The Art And Science Of Social Media Program Measurement

The Art and Science of Social Media Program
Measurement

Written By
Vanessa DiMauro and Lily Cua
Leader Networks

Table of Contents

FOREWORD .................................................................................................................................................................4

INTRODUCTION.........................................................................................................................................................5

WHAT IS SOCIAL MEDIA? ...........................................................................................................................................5
Figure 1: Twitter Growth Curve ..................................................................................................................5
WEB 2.0 WANTS YOU! ..............................................................................................................................................6
Table 1: Web 2.0 Usage Between IT and Non-IT Employees:............................................................9
BUSINESS PLANNING AND STRATEGY ....................................................................................................................... 10

FINANCIAL METRICS .............................................................................................................................................. 11

LEARNING AND GROWTH METRICS ................................................................................................................... 12

THERE IS NO SUCH THING AS A STABLE COMPETITIVE ADVANTAGE ....................................................................... 12
PEOPLE CAN LEARN, MACHINES CANNOT ............................................................................................................... 13
BE PRO-ACTIVE, NOT RE-ACTIVE ........................................................................................................................... 13
IT’S ALL RELATIVE ................................................................................................................................................... 16
PRACTICE MAKES PERFECT ...................................................................................................................................... 17
Table 2: First Movers versus Market Leaders ....................................................................................... 17
NOT ALL GROWTH CAN BE MEASURED................................................................................................................... 18

MARKETING METRICS ............................................................................................................................................ 21

THE SOCIAL MEDIA UPRISING .................................................................................................................................. 22
Table 3: Allocating Online Marketing Budgets .................................................................................... 22
Figure 2: Social Media Marketing Spend ................................................................................................ 23
SOCIAL MEDIA MARKETING IS STILL MARKETING .................................................................................................... 24
IS ONLINE MARKETING A RECESSION-PROOF REMEDY? .......................................................................................... 25
HOW TO HARNESS SOCIAL MEDIA CYBERSPACE AND QUANTIFY MARKETING SUCCESS .......................................... 26

ENGAGEMENT METRICS ........................................................................................................................................ 28

FIND OUT WHAT CUSTOMERS WANT AND THEN GIVE IT TO THEM........................................................................ 29
Figure 3: Customer Engagement as a Benefit from Using Social Media Marketing. ................ 32

CUSTOMER METRICS .............................................................................................................................................. 33

PEOPLE TALK, CUSTOMERS TALK ............................................................................................................................ 33
ARE YOUR CUSTOMERS HAPPY? .............................................................................................................................. 35
ALL CUSTOMERS SHOULD NOT RECEIVE EQUAL TREATMENT ................................................................................. 36
IT’S NOT ALL BLACK AND WHITE ............................................................................................................................ 37

OPERATIONS METRICS........................................................................................................................................... 39

FOCUS ON THE DAY-TO-DAY ................................................................................................................................ 39
IT’S WHAT YOU DO WITH WHAT YOU HAVE .......................................................................................................... 40

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SOCIAL MEDIA STRATEGY REQUIRES NEW BUSINESS PROCESSES ............................................................. 42

THE SUM OF THE PARTS .......................................................................................................................................... 43

3

Foreword

Social media has changed the way we communicate in both the personal and the business arena.
Every individual now has the ability to create community powerful interactions about a product or a
social or political cause. We are all now potential reporters and publishers, critics and reviewers. Our
opinion matters and influences how people worldwide invest their time and money.

This revolution has also changed the way we market. Marketing budgets are shifting away from print
and television ads that reach the masses to programs that listen to customer sentiment, engage them
in social communities, and share value by way of corporate and personal blogs, microblogging, and
vlogs, just to name a few.
While there is no question that corporations are making the shift to these new channels, they will
not put their marketing dollars into these new areas blindly. Costs of such programs can be
significantly lower than traditional media buys, but companies need to know that social media
programs are not only less expensive but effective. The two immediate questions are:

How does a company effectively listen to their customer?

What actions, if any, do they take?

The key factor is that they do listen, and use what they learn to improve the customer experiences.
If designed with measurement in mind, social media programs are significantly more measurable
than traditional print ads of the past. In addition, social media has the potential to provide more
than brand recognition. Companies can gain insights that no previous marketing vehicle could have
provided. Specifically, the ability to create an open forum for customers to be heard, and companies
to better serve them.

In the next 40 pages, Vanessa DiMauro and Lilly Cua provide an excellent discussion of how to
approach social media metrics. The Art and Science of Social Media Program Measurement makes a
clear case for why an effective strategy is crucial to achieving business goals. Then, as they say, the
devil is in the details.

Written by
Catherine Weber
President, Weber Media Partners
www.impressionsthroughmedia.com

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Introduction

“Web 2.0 evangelists…argue that social software can be used to boost productivity. They
say it can facilitate an open-ended corporate culture that values transparency, collaboration
and innovation. Most important, it can be an effective way to build a customer-centric
organization that not only communicates authentically but also listens to customers and
learns from that interaction” (Dutta and Fraser, 2009).

www.forbes.com/2009/03/11/social-networking-executives-leadership-managing-facebook.html

What is Social Media?
We hear about it and talk about it daily, throwing around terms such as ―blogosphere‖ and ―mini-
feeds‖ and talking about sites like Digg and Twitter. However, what exactly is social media? This
term is difficult to define for two reasons. First, the scope of this term is very broad and, therefore,
hard to define succinctly. Second, social media is constantly changing as technology continues to
evolve. For example, just one year ago, almost no one had heard of Twitter and now millions of
people are tweeting worldwide.

Figure 1: Twitter Growth Curve

Source: http://mashable.com/2009/01/09/twitter-growth-2008/

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Social media is a broad term that collectively refers to the various activities that use online
technologies to publish any form of information and then broadcast it to the entire World Wide
Web where anyone with an internet connection can view it and respond. Because of its nature, this
content is easily accessible and highly scalable and any online user can generate it, which is why
social media is also known as user-generated content (UGC) or consumer-generated media (CGM).

While current emphasis is on the tools that support the behaviors of connecting, social media is
really about a business process redesign. Businesses use the internet as a facilitation platform to
connect and enable collaboration between different people using a set of tools or triggers. It is
largely responsible for the monumental shift in how people search for and find information as well
as how people communicate in their personal and professional lives.

Web 2.0 Wants You!
Web 2.0 is no longer just for teenagers. CEOs and top executives cannot ignore this fact. Research
has shown that executives make strategic business decisions based upon peer information, much like
their teenage counterparts who make choices with input from peers. However, there are relatively
few opportunities for executives to connect with each other online, other than via email. They often
need to wait for a conference or in-person event to learn who is doing what with whom in business.
Conversely, throughout the web, teenagers, the 20 something cohort, and a growing number of
people in other age groups have a myriad of forums where they are talking about themselves and
their experiences. They are sharing information and collaborating with each other in powerful ways.

Armed with their peers‘ perspectives, they are using new tools to make decisions about what they
buy, where they go, and what they do. In essence, they are changing the global economy through
their online collaborative behaviors.

The potential for this opportunity exists for executives as well, as this constituent is very driven by
leveraging peer referral and experiences to shape future decisions. Therefore, youthful users discuss
which music to download or party to attend, while executives need a means to discuss industry
changes and trends, management issues. They need to know which product or service their company
should buy and how to best leverage their organization.

Accordingly, social media programs are becoming the new strategic business mandate – for both
B2B and B2C organizations. Effective customer relationships are the core to any successful
company and the strength of any organization is largely dependent upon the company‘s ability to
deliver the right products and services to its customers in a timely way. Knowing what the customer
wants and understanding their current and future needs is paramount to increasing revenue and

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exceeding customer expectations. Social media programs provide a prime opportunity for
companies to get to know their customers more intimately and keep the finger on the pulse of their
needs and behaviors.

The time is now for companies to embrace communities to help them serve their clients better,
faster, and in more cost-efficient ways. Using social media, companies now have an opportunity to
forge a dialogue with their customers actively, not just at the point of sale, but also throughout the
lifecycle to learn what they like and don‘t like about a product or service.

There is nothing more dangerous to an organization‘s lifeblood than a group of dissatisfied
customers. Yet, an organization may often not be aware of clients‘ issues until they have incurred
reputation damage or a trending loss in revenue. By cultivating meaningful relationships online,
product development leaders can work with clients to share roadmaps and plans. This helps to get
early input from the people who could be buyers at a later stage. Marketing can learn what messages
are most effective with their constituents and have greater opportunities to educate and inform the
customer, not just with shiny whitepapers and marketing newsletters, but also by bringing them into
the discussion and process of product and content co-creation. Social media engagement programs
also offer opportunities to make heroes out of users, enabling them to share best practice stories and
to connect with other clients.

Social media sites have also become huge players in the political, sports, music, and entertainment
realms. Big name proponents of this web platform include President Barack Obama, Shaquille
O‘Neal, Arnold Schwartzenegger, and Sarah Palin.1 What is surprising is the indifference of many
high profile business leaders. However, an increasing number of executives at smaller firms see the
value they can generate through social media outlets and are adopting various channels into their
business strategies. In a recent study conducted by ENGAGEMENTdb of the world‘s 100 most
valuable brands2, figures showed a direct correlation between strong financial performance and deep
social media engagement. More specifically, the research shows that, on average, in the past year, the
companies most involved with social media enjoyed an 18% growth in revenues whereas the least
engaged companies suffered a 6% decline. The values for gross margin and net profit paralleled
these values (Altimeter, 2009).3

1
Reference list of business leaders and executives on twitter: www.twexec.com/executives-on-twitter/
2
As measured by BusinessWeek/Interbrand “Best Global Brands 2008”
3
Reference: www.engagementdb.com/downloads/ENGAGEMENTdb_Report_2009.pdf

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With such a clear relationship established between financial indicators and social media involvement,
it is perplexing to observe companies that continue to resistance to this new genre of
communication and technology. The following are some surprising statistics released in a report
compiled by UberCEO.com this June regarding the CEOs of Fortune magazine‘s top 100 companies:

Only two have Twitter accounts

Only 13 have LinkedIn profiles, and four of them only have one connection

81% do not have personal Facebook pages

Only two have more than ten friends on Facebook

None have a blog4
Some attribute these figures to the fact that it is difficult to know the investment‘s potential value or
related risks and restrictions imposed by regulations such as Sarbanes-Oxley and Reg-FD. Other
CEOs dismiss social media ―as a time-wasting distraction or regard it as a risk management
problem…focus[ing] on potential risks like security breaches and data privacy‖ (Dutta and Fraser,
2009). Whatever the reasons, CEOs that do not engage in social media are ―giving the impression
that they‘re disconnected, disengaged, and disinterested.‖ They are ―missing a fabulous opportunity
to connect with their target audience and positively affect their company‘s perception‖ (Sharon
Barclay, an UberCEO.com editor.

See: www.computerworld.com/action/article.do?command=viewArticleBasic&articleId=9134860)

Moreover, these business leaders need to see the urgency of managing their online reputation before
someone else does. This assertion is supported by findings from a study conducted by Forbes
Insights, which indicates that the Internet has become the chief source of business information
(2009).

However, the term ―Internet‖ now includes much more than Google searches. Its scope spans from
global news sites to personal blogs. The executives that use all forms of Internet input as business
information, whether it be from a competitor‘s website or a consumer‘s Facebook page, will
ultimately be the most knowledgeable and therefore, most successful. Currently, most of these
executives are younger than 40 years old. The Forbes study found that 56% of executives under 40
maintain a work-related blog daily (35%) or several times a week (21%). This figure drops to 35%
and 1% for those that are 40-49 and 50-plus years old, respectively (2009)5. We find a similar pattern

4
Source: www.slideshare.net/shazza/fortune-100-ceos-and-social-media?type=presentation
5
Source: Forbes 2009 Study: The Rise of the Digital C-Suite: How Executives Locate and Filter Business
Information

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for Twitter usage, with members in the oldest category claiming that they ―don‘t see the business
value in it‖ (Forbes, 2009).

This same study also discovered a similar divide between IT and non-IT professionals. Forbes found
that ―CIOs and other IT leaders are the most likely executives to conduct Web searches, use online
communities to gather information and recommendations, seek out blogs and other Web 2.0 tools,
or use online video over text‖ (2009). The table below illustrates the stark differences in Web 2.0
usage between IT and non-IT employees:

Table 1: Web 2.0 Usage Between IT and Non-IT Employees
IT Employees Non-IT Employees

Daily Several Total Daily Several Total
Times/Wk Times/Wk
Contribute or read micro-feeds via 29% 33% 62% 9% 5% 14%
Twitter or similar application
View work-related video content via 33% 29% 62% 9% 9% 18%
YouTube
Network professionally in an online 36% 36% 72% 12% 19% 21%
community (LinkedIn, Facebook,
online industry forum)

Source: Forbes 2009 Study: The Rise of the Digital C-Suite: How Executives Locate and Filter Business Information
Whether or not a company‘s executives have implemented social media action plans, they cannot
deny social media‘s obvious presence. As the personal computer generation rises into leadership
positions, social media will become more entrenched in daily business operations. We strongly
suggest that social media is not a passing fad. Although more and more companies are setting up
blogs, Facebook profiles, and Twitter accounts, it appears that in many cases companies are taking
these actions only because everyone else is doing it. As a result, these companies are not able to
reap the full benefits of such tools. In this eBook, we hope to give organizations a clear picture of
what this success entails and discuss metrics that you can track to help achieve success. We have
categorized the research into sections that provide an analysis of key areas of social media metrics,
detailing what they are, how they are measured, and what value and insight they can provide.

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Business Planning and Strategy

Does your company have a real social strategy?

We are talking about a real social enterprise strategy - one that you drive and measure by business
performance. We are not referring to the garden-variety social media marketing campaign that
focuses on tools such as creating a twitter account to "get" followers or a Facebook corporate
account to put up marketing information.

We are referring to a social strategy that is well grounded in the business goals and objectives your
company needs to achieve, one that permeates the organization's operations from customer care to
competitive intelligence, to driving new products and features and, is integrated in the sales cycle.
Have you prepared for the cultural impact and change management process that a social strategy can
have on an organization? Have you created a social framework for the enterprise to do business
differently?

In order to move from the fanciful experimentation with social media tools to putting a social
strategy at the forefront of the business operations one must focus on the following key areas:

1) Develop an integrated approach to a social enterprise strategy:

Social strategy does not just impact marketing nor should marketing be the only influencer
on social strategy within the enterprise. Instead, a balance of voices and vision should drive
the process and include key operational areas within the business. Everyone should strive to
meet social strategy objectives and help achieve goals across the organization.

2) Seek external metrics:

Do not spend too much time navel-gazing, looking only at your social returns but look to
competitors for best practice, success indicators and outcomes. Outside research and
benchmarking is often rich with data to inform your organization about what is possible
with social strategy and showing you where you may be lagging.

3) Define frameworks and measures:

Social strategy is no different from any other kind of business strategy. You need to establish
milestones, measures, and metrics to assess critically the efficiencies and outcomes gained
with the same rigor you would apply to any other line of business activity. Yes, social
business is a new order. Nevertheless, hold it to the same performance standards and
measures as any other business strategy. Social strategy needs to return stakeholder value.

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Financial Metrics

“Financial metrics…are necessary to measure if any investment is worth keeping or it any
process change will significantly impact the company’s finances negatively or
positively…The very goal of measuring finances is to cut on costs or improve how money is
spent all throughout the organization.”

http://ezinearticles.com/?The-Key-Components-of-Financial-Metrics&id=1240926

All established businesses have some set of financial metrics that they measure. CEOs, CFOs, and
stakeholders often look to these numbers first and prioritize them above other metrics that do not
appear to directly impact the business‘ bottom line. This is because a business‘ main purpose is to
generate value. As a result, all components of a business—marketing, operations, growth and
development, human resources, strategy, and management—incorporate some form of financial
measures. It is difficult to sift out financial metrics into an exclusive category because they underpin
all other figures that businesses track.

Moreover, many departments translate the values they monitor into financial data because ultimately
they want to see the direct connection between their operations and the returns. For example, the
marketing department may track its monthly customer churn rate and from this data calculate how
the company‘s sales levels dropped as a result. Because of this common practice, this paper will take
an integrated approach to financial metrics in which each of the following sections will include the
associated financial values and resist the temptation to create a specialized category for financial
metrics as they cannot (nor should they) be taken out of context of the larger business objectives.

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Learning and Growth Metrics

“The dogmas of the quiet past are inadequate to the stormy present. The occasion is piled
high with difficulty, and we must rise with the occasion. As our case is new, so we must
think anew and act anew.” (Lincoln)

Most traditional metrics capture values from the past in order to forecast the future. While these
measurements can give a firm a general idea of its upcoming performance, often the past is no
longer relevant, the data has become obsolete, or it just does not directly correspond to current and
future operations. Learning and growth metrics are unique in that they quantify how a business plans
on evolving. Unlike most metrics, learning and growth metrics directly appraise potential changes
rather than manipulate old numbers to churn out ballpark forecasts. These metrics are therefore
valuable because they help to gauge a firm‘s future performance.

There is No Such Thing as a Stable Competitive Advantage
For companies to grow and succeed, they need to have a unique competitive advantage that
differentiates them from their counterparts. Unfortunately, the pace of today‘s business world forces
companies to continuously enhance their competitive advantage because the odds are that your
competitors will quickly imitate and improve upon the profit-generating formula you created.
However, there is one thing they cannot easily replicate or standardize - employee experience.
Organizations now have the technology to reproduce easily, operating systems, computer software,
and other equipment business operations depend on.

However, what employees know and have learned during their experience working at a company
cannot be perfectly transcribed and reproduced. As Russell Coff, an associate professor at Emory of
Organization and Management, argues, ―human assets are a key source of sustainable advantage
because…casual ambiguity and systematic information mak[e] them inimitable‖ (1994). In this
regard, a company‘s true competitive advantage should come from its human capital. If the company
wants to remain competitive its employees must constantly be learning and adapting to changing
industry standards.

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To leverage social media successfully long-term companies must offer a unique point of view and be
able to contribute to the growing body of shared thought leadership in the social sphere. Too often,
companies launch empty social media campaigns - campaigns void of a purpose or that fail to make
a salient contribution to the world‘s information exchange. While at times these campaigns are
successful in the short-term due to their sex appeal of well-crafted messages, if there is no meat
behind the effort to engage, or complete processes to support the spoils of the engagement, they
often fail long-term. Therefore, defining and sustaining success with social media frequently begins
within the organization.

People Can Learn, Machines Cannot
Most executives will agree that their employees are their most valuable assets. Although advanced
technology has some human-like capacities, one of the most important features that distinguish
humankind from computers is our ability to learn, catalog, integrate our experiences into our
knowledge base, and innovate. Computer systems can have frequent updates to incorporate new
organizational developments, but people have to design these new systems. All technology is
dependent on some form of human involvement, whether it is designing the structure, inputting or
manipulating the data, further analyzing the output, or updating the system.

David Carr of the New York Times reaffirms this position, stating that ―In the digital age, the critical
difference between success and failure is human capital - those heartbeats and fast hands that can
make a good business great‖ (2008). Because employees are the component of the organization that
enable it to evolve, the following section on learning and growth metrics largely deals with a
company‘s human assets.

Be Pro-active, Not Re-active
Growth and learning metrics are ―not just behavioral and statistical but ‗developmental‘ in the sense
of development of adult mental growth over the life span.‖

(See: www.balancedscorecard.org/Portals/0/PDF/Laske4.pdf page 1).

In other words, growth and learning metrics do not solely measure and analyze old behaviors.
Rather, they aim to capture those values that most directly correspond to future organizational
growth. Traditional metrics provide information about a firm‘s past performance, but are not always
the best figures for predicting future performance or implementing and controlling a firm‘s strategic
plan. This method may have been effective when businesses were not forced to evolve at a

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whirlwind speed. Now, businesses cannot depend on old data to make accurate predictions. They
need to be pro-active and anticipate what values will be most relevant to their organization in the
future and modify them as dictated by market forces. By integrating this forward-looking
perspective, businesses will be able to ―better translate the[ir] organization‘s strategy into actionable
objectives and better measure how well the strategic plan is executing‖ (Kaplan and Norton, 1992).

Robert Kaplan and David Norton, authors of The Balanced Scorecard, also recognize the importance of
tracking a company‘s learning and growth. They designed a management system in which one of the
four perspectives they integrate is learning and growth. In their words, ―learning and growth metrics
address the question of how much the firm must learn, improve, and innovate in order to meet its
objectives‖ (Kaplan and Norton, 1992). From the perspective of their management system, most of
these metrics relate directly to or are driven by employees.
As the pace of today‘s technological era continues to accelerate, continuous learning and growth
becomes increasingly imperative for a company‘s success. Therefore, these metrics need to be
collected and analyzed frequently and modified as needed. When numbers are gathered slowly,
information will become outdated and useless. As a result, these metrics will drain money and time
rather than guide managers on how to capitalize on their investments to realize the most growth
possible.

The following is a list of learning and growth metrics:

1. New ideas generated to improve the company (e.g., new product ideas and suggestions,
operational adjustments, etc.)
a. New ideas can be put forth by customers via posts and blogs, or by employees
(company newsletter, company blog, etc.)
2. Savings on market and consumer research spending (faster and more knowledgeable
employees will result in more efficient practices and lower costs)
a. Time to market is accelerated through using social channels to vet new product ideas
and reality test new concepts before they reach full-scale product development
lifecycle.
3. Average length employees work at company (the longer they stay, the greater the potential
for learning and increased efficiency, which will help the company grow quickly, even in
tight economic times. In a recession, companies are reluctant to fire experienced employees
because they are the firm‘s most valuable repository of knowledge)
a. Experienced, knowledgeable employees can make excellent social media
representatives for the organization.

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4. The strategic technology advances the firm plans on implementing and how this will
improve operations and/or reduce the number of employees (labor costs, OH costs etc).

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It’s All Relative
None of these values is incredibly useful in isolation. In order for these types of metrics to be
helpful, companies need to gather data regarding their competitors‘ firms in addition to their own
organization. It does not really matter how fast your company is learning and growing unless you are
doing it faster and better than your industry counterparts are doing it. Of course, you want to be as
operationally efficient as possible to minimize costs and widen profit margins, but as long as you
have an edge up on your competition, you will generate business.

The 2008 Summer Olympics are a good example. In the track and field competition, Usain Bolt
blew by his competition in the 100-meter dash with a time of 9.69 seconds with the second place
runner coming in a full two tenths of a second later. Breaking the world record he had already set,
Bolt‘s feat generated a lot of buzz and brought in a great deal of revenue from his sponsors, namely
Puma, Gatorade, and Digicel. Michael Phelps was also at the center of most discussions at these
same Olympic Games, coming away with eight gold medals and millions of dollars in sponsorships
(granted, this was before some compromising pictures were released).

Although all of his eight performances were incredible, the one that produced the most hype was
the 100-meter butterfly in which he won by a mere one-hundredth of a second. My point, however,
is that while Bolt made his race look like a stroll in the park and Phelps‘ race was a nail-biter to the
end, both athletes ended up with the same prizes, gold medals, fame, and money.

The position above (i.e., what is most important is that you can outperform your competition) can
also be applied to business situations. For example, consider time to market (TTM), which measures
the amount of time between when a company conceives the product idea and when the physical
product is available for sale. This metric is particularly important in industries where products
quickly become outmoded, which is becoming more commonplace as the attention spans of
consumers shortens and expectations rise.

If two businesses come up with similar product ideas, the company that can create a prototype and
send it to its manufacturers first will immediately get a huge boost in market share, which will
consequently erect a barrier to entry for competitors. It does not matter if the company released the
product one year or one month before its competitors. The fact that it came out with the product
first (given that quality and price levels are comparable to those of competitors‘) guarantees a
substantial amount of business.

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Practice Makes Perfect
On the flip side, many companies have made their millions by waiting for industry innovators to
―test the waters‖. They adopt previously tested ideas, learn from failed attempts, and make
refinements where necessary. In other words, these companies are waiting for others to educate the
market. This approach allows them to use the additional time and experience to perfect the product
or service and enter the market with a superior product. Michael Shrivathsan, an expert in product
management and marketing, explored the misconception that having the first-mover advantage is
the be all and end all. In Table 2 below he highlights how market leaders are not always the first
movers ( 2006):

Table 2: First Movers versus Market Leaders
First Mover Market Leader
Personal Computer Altair (1975) Dell
Word Processing Software WordStar (1979) Microsoft Word
Web Browser Mosaic (1992) Microsoft Internet Explorer
Internet Search Engine Excite (1993) Google

In many instances, most people have not heard of first mover companies. This substantiates the
counterpoint to the previous argument. Companies with a ―head start‖ do not necessarily reap the
long-lasting benefits. As Shrivathsan states, ―to gain the advantage, first movers must capitalize on
the opportunities that come with being a pioneer while at the same time manage the threats that
arise. The bottom line: Being first in a market is only an advantage when you do something with it‖
(2006).

This applies directly to businesses using social media tools and online communities. Companies
should not just focus on creating and using them first, because they run the risk of focusing on
immediacy rather than quality. Twitter is a good example. The average Twitter user has 549
followers, although this number is skewed by large corporate sites that have 15,000 followers on
average.

What proportion of these followers actually cares about your personal life or your company‘s
products? If you look at your own Twitter page, it‘s likely you will see a post made by someone you
do not know or at least by someone who you don‘t really care to know about. If you examine your
followers, it‘s likely you will be surprised how many of them you have never heard of. Even the

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people you follow religiously tweet insignificant details about their lives that you could more than
live without.

The Twittersphere inundates us with thousands of tweets that are 140 characters of nothingness. So
how do companies find a balance between tweeting noise and effective marketing and customer
relations? As is the case with most social media instruments, being the first and loudest does not
necessarily make you the most successful. Strategic metrics are therefore paramount. Measuring
quantity will not guarantee returns. The trick is measuring quality and efficiency. Engaged companies
are often the most successful companies, and that requires a business strategy with clear goals and
objectives by which to measure the outcomes of social efforts. If companies can develop social
media strategies that effectively satisfy their customers‘ needs and before their competitors, then they
will have built an insurmountable barrier to market entry, making them the only game in town.
Companies that do not have an integrated social media strategy should look at what other
companies are doing to see which strategies are succeeding and which are just budget drainers. They
should first and foremost ―focus on customers, understand their needs deeply, and create products
and services that meet those needs much better (in ways that matter to customers) than any of [their]
competitors‖ (Shrivathsan, 2009). This is a best practice approach to how a company can use a late
adopter status to its advantage. Otherwise, they will not only have a slow start, but they will be stuck
at the starting line while competitors continue to push forward.

Not All Growth Can Be Quantified
As with most categories of business metrics, there are values that you need to track, but cannot be
fully quantified. Specific aspects of learning and growth include corporate cultural attitude,
mentorship opportunities, and recruited talent all of which have a qualitative aspect. While some
quantitative metrics may apply, the qualitative measures must be included to gain a full
understanding.

Corporate culture refers to a firm‘s core values, beliefs, and behaviors. One can define corporate
cultural attitudes as a function of how employees interpret and act upon these shared values, beliefs,
and behaviors. Are employees encouraged to experiment with and suggest new ideas? Are they
comfortable enough to voice their opinions and complaints? Are they empowered to make decisions
and take on responsibility? It is difficult to assign numeric values to the answers of these questions,
but that does not discount the value that you can distill from the answers to these questions.
The ―mentorship opportunities‖ category is relatively self-explanatory but is similarly difficult to
monitor and quantify. Mentor-mentee relationships are some of the most valuable bonds in a

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company, not to mention, cost-efficient. Mentors are often the most experienced employees and can
therefore teach recently hired employees about the ins and outs of a company from firsthand
experiences. New employees will likely respond more to advice given to them by coworkers rather
than by bosses who have control of their employment status. Mentor-mentee relationships build on
and sustain themselves through a sense of camaraderie, which translates into a happier and more
self-sufficient work force. This ultimately results in lower costs and greater profit margins for the
company.

Reverse Mentoring
A particularly valuable mentor-mentee relationship would be pairing up a ―Millennial‖ employees
who is technologically savvy with a group of executives that are not as well-versed in the emerging
Web 2.0 culture, or as David Weinberger calls them, ―digital immigrants‖. A company should
maximize the value it can get out of its human resources and these reverse mentoring programs help
established businesses break into the changing business scheme at essentially no additional cost.

One of the most common findings we encounter is that a lack of digital leadership sends the wrong
signals to staff - when executives do not use social media strategically or simply do not use it at all,
the organization learns by example that social leadership is not a priority. This is an unintentional
outcome. While leaders are saying social leadership is important, when they do not act accordingly,
the message is diffused and therefore rarely embraced.

The most common reason for lack of social leadership is unfamiliarity with the tools and best
practice of social media. This is a problem (somewhat) easily solved. On a number of occasions, we
have put in place "reverse Mentoring" programs to pair leaders with Millennial to help educate and
or support change. Once senior leaders become familiar, skilled, and "acculturated" into social media
usage, they are then able to speak the language of social media - and lead - by example.

Recruiting Talent
Putting the unique role a Millennial employee can play within an organization aside; recruited talent
is probably the most important learning and growth value in which a company can invest. The talent
brought into a company determines the growth potential for the organization. Human resources
departments and any other individuals involved in the recruiting process need to be incredibly
particular as to the employees they are hiring. They need to look at personality traits, compatibility
with the firm, intellectual depth, acquired skills, and willingness to learn and work hard. Because new

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employees will likely replace older employees in the future, recruiters need to think in terms of the
company‘s vision for future growth and development.

Bill Gates and Steve Jobs, two of the most distinguished technology founders in history, practice
this kind of rigorous hiring process believing that ‗A players hire A players, and B players hire C
players,‘ this can translate functionally into a negative slope. Lowering the hiring standards a small
amount will eventually lead to a very significant drop in the quality of employees. Companies should
hire only those individuals that have the skills and knowledge to realize the firm‘s growth potential
and should closely monitor the learning curves of recently hired employees. This will ensure that the
recruited talent can handle the tasks as well as be able to contribute to future company
developments. Recruiters need to realize that the people they hire will ultimately become the new
and (hopefully) improved backbone of the company.

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Marketing Metrics

“Good marketing is any effort by a company…to DIRECTLY satisfy the wants and needs
of its customer” (Collier 2007).

(http://moblogsmoproblems.blogspot.com/2007/01/what-is-good-marketing.html)

Marketing metrics aim to quantify the performance of a business‘ marketing efforts. Given the
unprecedented and rapidly growing impact technology has had on the business world, the following
discussion will focus on online marketing. It is important for a business to track the effectiveness of
each of its marketing campaigns to minimize gratuitous costs and optimize the value added directly
and indirectly to its bottom line. To use marketing metrics effectively, one must first understand
what a company is striving to accomplish with its marketing campaigns.

Effective marketing will accomplish four things:

1. Spread consumer awareness, thereby expanding the pool of prospective customers
2. Increase word of mouth (WOM) and other forms of consumer-generated advertising,
also augmenting the number of potential customers
3. Pique interest so consumers become customers and begin to explore and purchase the
business‘ products or services
4. Affirm the quality of the business‘ products or services to existing customers, resulting in
greater customer loyalty and retention rates

How does a business quantify whether or not its marketing efforts do these four things? This task is
difficult for any marketing campaign and more difficult to accomplish for those campaigns served
on online communities because of their novelty. Popular online communities such as Twitter,
Facebook, and Digg have only been around for a few years, created in 2006, 2004, and 2004,
respectively. However, companies that are not integrating these social networking sites into their
grand marketing plan are already falling behind those that are in better synchronization with this
new wave of technology. Unfortunately, many of the businesses trying to incorporate social
networking into their strategy planning are completely oblivious to whether their efforts and
resources are generating optimal results; a state of affairs that could hurt them in the future.

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The Social Media Uprising
As tweets, posts, and blogs permeate the daily headlines and news reports, it is obvious that the
number of ―social media ‗spectators‘‖ is escalating at a rapid pace. Not only are there more eyes on
social media sites, there is a growing level of attention and capturing audience attention is the new
currency in the online marketing environment.. People are beginning to realize that these sites can
be used for more than trivial communication and connections. For example, Twitter in its earliest
stages was perceived as a detached method of broadcasting petty details about one‘s personal life.
Now, it has become one of the most important tools of the Iranian Revolution, American political
campaigns, and in wide use in many companies‘ marketing and CRM strategies.

Table 3: Allocating Online Marketing Budgets

Source: http://mashable.com/2009/01/12/social-networking-online-marketing/

Twitter is one of the fastest growing social media sites, boasting 1,382% growth in February
(McGiboney, 2009). In March, the number of global visitors to Twitter‘s website alone skyrocketed

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to over nineteen million (Schonfeld, 2009). Consistent with these statistics, social networking has
and continues to be the top growth area in online marketing. The table above shows how companies
plan to allocate their online marketing budgets. As you can see from this table, a quarter of the
companies surveyed plan to increase their spending on social networking and a third plan to
maintain their level of social networking funds. Forrester Research reports similar findings from
the results of their research study.

Figure 2: Social Media Marketing Spend

Source: www.web-strategist.com/blog/2009/03/16/report-social-media-marketing-up-during-
recession/

These figures may not seem impressive, but given that the current recession typically demands
reduced budgets, especially marketing budgets, a 95% bullish market for social media is remarkable.
These increases in social networking spending, however, are not unfounded. Social media marketing
is relatively inexpensive and provides a great opportunity to generate cost-efficient word of mouth
promotions. Most importantly, it engages customers.

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Social Media Marketing Is Still Marketing
Let us not get ahead of ourselves. Online marketing is still a subset of overall marketing. According
to CPA, Michael Gray, there are three components required for a successful marketing campaign: a
market, a message, and timing (2002). When designing a marketing plan, the first three questions and
underlying issues you need to address about the market are:

1. To whom, are you trying to target?

2. How many people are in your target population?

3. Is your market large enough to support your operations?

Marketing departments must always consider their target market when designing and adjusting their
strategies because ultimately, marketing is only successful if it appeals to the target market.

An engaging message is the second key element of a thriving marketing campaign. The message
must catch the attention of and resonate with the target market. In order to create such a message;
marketers need to understand their customers. They need to know the wants, needs, fears, and
problems of their customers and emphasize how their value proposition will satisfy them. This
requires frequent and open dialogue between the company and the public.

However, releasing your message and directing it at selected consumers will not guarantee a
prosperous marketing campaign. The final factor marketers need to consider is timing. The
difference between a failed attempt and a successful campaign could be determined by several
factors including:

o Consumer trends
o Economic conditions
o The competitive environment

Although these are uncontrollable factors, marketers can still use them to their advantage if they
anticipate them and respond aptly. A glaring example is the current recession. Andrew Kohut,
president of the Pew Research Center, reports that consumer satisfaction with the economy has
reached a 15-year low, which explains the drastic reduction in consumer spending.

High-end businesses such as Tiffany‘s and Coach are feeling this squeeze most acutely and have
been forced to alter their marketing strategies to maintain reasonable sales levels. While stores on the
opposite end of the price spectrum, such as Target and Wal-Mart, are also suffering from the

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economic downturn, they have been using the market conditions to their advantage. They have
altered their marketing campaigns to highlight their low-price offerings and attract the growing pool
of cost-conscious customers.

Is Online Marketing a Recession-Proof Remedy?
According to a study conducted by Forrester Research (2009), ―merchants believe online business is
better suited to withstand an economic downturn than physical stores or catalogs.‖ This assumption
may explain the retail industry‘s shift in marketing tactics from billboards and television
advertisements to Facebook and Twitter banners and buttons. Given that the number of people
who read or watch social media has increased from 48% last year to 69% this year, this strategy
should continue to spread (Forrester, 2009). Many companies such as General Mills and Blue Cross
recognize the benefits of blogs, podcasts, and other forms of social media and have already
integrated them heavily into their marketing strategies. Bloggers such as Seth Godin also realize how
―traditional ways of interrupting consumers (TV ads, trade show booths, junk mail) are losing their
cost-effectiveness. At the same time, new ways of spreading ideas (e.g., blogs, permission-based RSS
information, and consumer fan clubs) are quickly proving how well they work.‖

(http://sethgodin.typepad.com/seths_blog/2005/05/what_every_good.html).

Not only are the costs associated with social media marketing significantly lower than those of
conventional advertising many studies suggest that WOM is more effective than any other kind of
marketing, and social media is essentially online WOM. Jim Tobin further explores this idea in his
book, ―Social Media Is a Cocktail Party.‖ He likens social media practices to the expected code of
conduct at a cocktail party. For example: when you arrive at a cocktail party, ―the first order of
business is to observe the room, listen for conversations of interest and find an appropriate
opportunity to enter the conversation‖ (Tobin, 2008). Similarly, ―observing and tracking the
conversation is a vital first step in developing an effective social media program. By first listening to
the conversation, you will find what‘s being said, who is saying it and who is listening‖ (Tobin,
2008). If businesses can understand and apply the aforementioned concepts and tactics, they should
be able to launch a social media marketing campaign successfully.

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How to Harness Social Media Cyberspace and Quantify Marketing
Success
―People are talking about you and your brand and your issues (whether you like it or not). The only
question is whether you want to have an influence on it‖ (Ranii, 2008). This statement is even more
germane now with the introduction and widespread success of social media websites. Online
communities provide a forum for open dialogue in which consumers and businesses alike can
express their opinions, share their experiences, and spread information. Given the Internet‘s massive
audience, consumers and businesses now include essentially everyone. As a result, the scope of a
marketer‘s job has expanded immensely. A company‘s target market not only includes those
customers directly exposed to its advertisements, but it includes everyone connected to those
customers regardless of how distant the connection is.

In summary, marketing efforts have the potential to impact any and all consumers. Therefore,
metrics that intend to quantify the success of a marketing campaign become increasingly essential to
a company‘s success. The following is a list of marketing metrics that businesses should consider
when launching a social media marketing campaign:

1. Number of inquires on search engines (to measure spreading awareness)
a. Average number of impressions
2. Number of new customers
3. Customer acquisition cost
4. Ratio of cost to website exposure
a. Measured as cost per thousand page impressions (CPM)
b. Cost per lead (CPL or cost per acquisition)
5. Growth in market share

However, as the scope of social media marketing expands (which it inevitably will given the growth
of online networking tools) it becomes more difficult to quantify the success rate of particular
marketing efforts. There are many aspects of marketing that marketing departments should monitor
even if numbers cannot be assigned to these values. This includes the amount and quality of
customer-generated marketing initiated by a company‘s original marketing operations. Ask yourself
these questions:

1. What are people are saying about your advertisements?
2. What are they saying about your competitors‘ advertisements?
3. What degree of hype are you able to build up?

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Specifically, a company needs to understand what is said about their product, who is talking about
the products, and how frequently are the discussions taking place.

In today‘s technological era, this encompasses tracking blogs, podcasts, tweets, and other forms of
WOM both online and offline. Additionally, Web 2.0 connoisseur, Joshua-Michéle Ross, suggests
stories should also be a success metric because ―great stories are inherently viral and can have a
profound impact on decision making in an organization‖ (2008). The fact that we cannot translate
everything people are saying about a company‘s products and services into numerical values does
not take away from the importance of listening what people are saying. What people are saying is
extremely important and directly correlated to a business‘ success.

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Engagement Metrics

“An organization’s best customers…are not just “satisfied” or “loyal,” they are emotionally
attached to the organization’s brands or services. They are engaged” (Gallup, Inc., 2009).

www.gallup.com/consulting/49/customer-engagement.aspx

A disengaged customer is not really a customer, or at least not a good customer. Unfortunately, few
companies have implemented effective systems to gauge the level of their customers‘ engagement.
Understanding engagement metrics is important because they can give a company a more accurate
and complete picture of their customers.

For example, there are millions of daily web surfers. Most surfers breeze through websites and
articles, maybe spending a few seconds on any given page. These brief visits will increase a
company‘s number of visitors and impressions, but it does not give the company an accurate
accounting of how many of visitors are interested in their ideas, products, or services. This is why
engagement metrics are an important part of the mix. Engagement metrics aim to quantify how
interested and committed customers are to a business. Although it is good for businesses to get as
much exposure to their sites as possible, it is better yet to focus on getting the attention of
customers whose visits will most likely translate into business.

Engaged customers generate the most business because they are more likely to generate higher
conversion rates, be more loyal, and have higher retention rates. Another benefit of having engaged
customers is increased customer satisfaction.

Some key metrics for focusing on engagement include

1. Increased revenue
2. Increased customer loyalty
3. Improved customer experience
4. Increased customer referrals
5. Increased customer life-time value
6. Improved sales processes

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If consumers are indifferent to a company‘s offerings, they are unlikely to become paying customers,
especially not loyal, repeat customers. Therefore, knowing the level of engagement of your target
market is important. The following is a list of engagement metrics:

1. Ratio of the number of visitors to number of repeat visitors (to measure how successfully
the site captures viewers)
2. Ratio of the number of registered users to the number of active users
3. Click-through rate (CTR = Number of users who clicked on an ad, i.e., number of
impressions)
4. Frequency of posting
5. Average duration of visit (to measure the interest level in the site)
6. Average number of posts over a period of time per visitor

Find Out What Customers Want and Then Give It to Them
Recently a study of 1300 American and multinational companies conducted by e-Consultancy found
that less than half of the respondents had implemented a clearly developed customer engagement
strategy. However, the study showed a high level of awareness of the need for such a strategy
(http://live2support.com/newsletter/2009-01/customer_engagement.php).

Executives are beginning to appreciate the importance of engaging customers online and to invest
heavily in methods to capture the customers‘ attention and retain consumers‘ interest. However, one
common misstep in the process is that companies often (too often) believe they know what the
customer wants from them. They then often skip a critical step in the planning process – namely to
ask the customers or clients what their needs and expectations are from the company. A formal
inquiry process should start with understanding where the prospective user base‘s current process or
experience gaps are – what keeps them up at night or causes issues, problems or inconvenience.

A driving goal of any social media program should be to use the digital channel to accelerate a
business (or consumer) process and make it easier or more streamlined for the customers to interact
with your company. Therefore, the key is to explore, through semi-structured interviews or through
a quantitative study, the points of customer discomfort and/or need, and not focus initially on the
social media tools you might use to mitigate the pain.

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Too often, we have all been the recipient of a satisfaction questionnaire that asks a question such as
whether we prefer to read a blog or get a RSS feed! Where this fails is that it doesn‘t answer the
questions ―to do what?‖ or ―to achieve what?‖ Your answer is likely to vary widely depending on the
context of the engagement. Too much tool talk, while it might be entertaining, can significantly
derail the process of learning about customer needs. The goal is to identify issues and use the
information, when appropriate, to a social-media-driven intervention.

Case Study
Amazon.com is widely acclaimed for its customer-tailored
approach to its online services. Recently, I purchased a book from
Amazon online after receiving an email promoting a sale they
were having. A hyperlink was in the email allowing me to go
straight to the website. A personalized web page opened and had
information and featured titles that matched my interests. I had
no plan to make a purchase, but one of the books suggested was
one I had heard good things about and it was conveniently on
sale. Because I am a registered customer with Amazon.com, I did
not have to re-enter my shipping and billing information. That
information simply appeared to further facilitate and expedite my
transaction.
I bought the book!

Sharon Mertz, a research director at Gartner Research, explains that during a recession businesses
have to put in the extra effort in the Amazon example to get consumers‘ business. She states,
―When the economy slows down and consumers don‘t spend as much, businesses need to fight
harder for every dollar of consumer spending. Customer experience will only help with that‖ (as
cited in Beal, 2008). Companies have responded to this anticipated pattern of behavior by investing
heavily in two areas, CRM software and social media marketing.

Despite overall budget cuts, many businesses are spending more to enhance their CRM systems.
Gartner Research projected that in 2008, the revenue generated by CRM sales would increase 14.2%
from the previous year and that this level of growth would continue through 2012 (Beal, 2008).
Although implementing a CRM system entails time and resources, the benefits typically more than
offset the costs.

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CRM software enhances a company‘s relationships with its existing customers, which has the
potential to result in:

1. Increased sales through better timing from anticipating needs based on historic trends
2. Identifying needs more effectively by understanding specific customer requirements
3. Cross-selling of other products by highlighting and suggesting alternatives or enhancements
4. Identifying which of your customers are profitable and which are not
5. More effective targeted marketing communications aimed at particular customers based on
their needs and preferences6

The use of CRM software provides a firm with the opportunity to develop a more personal
approach to its interactions with customers. This can lead to enhanced customer satisfaction and
retention. If a firm keeps its customers happy, they reward the company with return business and
possibly referrals to the firm. This will generate more value from existing customers and reduce
costs associated with supporting and servicing them and the cost of finding new customers. CRM
software also identifies those customers that will be most profitable. In sum, CRM software enables
businesses to be more cost-efficient by engaging the most beneficial customers, which will maximize
profit margins.

The recent spending pattern for social media marketing parallels that of CRM systems. According to
a report published by PQ Media in 2006, ―the total marketing spending on social media is forecast
to grow at a compound annual rate of 106.1% from 2005 to 2010, reaching $757.0 million in 2010‖
(Rubel, 2006). These figures cover blog, podcast, and RSS advertising. This level of spending is not
surprising given the latest updates on minutes spent on social networking sites. Nielsen Online, a
company that measures web traffic, reported that in the past year the number of minutes on social
networks rose 83% in the United States (2009).

Top ranking social media sites like Facebook and Twitter increasingly permeate the public‘s lifestyle.
Overtime they become more valuable as advertising real estate on which businesses can broadcast
and endorse their products and opinions. These sites also are valuable forums in which businesses
can build up their reputation in the community by listening and addressing complaints publicly and
in a timely manner. When companies tap into these online communities effectively, they expand
their market potential significantly and cultivate open relationships with customers, which may result
in enhanced customer engagement.

6
[Online] Available: www.businesslink.gov.uk/bdotg/action/detail?type=RESOURCES&itemId=1075422939. Date
of Accession: July 5, 2009.

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As you can see in the graph below, 85.4% of the executives polled cited customer engagement as a
benefit of using social media marketing.

Figure 3: Customer Engagement as a Benefit from Using Social Media
Marketing.

Surprisingly, this same study conducted by Marketing Executives Networking Group (MENG)
found that only 21.2% of those surveyed thought that ‗lead generation source‘ was a benefit of social
media marketing. This suggests that although executives see social media as a valuable tool to engage
customers, they may not see the direct correlation between social media and their firm‘s bottom line
(as cited in Forrester, 2008). Regardless, no one is likely to argue against the position that social
media is going to play a huge role in the upcoming future, both in our personal and professional
lives. Thus, businesses will increasingly need to understand social media in order to understand and
engage their customers.

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Customer Metrics

“Customers are the lifeblood of any organization. Without customers, a firm has no
revenues, no profits, and therefore no market value” (Gupta & Zeithaml, 2005, p. 3).

As markets continue to shrink, businesses are shifting their focus to the individual customer, as they
should be, and are scrambling to keep their customers satisfied. If businesses want to succeed, they
have to exceed their customers‘ expectations because without customers, there is no business. This
development is reflected in a worldwide survey conducted by The Economist in 2002 which reported
that of the 681 senior executives interviewed, 65% claimed customers to be their main focus over
the following three years (as cited in Gupta & Zeithaml, 2005, p. 3). Many other studies, involving
both American and global firms reveal the trend of businesses becoming more customer-driven.
This finding is not surprising. After all, the customer ultimately drives a company‘s bottom line.
Therefore, there is likely to be a direct correlation between customer satisfaction ratings and
company equity.

People Talk, Customers Talk
Some studies suggest there is a slightly exponential positive relationship between a firm‘s market
value and its customer satisfaction level. To explore this idea, put yourself in the shoes of a new
customer at a new restaurant. You go to the grand opening and have an all-around great experience:
o Hostess was pleasant
o Bartender was friendly while you waited for your table
o Your waiter got all of your orders correct
o Food came out quickly, was hot, and delicious
What are some of the likely outcomes from your experience?

o Talking about this restaurant with your colleagues at work the next day
o Recommending the restaurant to your friends or anyone looking for a place to eat in that
area
o Going back to this restaurant

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Now think about the opposite scenario. You go to the grand opening and have the following
experience:

o Hostess is flustered with requests
o Bar is crowded with loud fans and the bartender is watching the game
o Your waiter was inattentive
o The food arrives cold and is of questionable freshness

Would you complain to your coworkers and friends the next morning about how awful your dining
experience was? The answer to this question is reasonably obvious.

As you can easily see, companies need to satisfy each customer because each one is a walking and
talking advertisement that has the potential to spread great reviews or harsh criticisms.

Kevin Cacioppo, examined this issue in his article ―Measuring and Monitoring Customer
Satisfaction‖ he found that a ―very satisfied customer is nearly six times more likely to be loyal and
to repurchase and/or recommend your product than a customer who is just satisfied.‖ In addition,
customers with a problem will eventually tell on average nine other people about their negative
experience (2000). This kind of WOM advertising can only be control through your direct
interactions with customers. All businesses can do is strive to please their customers in hopes of
maximizing good publicity and minimizing bad publicity. Furthermore, having satisfied customers
will not only guarantee repeat customers and continued business, it will also generate more business,
which gives a company potential for securing additional loyal customers.

The points above are part of loyalty expert, Fred Reichheld‘s, Net Promoter Score (NPS) concept. A
company‘s NPS is calculated by subtracting the percentage of customers who are ―detractors‖ from
the percentage who are ―promoters‖.

P – D = NPS

Reichheld defines detractors as ―unhappy customers trapped in a bad relationship‖ and promoters
as ―loyal enthusiasts who keep buying from a company and urge their friends to do the same‖
(2006). Customers who neither endorse nor denounce the company fall into a third category referred
to as ―passives‖. Research shows that NPS leaders outperform their competitors by an average of
2.5 times in most industries (Reichheld, 2006). In another of Reichheld‘s noted texts, The Loyalty

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Effect: The Hidden Force Behind Growth, Profits and Lasting Value, he reiterates the
importance of customer loyalty, finding that it results in as much as 95% higher profitability by
reducing customer defections by as little as 5% (as cited in Customer Engagement Strategies, 2009).

Surprisingly only 4% of dissatisfied customers will submit a formal complaint to the company
(Cacioppo, 2000). This disconnect in the customer feedback loop reinforces the importance of
having clear-cut metrics. All companies have unhappy customers, but because so few complaints
surface, companies do not know where their problems exist. Worse yet, companies may think they
do not have problems, or at least no problems significant enough for people to complain. Because
companies cannot force disgruntled customers to file complaints, companies need to have customer
metrics they measure and analyze regularly. Although numbers cannot paint a complete picture a of
firm‘s problems, they will at least raise red flags altering the appropriate personnel to further
investigate these areas if necessary.

Are Your Customers Happy?
Given the importance of achieving customer satisfaction it is no shock that customer metrics span
over a wide range of topics. Customer metrics include product and service satisfaction, loyalty, and
retention metrics. Although businesspeople casually throw around these terms, they should not use
them interchangeably. Granted, there is some overlap in the concepts related to these terms, but it is
the nuances of each that give a company insight into their customers‘ opinions and thoughts.

o Satisfaction is a customer‘s appraisal of their entire experience with a company.
o Loyalty, as defined by Richard Oliver, author of Satisfaction: A Behavioral Perspective
on the Consumer, is ―a deeply held commitment to re-buy or re-patronize a preferred
product or service consistently in the future, thereby causing repetitive same-brand or same
brand-set purchasing, despite situational influences and marketing efforts having the
potential to cause switching behavior‖ (1997, p. 392).

o Retention refers to a company‘s ability to keep its current customers and maintain a steady
inflow of cash from these customers.

In other words, customer metrics collectively aim to answer the question: are customers happy
enough to continue purchasing your product? For businesses, having connected customers translates
into steady demand and growth potential. It is for this reason that tracking customer metrics is not
only smart, it is essential for business‘ survival.

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The following is a partial list of measurable customer metrics:

1. Net Promoter Score (NPS)
2. Retention rate
3. Quality perception
4. Customer churn rate which can be devised by taking the total number of customers who
discontinue a service divided by Average total customers for that period
5. ASCI score (http://customermetrics411.com/customer-satisfaction.html)

The above list is far from comprehensive; and continued research needs to be conducted in this
field. However, it is important for businesses to have benchmarks that they can measure and use to
determine their degree of effectiveness in servicing their customers.

All Customers Should Not Receive Equal Treatment
Businesses are well advised to consider another aspect of customer metrics. While businesses want
to attract as many consumers as possible, they want to focus their efforts on those customers that
generate the most value for the company and drop those that cost more than they contribute.
Therefore, businesses should calculate each customer‘s lifetime value (CLV) and customer equity
(CE). These values represent ―the present value of all future profits obtained from a customer over
his/her life of a relationship with a firm‖ (Gutpa & Zeithaml, 2005, p. 13). From these calculations,
companies can make educated decisions about who they should direct their marketing campaigns to
and who they should not waste their money on.

It is particularly important to satisfy valuable customers because attracting new customers, on
average, costs five to eight times more than retaining old ones (Cacioppo, 2000). Many executives
are familiar with this, which was revealed by a survey conducted by Forrester Research Inc. that
showed the number of companies focusing on customer retention has nearly doubled in the past
year. Furthermore, studies have found that greater customer satisfaction leads to significant increases
in a firm‘s market value. For example, Anderson, Fornell, and Mazvancheryl (2004) conducted
research with N=200 of the Fortune 500 companies across 40 industries and discovered that a 1%
improvement in satisfaction resulted in a $275 million increase in the firm‘s value (as cited in Gutpa
& Zeithaml, 2005, p. 16). Anderson and Mittal (2000) conducted a similar study with an N=125
Swedish firms and the Swedish Customer Satisfaction Barometer (SCSB), which is comparable to

36

the American Customer Satisfaction Index (ACSI). They found that a 1% increase in customer
satisfaction resulted in a 2.37% increase in ROI (as cited in Gutpa & Zeithaml, 2005, p. 16). Clearly,
there is a direct correlation between customer satisfaction and financial outcomes. For this reason, it
is important understand customer metrics and integrate them into strategy planning.

It’s Not All Black and White
There are some customer ―watch points‖ that cannot be easily quantified, but should be monitored
by companies to get a broad understanding of their customer base. As defined by the Word of
Mouth Marketing Association (WOMMA), WOM marketing is ―giving people a reason to talk about
your products and services, and making it easier for that conversation to take place. It is the art and
science of building active, mutually-beneficial consumer-to-consumer, and consumer-to-marketer
communications.‖ (2007).

One example is WOM marketing, which includes other phenomena such as: going viral, product
buzz, community building, and cause marketing. The nature of this kind of marketing makes it
difficult to monitor. Yes, there are tools available for social media monitoring such as Techridgy,
Tweetbeep and a host of free and for pay social media monitoring services, however, none are
comprehensive. Therefore, many organizations use a variety of tools and manual processes for
tracking social media buzz.

Although WOM marketing dates back to the birth of business, marketers are now beginning to see
the benefits of harnessing and exploiting it within the social media arena. As popular social media
outlets continue to spread, the scope of this job is broadening. WOM now not only includes audible
conversation, but emails, blogs, tweets, SMS messages, podcasts and other venues. However,
companies can use advanced technology to track what people are saying. The bigger problem is
managing the outcomes of the WOM and developing systems to use the information strategically
within the organization to inform innovation, increase customer satisfaction, identify brand
evangelists, and manage sales.

Organizations can take a variety of steps to use the information they receive via social media
monitoring for the benefit of the bottom line. This entails four basic tasks7:

1. Educating consumers about the firm‘s products and services
2. Identifying like-minded consumers and providing an accessible medium for them to openly
communicate and share information

7
[Online] Available: http://womma.org/. Date of Accession: June 30, 2009.

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3. Observing and analyzing how, where, and when information and opinions are being shared
4. Listening to supporters, detractors, and neutrals and responding promptly and appropriately

In summation, businesses need to monitor their brand. They should track upswings and downturns
in customer behavior and explore how consumers perceive their brand both before and after the
launch of marketing campaigns. Companies need to identify the most powerful influences on their
market. This all relates to the concept of satisfying your customers. Before you can please your
customers, you have to know who your customers are and what they are saying. With more people
plugging into the 21st century and more online communities emerging, the input into companies‘
customer base is exponentially increasing. If monitored effectively, this input can become a
company‘s most valuable source of customer feedback. In addition, if used appropriately, a company
can satisfy more customers and prosper from the increased business.

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Operations Metrics

“Operational Efficiency is what occurs when the right combination of people, processes,
and technology come together to enhance the productivity and value of any business
operation, while driving down the cost of routine operations to a desired level. The end
result is that resources previously needed to manage operational tasks can be redirected to
new, high value initiatives that bring additional capabilities to the organization.”

www.ensynch.com/sp_operational_efficiency.aspx

Operations metrics are measures of the effectiveness and efficiency of a business‘ processes. In
other words, how fast does a business accomplish its objectives, how much human and equity
capital was required to accomplish these tasks, and how successful was the business in producing the
intended results?

Focus on the Day-to-Day
A business‘ operations are the daily activities it must accomplish to achieve broader tactical and
strategic plans. It is important to track operations because it is through operations that firms
generate value. Monitoring operations is a three-step process. It involves tracking the resources
needed for each operation, the output of each operation, and the operation itself. As a result, there
should be three distinct categories of operations metrics: Input, Output, and Processing.

Businesses should strive to minimize input, maximize output, and expedite processing. In order to
accomplish this, firms first need data that show them how they are currently operating. Then they
should create reasonable benchmarks. When operational adjustments are made in the hope of
reaching these target values, firms should track the appropriate metrics on a continuous basis.

These practices apply to all businesses, regardless of whether their operations are conducted in a
brick-and-mortar setting or online as an ecommerce firm.

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The following is a partial list of operational metrics:

Input

1. Cost of resources (includes human capital)
2. Resource availability
3. Resource optimization
4. Market and consumer research spending

Processing

1. Time duration of process
2. Number of people required for the process
3. Operating margin (operating income/total revenue)

Output

1. What kind of attention is your product generating (#tweets, posts, blogs, digs, etc?)
2. (for physical products) sales volume produced in set period

It’s What You Do With What You Have
Operations have always been and will continue to be an organization‘s focus in its business strategies
and benchmarking. This is because the purpose of any business is to generate value for consumers,
and value is not produced by people or machines alone, but by the actions of employees and the
operations of machines.

Significant advances in the field of operations over several decades have been made regarding speed
and efficiency. Firms still need people and machines to operate, but fewer people are taking less time
and fewer resources to accomplish the same tasks.

The introduction of social media communities has enabled consumers to become a businesses‘ most
valuable marketing tools. Many companies have integrated some form of ―generation-c‖ marketing
into their grand strategy because it requires minimal funding and it gets potential customers involved
with their company. In terms of operational efficiency, customers are helping marketing
departments accomplish their goals of: increased exposure, generating awareness, piquing interest,
and affirming the company‘s reputation; all with smaller budgets and fewer employees. Online
marketing spreads like wildfires with the potential for unlimited growth of the marketing message‘s
exposure and influence.

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All a marketing department needs to do is light the match and let the rest spread naturally (maybe
adding some lighter fluid to rekindle the flame). This ―match‖ could be creating a blog or social
community site, blasting a tweet, or posting a creative podcast or video.

A popular example of the aforementioned viral marketing technique is Blendtec‘s ―Will It Blend?‖
campaign. In the show, Tom Dickson, the founder of Blendtec, attempts to blend an assortment of
items to accentuate the power of his blenders. His first attempt included a box of matches, and since
then he has worked with golf balls, cell phones, hockey pucks, Barbie dolls, iPods, and many other
items. Before the series of infomercials was launched in 2006, Blendtec was an unknown company
in an oversaturated industry. For most people, all blenders are the same. The trick for Blentec was
getting consumers to distinguish its blenders so that consumers would care enough to buy its
blenders as opposed to the hundreds of other available blenders in stores.
What is remarkable about Blendtec‘s success story is that its marketing budget was about fifty
dollars. Interestingly, the most expensive part of each episode was often the product to be blended.
Given these limited resources, George Wright, the marketing manager of Blendtec, epitomizes
operational efficiency. Rather than spend money the company did not have on commercials that
would get lost in television‘s advertising clutter, he bought WillItBlend.com and produced
innovative movies he thought (and hoped) people would want to talk about.

Not only has the online marketing campaign increased sales 700%, it inspired the creation of ―Will It
Blend?‖ merchandising approach. The additional merchandise (e.g., shirts and gadgets) produce
revenue, but more importantly, they further promote the company and its products. Moreover, with
65 million views on YouTube and 120 million views on WillItBlend.com, Blendtec has gotten a lot
of media coverage and buzz both nationally and internationally.

Examining the three lists above Blendtec would excel in all operational metric categories.

Cost of resources: $50 and staff time

Resource availability: can blend whatever is easily attainable

Market and consumer research spending: follow the market trend and let people talk
about your product

Attention generated: international buzz, 65 million views on YouTube, media coverage
(Today Show, Food Network, History Channel, Discovery Channel, Tonight Show), print
magazine (Wired), mentioned in Congress, Blogs posted (Forbes, NYTimes, BusinessWeek)

41

What is most impressive, as stated by Wright in his keynote address in 2008, is that all of the
operational advantages were generated ―on a shoe string budget.‖ Using the most basic operational
efficiency metric, output divided by input (all of the above metrics can be summarized into these
two categories), we see that the numerator is significantly larger than the denominator. In other
words, Blendtec has found a winning formula for accomplishing its marketing objectives quickly,
with minimal resources, and with a high rate of success.

Social Media Strategy Requires New Business
Processes
Strapping new tools onto old processes is a common problem when enterprises start using and
measuring social media. Enterprise Social Media often requires a process integration effort to
harvest online community and collaboration because the introduction of social media is likely to
change the way a company does business.

Take for example a client-focused online community, a private area for say 10,000 of your key
clients and prospects. You create a community and launch content, user generated content
opportunities, forums, polls, etc. all the usual suspects. You spend 6 months focused on this
beautiful thing, it launches, clients and prospects love it everyone is thrilled. This is a good thing.

Now, the typical enterprise is not stupid. They rose to be a sizable organization for a good reason!
Yet, somehow, because new media is, well new, companies often don't know what to do with the
assets created by the social media. Of course, they are celebrated, touted as valuable, and maybe a
few good case studies are written about how social media was able to help support a conference
business by bringing in additional enterprise attendees. Maybe it saved a critical client relationship,
but often the integration-point between social media initiatives and business process are not well
crafted in support of each other. They should be since it is likely the reason the social media project
was launched in the first place was to support operational outcomes, correct?

Examine where the business process gaps are within sales, marketing, and product development.
Also examine your social media efforts with a critical eye. Link the two processes, and create
repeated and repeatable measures so they can support each other. Find ways to make maximum use
of the data from and outcomes of social media throughout your organization. It's just a matter of
time before "new media" loses it "new" luster and you will be ahead of the curve if you build in
business process alignment now.

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The Sum of the Parts

There is an art and a science to measuring social media programs efficacy, and in the end, you
become what you measure. While virtually anything is measurable, the art is really in creating an
effective strategy to accomplish the business goals you endeavor to achieve.

Without an effective plan that clearly outlines key goals, the operations for achievement, staffing
needs, and a clear risk and mitigation strategy, it doesn‘t really matter what you measure because the
process to get their will likely be random and based on serendipity. Thus, we encourage you to think
carefully about what you hope to achieve through social media programs, choose judiciously from
the buffet of goals laid out from the various stakeholders within the organization, and focus clearly
on the tactical operations to get there.

The devil, as with most programs, is in the details and too often social media efforts become like
peewee soccer games where all players run at the ball without any mind to their strategic role on the
team. With clear goals and efficient execution, the measurement of social media campaigns is
exciting and the fruits of a well thought out social media program are your labors coming to life!

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The Art And Science Of Social Media Program Measurement

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