There a lot of conversations (cf the viral garden and My 2 cents) going on about the ROI of conversational marketing. Even if almost everybody agrees with the fact that conversational marketing requires an appropriate metric, there are very few concrete proposals. This inspires me a few thoughts:
– We are very demanding about our media: besides watching the evolution of your sales figures or setting up an ad hoc impact study, there are no means to evaluate any kind of above the line campaign. How would you calculate the ROI of a sponsoring action? How would you evaluate the return of giving away expensive goodies to your business partners?
– Conversational marketing shouldn’t be per se considered as advertising budget: It’s symptomatic to see the definition of advertising on wikipedia “Advertising is paid and/or sometimes free communication through a medium in which the sponsor is identified and the message is controlled”. This definition doesn’t really apply for the conversation. Couldn’t we regard conversational marketing as market intelligence and customer service?
– Let’s assume, we need to prove a direct return anyway: I would then use the Net Promoter Score (NPS) that gained a lot of popularity the last years. Even if it doesn’t measure the impact of conversation, this metric is full of learnings for the believers in conversational marketing. In an interview to CEO forum, Fred Reichheld (Bain & Company) stated about the NPS:
(The NPS) means customer feedback measures are used to drive internal priorities just as much as traditional profit and accounting measures. That’s a major change: in information systems, in the culture and behaviours of the company, and in the skills and training front-line employees need. It also has some very strategic implications, for example in how you segment your customer base and how you invest in serving those segments. It changes the whole rhythm of your business
In another interview, Fred Reichheld gives an example of the impact on a company profits:
high scores are a strong predictor of economic success. HomeBanc, a mortgage company in Atlanta, has a whopping NPS score of 84 percent. As might be expected from this score, HomeBanc’s productivity levels average 60 percent higher than industry standards. The firm’s growth exceeded 25% each year for the past decade – more than doubling the industry rate
This makes me believe that instead of trying to measure a direct return on the conversation, we should focus on proving that sound conversational marketing has an impact on customer satisfaction and that customer satisfaction impacts companies profits.
Bad idea, indeed 
May 30, 2007 at 4:47 pm |
“…instead of trying to measure a direct return on the conversation, we should focus on proving that sound conversational marketing has an impact on customer satisfaction and that customer satisfaction impacts companies profits.”
I think this is the key. To be honest, I doubt we’ll ever formulate an exact way to measure the ROI of social media (though it doesn’t hurt to try).
But like you said, we should think of it as a contributor. Social media is not the “be all and end all” of marketing. It adds to the package. Let’s find out how that addition affects the rest of our efforts.
May 30, 2007 at 6:35 pm |
Philippe, you raise a lot of good questions about the conversation going on about social media and ROI — is it even the “right” conversation? I work for a consulting firm that works with large organizations on culture change, particularly focusing on leveraging diversity and building inclusion. But time and time again, organizational resistance to change plays out in a metrics conversation…I think the same thing is happening in marketing departments everywhere. How much of this ROI conversation is about people feeling threatened by something new and different or just not wanting things to change. Anyhow, this is just to say that I see the same dynamics playing out in other fields and encourage the collective “you” to keep fighting the good fight. 🙂
Ryan, I think you are right about it being part of a package — which makes it harder to have discrete measurement processes. For many of the out-loud comments about “what’s the ROI?” are unspoken “this is a waste of time” comments. To me, the conversation needs to be “can we get on the same page about whether or not this even has value?” Once everyone is on that page, THEN you can have a meaningful conversation on ROI. In my opinion, anyhow. 🙂
May 30, 2007 at 8:21 pm |
Ryan,
I guess that like the scientists, marketers would like to discover the TOE (theory of everything – http://en.wikipedia.org/wiki/Theory_of_everything -). It’s the graal of every discipline. I doubt the holy graal can be found. The beauty of digital marketing is that we are still searching (and progressing) while a lot of traditional marketers just rely on good old (often unproven) rules
Tara,
You seem to have a really great job! and I really like this idea that metrics are sometimes a way to avoid change and innovation. It’s a very inspiring thought.
May 31, 2007 at 2:30 am |
Phillippe –sorry about the missing L in your name above!
About that Theory of Everything…
May 31, 2007 at 5:55 am |
The long tail is the TOE! of course! 😉
(there was no missing L :))
May 31, 2007 at 5:56 am |
Great analysis Phillipe and sound comments. You say “sound conversational marketing has an impact on customer satisfaction and that customer satisfaction impacts companies profits” – no one can argue that point. And the search for the grail? Its the ultimate search 🙂
May 31, 2007 at 7:14 pm |
That’s what I get for trying to read little sans serif font at 1:30 in the morning. Eventually I’ll learn my lesson.
May 31, 2007 at 7:59 pm |
I wrote Graal instead of Grail :s (and I have no font size excuse)
June 1, 2007 at 12:34 pm |
Another way to think about measuring conversations is to measure involvement. Involvement is the prerequisite to action, whether that action is changing perceptions or behavior, asking for more information, or buying. So maybe –if we have to show measures — we look at how long people spend listening to a podcast, how many questions are asked during a meeting or presentation, how many comments are made on a blog post, how much interaction there is during a sales situation (the more interaction and conversational it is, the more engaged the prospect is — vs. the rep just telling and selling.
June 1, 2007 at 6:23 pm |
How to Tell Stories, 2.0
Lots of synchronicity out there on the subject of Story: Valeria Maltoni’s recent post on Elevating the Conversation on Stories is well worth your time. I’ve been wrestling with the notion of Story as a definition or motivation for all
June 1, 2007 at 8:50 pm |
Hello Lois,
I agree that time will play a much bigger role in the future.
The engagement metrics you propose make a lot of sense. I think some of them will be a mix of quantity (number of topics) and quality (are they on topic, do they express interest or do they just ask for clarification?)
June 6, 2007 at 8:16 am |
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