According to a new report from global strategy and consulting group Bain & Company, early adopters of social media have been able to capture real economic value from their activities. These social business pioneers were among the first to implement social media into their organizations on a large scale investing anywhere from $750,000 to $10,000,000 a year in social programs.  As a result, they have slowly but surely answered the popular social media question of ROI.

So, what is the ROI?

Bain & Co. report that a key indicator of social media return is customer loyalty. Customers who engage with companies over social media typically spend 20% – 40% more with those companies than other customers. Additionally, Bain & Co. also found that customers who engage with brands via social media demonstrate a deeper emotional commitment to the companies. Social media is quickly becoming a cornerstone for companies to engage with and retain their customers for both advocacy and customer service.

The strategy of early adopters

Contrary to popular belief, social media doesn’t apply to the ‘Field of Dreams’ principle, building it is not enough. You need to consistently provide value to your customers if you expect them to engage and interact with your brand.

Bain & Co. outlines a few key strategies that helped these social businesses take off:

1. Social media objectives should be matched to existing business objectives
2. Know your key customers, and target your efforts with them in mind
3. Build a cross-functional social media team to lead social operations
4. Monitor progress and measure results
5. Keep social media initiatives as nimble as possible, sometimes directions change

Key Takeaways

There are a few key learnings from this for any business looking to integrate their social activities and become a more organized and efficient social business.

1. It’s All About the Data – Without comprehensive data that can go across all facets of the organization, costs will always be higher and results will never be consistent.
2. Customers are Everywhere – Meeting customer appetite for brand response has extended past the reach of an owned Twitter or Facebook account. Customers are discussing your brand on their own walls, forums, and blogs.
3. Engagement Must be Scalable – Expect volumes of discussion and brand mentions to rise exponentially on social media. With this, the human cost of data sifting to uncover issues will grow without the proper infrastructure.

What should businesses do? Prepare themselves with better technology to capture more data from more sources and triage to the appropriate individuals and units.

A recent Forrester Research report by Josh Bernoff (co-author of Groundswell) states that we have moved from the Information Age to the Age of the Customer, where empowered customers are disrupting every industry. Josh states in his report that successful companies must become customer obsessed, mastering deep understanding and engagement with customers. At ListenLogic, we see examples of what Josh says occur every day. A recent CNN article looks at one dimension of the Age of The Customer, clearly illustrating the need for real-time listening and understanding of social customer data.

Social Media has changed business in many ways. Mobile devices, smartphones and iPads are now constant companions to over one billion consumers and they use them constantly to consume a constant stream of professional and social media data. Mobile consumers publish a constant stream of thoughts, opinions, reviews, recommendations, praises and complaints.

There are three key drivers that power the Amplification of Social Media in the Age of the Customer that brands need to understand:

• The average American has 634 ties in their social network (Pew http://bit.ly/lJdBPI). If a positive or negative issue resonates, it will travel from network to network and grow quickly and exponentially.
• The Press is always listening to social media, they have an insatiable appetite for controversy and publish 24/7. The bigger the brand and more negative the story, the more likely the Press will follow.
• Activists and individuals have learned how to “crank up” the Amplification to increase amount and velocity of spread. People have learned that what you post, where you post, and how you post makes a big difference. Carefully crafted messages posted to influential sites and posted to generally easy to monitor sites using company, brand, product, and stock symbol keywords and hashtags will be picked up quickly.

The most important thing for big brands to understand is that customer complaints amplified by social media will affect your brand and every brand with increasing frequency. It is a reality of the Age of the Customer. Some complaints will be false and intentionally malicious, some routine and minor, and a few will be embarrassing and damaging to your reputation and stock price. The response to these complaints can range from ignoring, to correcting, to apologizing. In every case a companies’ ability to quickly identify, understand, and respond appropriately is the key to minimizing the social spread and impact.

We hope you find the commentary and article helpful. Please feel free to contact me ListenLogic with any questions you may have. We would be happy to provide you and your team with an educational update on Best Practices Social for CRM and Social Reputation Management in the Age of the Customer.

As worldwide social media use continues to rise, social media budgets are rising as well. More spending means more responsibility and more expected return on investment. ROI has always been in question when spending on social media, but even more in today’s economy. According to eMarketer establishing measurements for ROI tops the list of social strategy goals in 2011.

How do we measure social media ROI and what strategies help us reach that return? That question is answered differently by brands, small businesses, and agencies.  By looking at how we use social media, we can build some basic metrics for measurement: Revenue, Knowledge, Protection.

Revenue: Social Commerce and Location-Based Services

Just look at how social commerce grew in 2010 and it’s hard to dispute how social media can directly provide ROI and even become an integral part of your business. Most importantly, you’ll recognize social commerce (purchasing direct from social media platforms) can directly reflect how well your brand engages consumers and positions itself on social media.  This proves that revenue can now be a key indicator of an effective campaign, even in social media.

Location-based services continue to prove a great tool for driving in-store traffic that may otherwise walk right by, and if they are utilizing a check-in deal/coupon, tracking those sales becomes much simpler than measuring brand awareness through social media.

Knowledge: Consumer Insights and Competitive Intelligence

According to a MarketingProfs study, 80% of CMO’s reported customer suggestions help shape product decisions. This means that gaining a better understanding of your consumers, competitors and your market is one of the safest bets for social media ROI.

By listening to your consumers through social media you can gain insight into their wants and needs, informing your product innovation and marketing campaigns. Through listening to your industry broadly, you can uncover industry trends as well as glean an immense amount of competitive intelligence.

Leveraging social media for market research is often less costly than traditional market research.  Additionally, the leveraging identifies shifts in trends earlier, and can span across the entire enterprise providing a return on investment all departments can see.

Protection: Brand Monitoring and Threat Awareness

Brand monitoring continues to top the list of must-haves for social media strategists in 2011, but is it enough? Having a brand monitoring dashboard is essential for brands, but does it solve a problem if no one is looking at it?  There is no ROI in data, it’s all in how you use it. Having the expert manpower and a sound brand monitoring & threat tracking strategy is just as important as the technology behind it.

What should you be looking for? Customer complaints, mentions in online and news media, employee activity, and of course videos in reference to the brand. We all know how fast news in social media can spread and if you’re not actively monitoring your brand, there’s a good chance that a large portion of your customers will be aware of an incident before you are. Don’t just get a dashboard, develop a brand monitoring and threat tracking strategy to actively monitor your brand.

Where are you searching for ROI when it comes to social media? Is it all about building brand awareness or does revenue reign supreme now that monetizing social media is becoming more achievable?

With 2010 quickly winding down, it’s time to look ahead at what to expect in social media in 2011.

Social Media Trends to Watch in 2011

1. Location-Based Services
   There’s no denying location-based services such as foursquare and gowalla are impacting social media marketing. Whether it’s providing a better customer experience or offering up highly targeted in-store deals, ‘check-in’ services provide a timely way to drive revenue with a highly targeted audience that’s never been available before.
2. Consumer insights through social media emerges from brand monitoring
   While brand monitoring remains important, brand marketers are listening to online consumer conversations to better understand consumer mindsets. Whether it’s to drive product innovation or shape marketing messages, social market research has emerged from brand monitoring as it provides deep consumer insights and market intelligence that compliments traditional market research.  Social intelligence is in, social media monitoring is out.
3. Social Shopping
   Online and in-store shopping has become social and it’s only going to continue in 2011. Brands are beginning to leverage social commerce by providing apps that enable users to share purchases with their friends.  It makes sense for retail brands to integrate social media and move beyond coupons.
4. Consumers become more selective with content
   Twitter and Facebook social streams have filled up, there’s simply too much content.  Consumers are now trying to organize their streams.  We see sites like Paper.li popping up (ex: SocialNerdia on PaperLi) that provide a ‘newspaper-like’ organized view of their social media streams.  This means marketers now need to create high-value content that can get filtered to the second level of consumers’ social streams.

Technology remains the driving force and will continue to shape how marketers use social media.  Regardless of your participation with social media, 2011 is likely to bring change to the way you engage, measure, or strategize.

What other trends do you see emerging in 2011?

When it comes to social media, determining sentiment isn’t as clean and straightforward as it is in a journal or newspaper. In social media people write like they speak. This means heavy uses of slang, shorthand sentences and words, poor grammar, idioms, and industry/brand/regional specific dialect.  There is a big difference between automated Generic Sentiment analysis and Adaptive Sentiment™ analysis and how it relates to Social Media Monitoring.

Generic Sentiment Analysis

Almost every 1st Generation Social Media Monitoring tool uses generic sentiment analysis algorithms with a majority using the same outsourced technology company to do so. This technology is based on understanding sentiment from proper sentence structures from a textbook or newspaper article. If it says “good, delicious, fast” it’s going to be positive. If it says “gross, disgusting, sick, slow”, it’s going to be negative.  Generic Sentiment analysis is an approach that just doesn’t lend itself to social media and all of its informal communications and industry contexts.  Because of the language nuances and industry contexts, Generic Sentiment analysis typically produces accuracy results in the 50%-65% range, sometime much lower depending on the industry topic.  That’s “flip of the coin” accuracy.

Adaptive Sentiment™ Analysis

Our product, RESONATE, uses automated Adaptive Sentiment™.  Adaptive Sentiment is our patent pending technology that incorporates machine-learning and human feedback to fine-tune sentiment algorithms and continuously LEARN the unique language of your brand or product within social media.  The language and medium for every brand is different, which means the words that mean positive, neutral, or negative will also be different.

Examples:

For an electronics manufacturer, a product seen as “Sick”, “Nuts”, “Dope”, “Crazy”, or even “The Bomb” is a good thing, it’s positive.  Using Generic Sentiment, these words are typically an indication of something very wrong, but it depends on the context and industry.  Context and meaning changes from product to product, brand to brand, and industry to industry. Another example from one of our clients, the words “nom nom nom” are meaningless, unless they’re used in the food industry, where “nom nom nom” means “delicious.” Generic off-the-shelf sentiment analysis would score this typically as a neutral comment.

What does this mean for your brand?

If you’re running a social media monitoring campaign it’s critical to ACCURATELY know what people are saying about your brand, market and competitors.  Adaptive Sentiment technology LEARNS your brand and the unique language used by your consumers.  It learns that “nom, nom, nom” is good if you’re in the food industry, and “leaking” is bad if you’re in the plastic bag industry. Your brand is accurately measured and the algorithms constantly fine-tune themselves with human feedback as opposed to the generic model which simply runs a basic sentiment algorithm and never learns.  Because of its continuous learning intelligence, Adaptive Sentiment delivers sentiment accuracy in the 90% range vs 50%-65% for Generic Sentiment.

At ListenLogic, we service each client with a dedicated analyst that custom builds your Adaptive Sentiment models and provides daily optimization of your account to deliver highly accurate brand sentiment in real-time.  We help your organization identify new threats and opportunities each business day. Social media monitoring is a powerful way to gain insight into your business, but if the information you’re receiving isn’t accurate you’re wasting the effort.

See it for yourself

If you’d like to take a demo and see how our enterprise listening solution can better serve your brand or clients, contact us today and request a demo.