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« The Social Organization & Womenomics | Main | The New Diplomats: Community Managers »

January 13, 2010

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Rhappe

Also - there is a much larger topic of how to model and measure behavioral dynamics... but that is a topic for a different post. The investment and returns on relationship and learning related initiatives is very off-set... and you can get at it through modeling and tracking but not in traditional modeling approaches. Much bigger topic.

David Meerman Scott

Yes, I did notice that many people seemed to miss the end part of my rant where I talked about things you can measure.

Here's a list that is a little longer than what was in the rant

Here are some things you can measure.

1. How many people are getting exposed to your ideas?

2. How many people are downloading your stuff?

3. How often are bloggers writing about you and your ideas?

4. (And what are those bloggers saying?)

5. Where are you appearing in search results for important phrases?

6. How many people are engaging with you and choosing to speak to you about your offerings?

7. How are sales going? Is the company reaching its goals?

Rhappe

Hi David -

I thought the measurement was the key nugget in your rant and felt like because your rant was amusing, people missed that so thank you for adding some more specifics to the measurement piece of it.

twitter.com/cselland

Great post Rachel - agree completely.

Here's where I believe there's a big difference between consumer marketers (i.e. those who do things like TV ads and billboards) trying to build broad brand awareness, and B-to-B marketers more focused on specific lead & demand generation. The former are more willing to tolerate and invest in marketing activities that 'can't be measured' than the latter. Much more.

In the latter case - which is primarily the world I come from and focus on - your points are particularly valid. As you say, if you're not measuring - you're running around aimlessly.

Good stuff.

BFchirpy

ROI or not ROI? Measure or not measure?

If only it was so simple. In practice, the choices are (a) don't measure, (b) measure, (c) measure by proxy.

Most things are only measurable by proxy. I don't mean this in any philosophical sense. I don't believe that there's a social science/MBA Uncertainty Principle. But most organisations don't have the resources to measure anything other than by proxy.

There's a common refrain from the ROI-heads along the lines of, "You can't afford NOT to measure - don't tell me about lack of resources." But they're talking as if financial or organisational resources are the only ones needed.

Measuring ROI is hard. Really hard. Social Science PhDs struggle with it. Most organisations lack the intellectual muscle to deal with it at all.

So they muddle along and try their best. David asked, "What's the ROI of measuring ROI?" This is a really interesting question. Because it's often negative. It takes a big intellect to work out the right metrics. But any dullard can see if you're faking. Employees and colleagues aren't dullards.

You aim for improvement and evidence-based practice and you get perverse incentives and compliance.

So, I'm with you. Nothing absolves you from measuring - all organisations have stakeholders and they all deserve evidence for successes and failures. But obviously bad measurement is worse than no measurement at all.

Lastly, I find people are oddly resistant to financial metrics (particularly in non-profit organisations where I do some of my work) because 'not everything can be boiled down to money'. But we've managed to create a society which is largely pretty good at price-discovery. Dollars are like goals - I think we (mostly) have a feel for what they mean.

Derek Slater

Great observation.

The field I write about (security) has the same problem - ROI (and EVA, and TCO, and every other measure) is tough. But metrics are the language of business, so you have to keep measuring while simultaneously hammering away to improve the methodologies.

Rhappe

Chris - Yes, it is partially a B2C/B2B issue but personally I think it is sometimes caused by a cultural resistance to wanting to know... but you are right because B2B has traditionally operated on smaller budgets, they've needed to make sure smaller budget items are accounted for more specifically.

Simon - you raise some excellent observations because there is a way to track almost everything but it is often either not cost effective to do so (really complex and costly) or as you said, it can introduce odd incentives if not thought through really well. Your observation about non-profits is particularly interesting. Regardless of being able to attribute dollar value to every outcome, organizations still have to decide where to invest resources so... articulating value in some way is important to help with decision-making regarding where the money/effort/resources go.

Derek - thanks for stopping by. I don't know much about the security field but sounds like a similar tension... measuring while not necessarily sure if it's exactly the right thing to measure.

BFchirpy

Late thought:

One glaring error in organisations' misplaced efforts/lack of effort in measuring ROI is even more pernicious.

Part of the issues that people have with stuff like Dave Allen's GTD framework is not necessarily that they can't organise their time. Or don't know how to prioritise. But that they don't have much clue about what they're actually aiming to do.

ROI efforts in organisations are frequently aimed at the effectiveness of a process and not the intended results. People have, say, an HR department because everybody else has an HR department. Ditto classroom training, internal comms team and, coming soon, SoMe team.

One team of Senior Managers I worked with were looking for advice on how to measure the effectiveness of a 'restructuring'. None of them could remember what the purpose of the restructuring was. And any attempt by me to divine this was seen as crypto-mysticism.

Eric Goldman

Rachel thanks for a great post (and to David for his contribution). It has sparked some interesting comments and although the essence of what has been said is right (ROI is difficult to measure), the reality is that with the right tools and an appropriate methodology, one can measure it. The right tools, to my Sales and Marketing Automation (SAMA) bigot's mind, begin with an SAMA solution. Admittedly, this solution will only apply to online marketing activities, although there are ways you can bring some of your offline events like trade shows into this online world. But if you are now switching to Inbound Marketing (online Web 2.0 approaches), then a SAMA solution will:
1) Capture analytics on every facet of a website's operation, including all you need for your ROI calculation.
2) Automatically feed the leads into your Customer Relationship Management system (like Salesforce.com), when they reach an appropriate Grade and Score. Or, in other words, when they have been nurtured from a cold lead to a hot prospect. And in your CRM you can assign the opportunity value realized by the lead, the value of which can be tracked back to the campaign or event which triggered it.
3) Provide ways to sort through data regarding the precise origin of a lead (even those with a delay between seeing the campaign piece (blog, tweet or other SMM "event", or PPC ad or other outlet).
To answer the question of how to do all this we have written a few blogs - readers may find these approaches useful. They are not 100% accurate (that does indeed become very complex very quickly). But each approach yields a good approximation of ROI and because the whole methodology is easy to use, the approaches are proving useful. Here are the links:
1) How to calculate the ROI of your website as a whole: http://bit.ly/6bFSvs
2) A list of the 10 best free ROI calculators on the web: http://bit.ly/7fwBkF
3) How to build your own ROI calculator (perhaps for your social media campaign): http://bit.ly/6IGZQh

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