Some time ago I posted an argument against seeking an ROI for Social Media tools. My point was that social media tools are a communication medium that are rapidly becoming ubiquitous: the need to justify the expense of implementation will be replaced by cost/return comparisons between competing technologies.
But here is an even more salient point for the independent worker: how many of us actually track and measure the impact of our current traditional marketing efforts?
For the home based business, independent professional, or soho worker marketing activities are usually a little more than an afterthought, and much less than a planned activity. We gravitate to the activites that we enjoy, and get results. We attend networking events, send notes or cards to our favorite clients, and publish a monthly newsletter that seldom meets deadline. Occasionally we will spring for an ad in a trade magazine, or a short PR campaign – especially if we know the person selling these services. These are all marketing activities, but we don’t measure their ROI. Why?
Because the ROI of measuring ROI doesn’t justify measuring it.
I read an article where Jim Collins dispels the idea that the difference between an entrepreneur and a corporate manager is a capacity for risk. He says, instead, that the entrepreneur has a higher tolerance for ambiguity. I agree.
Last week I had a conversation with a friend who used to practice law. She was explaining the methodology of case research: case management came down to an issue of risk management. What is known about this particular case, and what is still unknown? A $10,000 solution would posses more ambiguity than would a $30,000 solution.
This same principle applies to your marketing activities. See how these activities gradually increase in cost, and decrease in ambiguity:
- You can engage in an activity and intuitively know that you are getting results. For example, you spend 2 hours at a networking event and leave with the names of 3 potential clients, and a new vendor.
- You can invest in professional graphic design and printing of marketing collateral, perhaps creating a “press kit”. For a modest expense, you now have a basis of simple tracking on return. Send out 10 press kits, get 1 new deal. The ROI calculation here is fairly straight forward: Conversion rate (10%) x Value of a Deal divided by the cost of the collateral. The ambiguity lies in the fact that you are not likely to run multivariate tests to determine which mix of materials, colors, design, etc produce the best conversion rate. You go with a gut feeling on what you think will work.
- You can run a print mail campaign to a targeted market. Your campaign could include multiple versions of your mailer, with different tracking codes so you can optimize the conversion rate. This solution is going to be the most costly of these three, have the least ambiguity, and will likely take the least amount of your time.
So where does social media fit into this mix? Wherever you want it to fit. Free social media tools are proliferating across the web. An ecosystem of developers is producing value-added solutions that add functionality to the basic platforms, from blog site plug-ins to Twitter applications. Most of these solutions add incremental improvements and cost very little. On the other hand, some of these solutions are very complex, designed for enterprise-level clients, and carry a serious price tag.
Going back to my original post on the topic, I think that using social media tools for the independent worker is about staying relevant, not measuring ROI. Is there ambiguity? Yes. But that’s what you signed up for, right?
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