How do you measure the effect of a conversation?
Until now, and still continuing in most contact centers, Customer Service has been measured on the efficiency of its performance: number of calls per hour, times it takes to answer a question, time to answer an email, etc.
Organizations that moved to managing experiences migrated their metrics to effectiveness metrics: customer satisfaction, customer loyalty, and an effective delivery of the proper answer on time, not just the first time.
How do you measure the success of Social Media events in CRM? Is it about efficiency (answering as many twitter interaction as possible, for example), or about effectiveness (making sure the client gets that they need)?
The answer lies in the purpose of implementing Social Media in the organization.
Organizations that did things right actually have a strategic reason for adopting it. They also know that it should be tied to a corporate strategy with its own metrics.
Social Media will affect those corporate metrics, and that effect is what you must measure.
How do you measure that effect? By tracking metrics over time, detailing what changes were made, and the change in results.
A customer is unlikely to stop being a customer based on a single interaction. Customer satisfaction, loyalty, and commitment build over a lifetime of interactions between the customer and the organization (see this post for details). This change in these lifetime of interactions is what justifies the addition of social media to CRM – not the result of any one specific interaction.
Social Media is unlikely to return value or generate an ROI on just one channel or one interaction.
Plan your social media strategy across all the social channels, tie the results to a long-term analysis and make sure you tie it back to your corporate strategy.
Thoughts?
The basics of any business relationship is you are going to be do it with people you know, like and trust. With out those fundamentals then it fails. I think you have to be grounded with a Social Marketing strategy because people need to know it is a marathon and not a sprint. Plus, the best relationships are built over a long period of time.
Esteban, good points as always.
We agree that individual social media touchpoints will not shift customer opinion to a large extent. There are, of course, rare exceptions when a particularly bad experience could turn the customer off enough to stop working with a company, but we will ignore that for the sake of this discussion.
In order to to gain up-front executive buy-in for social media we must be able to define two things:
- Expected ROI over time.
- Key metrics to be monitored to ensure that you are achieving the promised ROI.
I feel that both are practical in our new world of Social CRM, however. As we create these new capabilities I envision building in solutions like:
- Tracking the number of touchpoints with a customer, broken down by social, email, phone, in person.
- Auditing customer behavior before and after said touch points.
If these interactions are successful we will be able to measure success by:
- Customer purchase history over time (Revenue).
- Number of support issues raised (Cost).
We are a long way from a real formula that demonstrates ROI, but it is not out of the question. Most importantly, we have the ability to define a real ROI, with real metrics to back it. Let’s do this right.
John Moore
http://twitter.com/JohnFMoore
@JohnMoore You got it right!! it is a mutli-channel strategy of which the social channel is a part.. There is no such thing as Social Media ROI. ROI or profit depends on so many factors (that are all linked) that it is impossible to calculate it to one interaction or even one channel (well explained by Esteban)
Even if you implement Social Media / Social CRM and you see loyalty increase (by increased re-purchase etc) it will be impossible to relate it to that one channel. New products, new processes, new vendors, new offers, even new customers and new employees all add into the total bucket of ROI.
And: this doesn’t mean you should not embark upon this social media road. You probably should. Just make sure it fits into a well thought-through strategy of building awesome
customer experiences. Because we do know those can make a difference.
Maybe an idea to track back (please follow my thoughts per bullet.. and shoot):
- customer experiences contribute to loyalty when they add value to customers in a sense that the experience makes things easier, costs less customer effort and/or provides delight.. (..anymore?)
- if, or when, we can tie increased “ease of use” or decreased customer (perceived) “effort” – with regard to a specific customer experience – to a specific channel (social media in this case)
- and we can than also tie customers – that “travelled” through that specific experience and through the social media channel – to higher repurchasing behaviour or increased product/service penetration -
– compared to those customers who did not have that experience through that specific channel..
- could we than have tracked it back to the source?
Yes, yes, yes. That is the point that I am trying to make,albeit not as clearly as you have.
By segmenting audiences and utilizing basic A/B testing techniques you can begin to measure the real ROI. While it is likely impractical to perform true A/B testing across your entire customer base you can look at sample sets of customers to determine the value of any of your communication channels, social, or otherwise.
John
And it is probably best to perform testing across several segmentations:
- Main segment: user vs non-user
- Sub-segmentation for each of the main segments across spend, geography, product etc..
Maybe we can open an add on our blogs:
wanted: – forward thinking client to perform social media impact on loyalty/ROI testing -
Then we also have our own ROI
Jamie,
Thanks for the comment. I only take exception to using Social Marketing as a strategy. I think you need to go beyond, well beyond, just marketing or sales or customer service. You have to do something at a higher level, like at a CRM for front office and ERP for back office, to succeed. Else, you run the risk of having conflicting strategies and moves between the different departments.
I agree with your comment on trust and like. Alas, I don’t think we are at that level. We know who we are doing business with, it would be hard to make the case to target and attract customers via social media – at least I have not seen it yet, so we are looking at how these relationships get affected with current customers — which we will assume already like us.
Thanks
Thanks Esteban
John,
There are always exceptions on both sides, good and bad, that have turned relationships in either direction. But that is not the mass of your relationships. One fluke, or ten, does not make policy.
I agree with you, we must track each channel interaction. However, that is not the metric of success for any channel. As we learned in the past by incorporating low-adoption channels as SMS or Chat (in some instances) it is not the volume that qualifies the success. Volume can be used for traditional ROI calculations (which frankly, I don’t see them as applying here — but that is fodder for many more posts) where you can calculate you costs per interaction, and then make assumptions about other channel avoidance, etc. If you need to calculate ROI, you can always use those tangible costs and benefits.
There is no recognized measure of success for companies **relying** in Social Media I have been able to find. Dell selling computers via twitter — sure, they could have done the exact same thing with emails (probably better with pictures and more details). Comcast servicing customers? Their ACSI score remains as “good” as it was before and their churn ratio (supposedly) has not changed. We can look at all the cases which have been cited lately and find out that there is no calculated ROI behind it. They just went along with a new channel and got good results. Alas, the people that failed are not mentioned.
I think we are still early enough in this new media that we are still seeing what happens, what are the successes, etc. There is still long way to go. You got the right idea with the metrics you mention, I am just not sure – yet – we have the ability to track and manage that. And that was the idea behind my post — it is about being to track it back. All the way to the origin.
Thanks
Thanks Esteban
Wim,
Thanks for a great comment! I totally agree with what you are saying: we cannot – yet – track it back to source. But, we should. That is going to be the measure of success for Social Media in CRM. We already did the same with other channels as we brought them in: email, chat, etc. We focused only on justifying that specific instance: if we implement chat we can reduce contacts by phone by 10% (or whatever number).
This time is different. Since the channel does not lend itself (primarily) to complete transactions — at least not on one single interaction — then we should focus on the overall impact on the corporate strategy. That is what I was trying to say – thanks for complementing that message.
I also noticed the wink on awesome experiences. Thanks for that
Thanks Esteban
@Wim,
bullet by bullet, as you requested.
- yes, that is the value of loyalty. easier, cheaper, better, etc. it is about having to spend less effort wowing the customer, although that does not mean take them for granted.
- this is the part where it gets tricky. the idea of tying ti back, in my experience, has been to be able to track a single interaction from end-to-end in the organization’s systems. and we don’t, in most cases, have the ability to do that. we can track, in some cases across channels, but we don’t have the ability to track across sessions or for more than one interaction. forget social crm – if we can track intent of interaction, that is the end-of-the-rainbow as far as CRM and metrics is concerned.
- that is iffy, but we can probably do that with assumptions. i think the key is to make sure those assumptions get renewed time and time again, and that they are aligned with our biz results. that is what makes it iffy.
- yes, yes, and yes. that is the key to this whole thing. being able to compare to non-tracked ones is far more difficult and hard to do. this is the key to making the measurement work — and i said that in the post somewhere — being able to compare to results with and without tracking. great point you made.
- that is the golden question… got an answer?
@John,
I strongly agree with your point on segmenting, but are we talking about the same segmentation? The one that I have seen and that I use is segmentation along the lines of geography, product, spending level, loyalty level, etc. Are you talking about segmenting between users and non-users of SocMed?
That would be very interesting to see… very interesting.
Great comment….
Yes, between the users and non-users. We would need to break it down by tranditional demographics within these target groups to get closer to a fair comparison.
However, if we segment this way we have a shot at truly understanding the effects of social media on a company’s bottom line.
John
Great idea! I never tried it that way, but then again I usually used segmentation for feedback and loyalty management, not for metrics.
I like that idea… will find a guinea pig — er, evolutionary client that wants to try it.
Thanks Esteban
When you are accepting the Award for Great Advancements in Social Media remember this moment of inspiration.
John
Of course, I will thank all the little people that helped me get there…
Thanks Esteban
that is an interesting add-on. I always looked at Segmentation as a marketing / sales endeavor. Some of it trickled into services – once in a while, but never saw much of it.
I like the idea of doing ROI by segement. Even more when you go beyond user / non-user
Thanks.