One of the few things we can all agree on is that the last two years of economic meltdown have changed the way much of business does business forever. Whether you're in publishing, politics, travel, television, health care, technology or almost any other industry, you've seen your business model change. Some of the change has come as a result of the weak economy and low unemployment; still more has come from the social media revolution that has changed forever how organizations relate to their publics.
We spent much of 2009 just trying to figure out this brave new marketing world, and now it seems as if we're spending most of 2010 figuring out how to measure it. In the last couple of years, my little world of media measurement and analysis has exploded from fewer than a dozen players to over 200 at last count. The problem is that what they measure may not have relevance in today's business environment.
First I need to digress a bit. I sit on the board of directors of Exeter Health Resources, an innovative, non-profit regional health care network that includes a hospital, hospice, fitness center and physicians offices. Given the changing nature of health care these days, its board meetings are almost always a mini-business school exercise in planning and adaptation.
Which gets us back to this blog post. As much contention as there may be about healthcare today, pretty much everyone agrees that what caused the mess we are now in is the way health care delivery is measured and compensated -- i.e. volume. Doctors and hospitals get paid by insurance companies for activities and procedures not on outcomes i.e. better health. Rather than reward them for improved health of patients, insurance company pay doctors more based on the more stuff they do. So the more they do, the more money they make.
If we are ever going to lower costs and improve outcomes, we need to change the fundamental metrics under which the industry operates. It's not easy. Lots of smart people are devoting a great deal of time trying to figure out how to shift from volume based measures to quality & results. And, as much as they all acknowledge that the system is doomed without change, it doesn't make the process any easier. But the health care industry is not alone in this struggle to move beyond volume metrics to a more holistsic system.
Which brings us back to how social media is changing not just the measurement industry, but all organizations. As it happens, I was privileged to spend part of last week at Dell's Social Media and Communities (SMaC) conference in Austin Texas. Here's a great description by Shel Holtz
Here's another good wrap up from Chuck Hemann. Once again I was surrounded by super smart people, including one of my all time heroes Michael Dell
He was, I think, 18 and I was 32 when I occupied a trade show booth across from him at Comdex. My company, Lotus Development, was just hitting its peak, and this kid with his just-in-time, built-on-demand computer idea was the coolest new thing to hit the computer industry in a very long time. His revolutionary ideas changed the computer industry forever, and last week's meeting was a good indication that they may just do it again.
Like any other conference of late, lots of the discussion centered around measurement. Like healthcare, computer companies have always measured success in terms of volume of activity. Sales, marketing, hiring and pricing decisions were all made based on how many units you sold or needed to sell. And there appeared to be a fairly straight line between marketing and sales and units sold. Years of data informed marketers that if you spent X, reached Y million eyeballs, Z many people would buy your product.
The problem with that premise is that it doesn't (and frankly never did) take into account the enormous, unfettered world that we now call social media conversations, but which used to be known as word of mouth, or the water cooler, or the back fence, or forums or bulletin boards or all of the above. It has always been uncontrollable and immeasurable. so marketers pretty much ignored it when they did their calculations. Now that social media phenomenon has sent its tentacles into every part of the marketplace, it can no longer be ignored. Which brings us back to the need to change the metrics.
Organizations now must factor relationships and reputation into those metrics. We've known for years that organizations only do business with the permission of their publics (i.e. customers, communities, government regulators, etc.) It's just never been as easy to take that permission away. Boycotts and bans can be started with a few key strokes. Rather than leading to a sale, that direct mail piece or email blast that used to sell product, may actually deter people from buying your product because it isn't eco friendly, or becomes the butt of a joke, or is linked to a cause people don't believe in.
Let's be clear about another thing: Relationships are not "squishy" measures. There is tons of great data and numerous case studies that shows that good relationships shorten sales cycles, speed up adoption of new products, increase efficiency, reduce turnover, lower recruitment costs, eliminate or reduce law suits and legal fees – all of which adds up to a better bottom line.
The need and ability to measure relationships is nothing new. Jim Grunig was talking about it more than two decades ago. I wrote my book on it three years ago.
The difference today is that it's no longer optional. In order to survive, organizations need to understand not just the volume of stuff they do and sell, but the social context in which they sell. It's not that companies that try to spam their way to social media success won't "sell stuff," but ultimately they will turn the market against them. Organizations need understand not just whether they're "getting exposure" but whether that exposure is positioning them as a good neighbor, a responsible business or just someone you like to do business with. United certainly got lots of exposure from Dave Carroll's United Breaks Guitars videos, but it certainly didn't sell many tickets.
The bottom line, measurement wise, is that social media requires that organizations measure not just volume, dollars and cents, but the quality and value delivered by their relationships.Which is what I'm calling the new combined metrics Revenuetionship Mmeasuremnt.