How much does a girl friend cost?

One of the most frequent questions I get at conferences is: How much does measurement cost?  And everytime I give a response, my answer gets a little longer.

The short answer is that it shoudl be a percentage of your budget. Doesn't it make sense to spend 10% of your budget to measure the other 90% to find out if its working? 

The slightly longer answer is of course "it depends."  It depends on your goals, because how you measure depends entirely on what your goals are. If your goal is awareness, you need surveys, if your goal is message communication you need content analysis. If your goal is outcomes, you need correlations and statististical analysis. How big a survey,  how much content you have to analyze and how many variables you need to analyze  depends on the size and nature of your audiences, the complexity of your campaign, and purpose of the research.

The right answer is the one I gave at PRSA Spokane yesterday which went something like this:  Today's communications are all about building enhancing and strengthening relationships. The notion that the you should be able to do that for free or for mnimal cost just because the technology is free is ludicrous. And of course 10% of $0.00 is still $0.00.  So lets take a big step backwards and look at the vaue of a good relationship.

Organizations with good relationships with their publics are known to have lower legal costs, greater renewals, lower recruitment costs, higher revenue per employee and shorter sales cycles. Customer loyalty has been shown to have a direct link to higher profits. All of which go straight to the bottom line. So if  you're worrying about being able to afford to measure that, you're clearly focusing on the wrong things. It's as if you're already in a relationship and you're trying to figure out the ROI of dating.

Comments

[Renee]

So basically measurement of social media is an investment on making sure you are building and strengthening effective relationships? If you are building and strengthening relationships then you will earn higher revenues with lower costs, essentially just by making sure what you’re doing is effective.

[www.facebook.com/profile.php?id=576583312]

Thanks for this!

Would you happen to have any favorite articles or links about the link between customer loyalty and higher profits? I feel this connection is key when explaining social media measurement and I need to learn more.

[Lynnelle]

Love this! Very succinct and common sense. Without a direct correlation between tweet & bottom line many business people are still suspect to give great credit (or budget) to Twitter (or the various other social media communication channels) - much less measure said channel. I see the same phenomena when talking about leadership training, team building or another effort to improve an intangible skill not reflected as a unique line item on the income statement.