I found myself using the phrase Return on Influence last week in talking to a reporter about the value of corporate blogging. I didn't invent it. Heck, there's nothing new under the sun these days. See Useful Links below. And thanks to Valeria Maltoni for the nifty graphic.
But the term "Return on Influence" bears repeating and maybe I can give another twist to the concept. Bear with me while I think out loud.
Why should the ROI on business or corporate use of social media be defined as Return on Influence rather than Return on Investment?
Why is it Return on Influence?
Short answer: because the return is soft. The benefits of incorporating social media strategies into your marketing are real (and can no longer be ignored) but they're not normally measured in dollars. Like PR, you say? Yes and no.
Social media, which includes corporate blogging, is still so new for many marketers that it occupies a niche outside corporate PR or interactive marketing (the latter still a code phrase for online advertising or email marketing, neither of which is particularly interactive).
Second short answer (which ties in with the first)... because social media is a new phenomenon for which we are still developing metrics and measurement. There isn't agreement yet on what these metrics should be. Velocity? Engagement? Conversation index? Reach? Community? Some combination. Whatever you choose, it's hard to compute a dollar or numerical value.
I'll go into more detail on social media measurement (thanks, Jeremiah) in another post. For now, let's stick with the concept of Influence.
One more time... what is Social Media?
Social media has caught on in the past year as the phrase du jour because it neatly describes what's at the core of this phenomenon: connecting and sharing. It's the same kind of thing you do offline when you're having a good discussion with another person at a party. Note emphasis on the human.
If you're a company, a Fortune 500 or 1000 or even a good-sized SME, "connecting" may sound like a fine idea. Hey, let's connect with our customers. Let's get inside their heads and find out what they're really thinking, what they like and dislike, what they want.
Sharing, on the other hand, is a little scarier. Excuse me, you may be saying... you want us to share our products or services, or our intellectual capital with our customers? You mean offer it freely as opposed to sell it? Er, yes. That's pretty much the idea.
But no, not all of your stuff... just some of it. Companies do not need to reveal all, to strip naked on a corporate blog and spill secrets. But you do need to reveal enough information to make your customers feel like you're having a substantive two-way exchange (aka conversation) with them. And therein lies the nub of Return on Influence.
The Social Media Mindset comes first
The social media mindset means truly embracing the notion that your customers are worth listening to, that they are worthy co-creators (the two-way thing again) and that they may in fact trust and influence each other more than you can influence them.
Conclusion: Return on Influence is a two-way concept
So Return On Influence becomes, as I see it, a fluid concept. On one side, it's how much you as a company (a collection of individuals) can influence your customers' perception of your brand by sharing and listening.
On the flip side, it's how much you can get out of enabling and allowing your customers to influence you. Whether it's an idea for a new product or service (cf Dell's Ideastorm) or a new strategic direction.
'Nuff said. Thanks for letting me think aloud. I know there's more to say on this topic. Please feel free to add your thoughts below.
Useful Links on Social Media and Return on Influence
Robert Scoble on What is social media
Shel Holtz on Business Adoption of Social Media
Kami Huyse's del.icio.us links on measurement of social media
Tracking the Influence (white paper by Matt Toll and Jeremiah Owyang)
The new ROI by Paul Dunay
ROI is Social Media's New ROI by Joe Marchese
Return on Influence by Valeria Maltoni