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So you’d expect them to approach social media from radically different angles. But as Olivier Blanchard explained at Wednesday’s Buzz 2010 event, which SmartBrief helped organize, the two kinds of organizations certainly have their differences, yet the ways they approach social media have more in common with each other than you might think.

Both kinds of organizations can use social-media tools to improve their human resources and public relations operations, he noted in his presentation:

• Social-media tools can lead to better hires and can help organizations make sure their workers represent the brand well online.
• Social media is a vital reputation-management tool, especially during a crisis.
• Social media helps organizations explain to the public why their product, service or mission is important.

One difference between the two kinds of organizations is whether they view the people they’re trying to reach as customers or  members, he added:

• Businesses want to establish a brand that customers trust. Nonprofits still need members to have trust in the organization, but they also want to build member involvement in whatever cause the organization has as its nonmonetary goal.
• Customer service takes on an extra dimension, as well. While nonprofits want the same kinds of support and feedback that business customers expect, they also need to feel a deeper connection, with more kinds of engagement.

The biggest difference between businesses and nonprofits is ultimately their goals. Both kinds of organizations need to worry about money — but for most businesses, profits are an end point, whereas the money a nonprofit brings in has to support some other goal. But Blanchard argues that these different goals shouldn’t change the way an organization thinks about return on investment.

Businesses must make sure their social-media efforts raise or save more money than they spend. Nonprofits need to do this, too, he notes, even though money is secondary to those organizations’ primary goal. Nonprofits need to resist the temptation to try to assign arbitrary monetary figures to actions, such as getting a member to write to their congressional representative.

Instead, nonprofits need to calculate the ROI of their social-media presence and use the money they’re bringing in or saving to accomplish those goals. Blanchard recommends nonprofits get around this by starting with their ultimate goal and planning backwards.  Start by thinking of your nonfinancial objective, then ask how much money you’ll need to support that objective, and then design your social-media efforts in support of those financial goals. Identify exactly how your social-media presence will lead you to those goals, he said, and then set clear metrics for success at every step along the way.

Image credit: raalves, via iStockphoto

If you missed the Buzz2010 series of events on social media for associations, recordings have been made of all three events.  Both the June 16 session on open leadership and July 20 session on social media risk are available right now.  The  August 18 session on social-media ROI will be available on Sept. 1.  Click here for more details.

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Olivier Blanchard is perhaps the most sought-after expert for those looking to connect the dots between social media and return-on-investment. Not only are we lucky enough to have him on our SmartBrief on Social Media Advisory Board, Olivier is sending off the Buzz 2010 Summer Series with a serious exclamation point. Before we introduce him to the association and nonprofit world here in D.C. on Wednesday, we wanted to throw some questions at him for the greater good.

The chatter around ROI seems to be as loud as ever. What would you attribute this to? Are we at a pivotal moment for business proving value for social media activities?

The chatter around social-media ROI is as strong as ever for two reasons: The first is simply because ROI [points to] one of the most important questions an organization can ask before green-lighting a social-media program: I could spend this budget somewhere else — Why should I spend it on social media? Before any other questions can be asked, you have to start with “why.”

The second is that most social-media “experts” seem incapable of a) being able to define ROI … and b) plug social media into a [profit-and-loss statement] and actual business objectives. Most [social-media marketers], having no true management background, they simply don’t understand how to tie social-media measurement and performance to business measurement and performance. This lack of business-management experience is a major problem in a field where everyone seems to have become an “expert” overnight.

As long as these so called “experts” fail to answer the ROI question, the chatter will continue. Ironically, the question can be answered in about three minutes. All it takes is someone on the social-media side of the table who understands how to plug new communications into a business from the C-suite’s perspective.

Have you noticed a recurring point where businesses and organizations decide to get serious about applying ROI to social activities? Is it based on experience, resources allocated or both?

Every organization is different. Some want to establish upfront measurement practices that include ROI from the very start. These are organizations with a specific focus or clear goals. ROI is based on accomplishing those goals. The program won’t get the go-ahead until every “t” has been crossed.

Others don’t get around to asking about ROI until 6 to 18 months after a program has begun and budgets need to be reviewed. Trust me, when 10% of your group’s budget is being cut, you start asking hard questions. Social-media programs not clearly in support of specific business objectives had better come up with a good answer when the budget hatchet starts to come down.

Typically, companies that start by identifying ROI before a social-media budget is assigned, people [are] recruited and the project is even outlined, fare better than their counterparts.

How can those who are in the trenches, but not selling product or services themselves, best justify their social efforts/hours to their bosses and peers?

By aligning their activities and objectives with key business objectives. The fastest way to ensure that your budget is renewed or validated is to show that you play a part in making the P&L positive.

Perhaps your group saves the organization money by using social media. Customer service is an example. Media buying, reach, could show some interesting cost reductions, [with social media] increasing reach while reducing relative Cost Per Impression. Perhaps your group generates not sales but leads by using [social-media] channels in insightful ways. There are dozens upon dozens of ways to ensure that your program can be shown to contribute to either reducing costs or generating revenue. What you don’t want to be is a “cost center” alone, or worse yet, the project team that can’t articulate its value to the organization. Which happens.

At Wednesday’s Buzz 2010 event here D.C., Olivier will be speaking with an association and nonprofit audience — taking a closer look at how  organizations that are looking to provide customer (or member) value via social media build satisfaction into the ROI equation. Join us in person or follow the event with #buzz2010.

Image credit, Olivier Blanchard

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There’s a perception that social media’s relevance to business is hard to measure. Do you think that’s true?

Sadly, that perception was created by self-appointed social media “experts” who actually had no experience integrating social media into a business practice. This unfortunate lack of practical knowledge among the majority of social media pundits initially created quite a bit of confusion for the business community, particularly as it pertained to tying social media activities to ROI and other core business metrics.

The reality is that it is relatively easy to measure social media’s relevance to a business once you understand how social media strategies apply to a breadth of business objectives. As long as a) the business knows what it is trying to accomplish and b) that business leverages its social media program in specific ways to impact those goals, measurement becomes relatively simple. Once you see how all the pieces fit, it’s just a matter of putting in the work.

When evaluating various metrics and tools for tracking social media, what should marketing and communications professionals look for?

First, know what you want to measure. The most complex tools in the world won’t do you any good if they don’t measure what your business needs to measure. So start with that.

• What are you trying to accomplish?

• How will we measure success?

Those are the two most important questions that need to be asked before the launch of any program, social media or otherwise.

Second, look for tools that simplify your job rather than complicate it. If you can find one tool that measures everything you want to measure, invest in it. The alternative may seem cheaper on the front end, but the amount of work required to manage several tools and a dozen separate data sets may end up costing you more in labor and headaches. Consider not only the measurement but the reporting and analysis as well. Consider the big picture.

Third, don’t limit social media management to marketing and communications. The sales, business development and customer support teams need to be involved in its management and measurement, as well. It would be a mistake to look at social media mostly as a marketing tool. Its management needs to be an organizationwide endeavor, even if some departments touch it more often than others.

Should putting the proper tracking mechanisms in place come before trying out new social media strategies/activities?

From a business management standpoint, sure. You want to establish baselines for your activities to track resource use, progress and changes (to eventually determine the specific successes and failures of your social media activities).

From a program management and execution standpoint, however, the launch of a social media program should typically begin with a discovery plan whose goal is to simply learn how to listen. This phase of the plan can be used in two ways:

• To validate the tracking and measurement program already put in place by the management team.

• To develop a tracking and measurement plan specific to the social media space.

Social media programs should never start with the creation of content or active engagement or anything “outbound.” That comes later. The first priority when starting out is to create listening outposts throughout the Web, and in parallel, identify specific business goals, then strategies, then tactics, then measurement methodologies to properly track performance. Approaching social media program development from that angle falls into the realm of best practices for this type of endeavor.

What are the three most common mistakes you see companies make when attempting to measure the impact or value of their social media efforts?

• Focusing too much on digital measurement. Sure, social media seems to live in the digital space, but digital is just the medium. The relationships, the engagement, the consumer behaviors, these things exist in the real world as well (and probably more so). Measuring the impact of social media programs only in terms of digital outcomes like Web traffic and the number of followers is pretty short-sighted and ineffective.

• Not understanding the difference between nonfinancial impact and financial impact. Nonfinancial impact is a precursor to ROI. For example, 1,000 net new daily visitors to a Web site attributed to Facebook fans is of immense value to the digital team, but unless these new visitors transact as a result of their visit (or their recommendations result in a transaction), the value of that traffic is limited (and irrelevant to the sales manager). So the difference between the value of a program and the financial value of a program are often not clearly delineated within an organization. This lack of understanding is still a major problem standing in the way of seasoned business executives taking social media seriously as a legitimate and powerful business development tool.

• Not establishing clear goals and objectives when launching a social media program. “Engagement,” “increasing brand awareness” and “having more conversations” are not real objectives. (A real objective is both specific and quantifiable.) “Soft goals” create soft strategies. Soft strategies turn into weak tactics. Weak tactics turn into bogus metrics. The more specific the goals, the more likely it is that organizations will see real (and quantifiable) results every month, quarter and beyond. Companies that don’t understand this are playing “pinning the tail on the donkey” with social media. This is one of the biggest reasons why so many social media programs seem to go nowhere.

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