Why spend money on social media? Part 1
By: David Spratt
In this two part series David Spratt shares insights from his Master’s research that can help you build the digital side of your business.
I recently spent some time with a group of business leaders who all had concerns about the increasing demands for money and resources that were being made right across their enterprises. Whether it was investments in new plant and machinery, wage increases, new government regulations or the price of electricity and waste services, they all felt pressure on the bottom line.
One area that came up in discussion was justifying our social media spend. For many of us, it feels like a bottomless pit where we pour cash in, only to be told that our search engine optimisation is inadequate, our branding is fluffy and our budget is not in line with industry trends.
My Master’s thesis was on exactly this topic. Finally, an audience after all that work!
My approach had been to interview twenty-five senior executives and business owners. This group included local success story Trade Me and huge global advertising firm Saatchi & Saatchi, as well as local retail outlets, businesses and for an expert perspective Justin Flitter, one of New Zealand’s leading Social Media and Emerging Technology commentators.
So what is this mysterious force called Social Media and how is value identified? In the end it came down to five things – conveniently all beginning with C.
The 5 C’s of Social media value: Commerce, Community, Communication, Content and Connection
You don’t need me to tell you about eCommerce. Anyone not living in a cave will know that online customer interaction is essential.
E-Commerce is not simply about trade though. If we are not doing so already, we should be collecting customer data and leveraging the huge value that this drives. A simple but powerful example is Amazon. Yes, they will sell you anything from a book to an electric car, but next time you visit, pay attention to their “recommendations”. Their data collection has followed your journey to the site, noted what you buy and where you stop and look. You are their ‘customer of one’. Algorithms are far more effective at knowing your preferences than the old school face to face service we expect from our local retailer.
We are not all retailers of course. My firm, Total Utilities, is interested in procurement contract expiries and value, energy and waste consumption trends, carbon footprints and greenhouse gas emissions. Sure, we collect this data ourselves, but often this information is provided by our clients who will willingly contribute this in exchange for superior value, speed and actionable insights.
Data has real, measurable shareholder value and when combined with commercial transactions, inquiries and insights makes your business worth more every day. Once it was the customer list that had value, today it is insights into customer preference.
This year I joined three significant social media communities. One group shares information on growing organic food, another is a professional Financial Operations (FinOps) group specialising in managing the complexity of opex based service contracts and the third is a group that helps me learn Italian and Norwegian. None are related and yet all have a key characteristic, they make me feel a part of something as a consumer and as a contributor.
In the past I would have joined an Italian Society or attended meetings of Financial experts or visited organic gardens. Today, if I have a question, I simply type it online and my answer will come from all over the world, or from just down the road. Either way it is instant, usually expert and relevant to my needs.
What is important is that by participating in, and supporting a ‘Community of Practice’ as these groups are formally known, my knowledge increases, my reputation is enhanced, and the opportunity to communicate, and extract value is created in real time.
I have formed lasting relationships with people I have not met face to face. One data specialist in Tel Aviv has extended an open invitation for me to visit. Just as powerfully, I have received calls from prospective clients, noting my membership of the Fin Ops group and wanting to meet.
I will cover connection, communication and content next month. In the meantime, consider this question. How many people do you know who have found love on the internet? If you are thirty years old or less the answer will likely be “most of my friends at one point or another”. If you want clients to love your brand understanding the five C’s is a great place to start.