This question comes up now and then, and it's making the rounds again now that Pinterest has gotten so much steam behind it in the past weeks. As usual, there are the early adopters and the “I'm going to wait and see, I'm too busy already with social media” group.
Social media has suffered negative comments because it is famously difficult to quantify the return on investment (ROI). In hard-and-fast business rules, quantifying the ROI on every business activity is best practice. The Wall Street Journal had an article just recently in which two seasoned business owners faced off about social media and whether it actually brought money in the door enough to pay for itself. You can read that article here.
No matter what the product or service is, early adopters tend to believe the benefits more quickly – after all, they're in! I remember my grandfather saying that his father could not see the benefit of a horseless carriage – that horses would “always be the main mode of transportation.” My great-grandfather could not be convinced that a motorized vehicle would be faster and allow a man to make a better living. But my grandfather quickly found out that investing in an automobile meant that he could work two jobs instead of one, giving him the ability to provide for his entire extended family (including his father) in the horrible times of the Great Depression.
Here are two points to make about social media for small business owners.
- Seeing the ROI depends on the glasses through which you look at social media. If you have on a pair of rose-colored early adopter glasses you will insist that “even though it's hard to quantify, the ROI is there” and you will quote many anecdotal stories to prove your point. If, on the other hand, you are wearing the dark gray lenses of the doubter, you will point to the lack of quantifiable data and the many anecdotal stories about how social media has sucked up months and months of staff time. Physicists now know that the observer of an experiment actually effects the outcome of the experiment just by the act of observing. The same tenet applies in the world of social media.
- Social media is the Internet's virtual way of walking around your block or driving around your neighborhood. When I was growing up in a small town, cops and bankers both walked around, meeting people, chatting, listening to what was going on. They were building relationships that helped make their work easier – the cop knew the street scoop, the banker knew whose wife wanted a fur coat for Christmas, knew the husband, and was positioned to lend the money.
We talk a lot about relationship marketing, which is not new, even though we seem to think that it has been recently invented. It is old, centuries old. Social groups like Kiwanis and Lion's Club exist to do good but also to build business relationships, and no one questions that business comes their way from that activity. No one questions that men go off to play golf and do deals at the same time. Is it quantified? I doubt all of it is, and I'm not sure I've ever sat in a meeting where it was even questioned.
Social media is, virtually, the same thing (pun intended). We “walk around the block” and “go to the Lion's Club meeting” and even “play golf” virtually. At the least, it's relationship building. And to think that NO business has come from it is, in my mind, ridiculous. To think that it will ever be quantifiable in the traditional, hard and fast ROI methodology is equally ridiculous.
For the moment, social media is here to stay – it is the new Kiwanis Club, and more. Will it peak and something else take its place? More than likely. But in the meanwhile, it's the game in town. Like anything else you do in business, if you decide to partake as a part of your customer-building or institutional positioning, the more you can structure it, use it wisely, and manage your content the better off you will be. If you partake, be wise in how you do it. If you don't partake, quit spending your time trying to prove to those that do that it's worthless. The truth is probably somewhere in the middle of both extremes. The debate itself will never give you, the business owner, a good ROI. And that's one thing about the topic that can be said for sure!