Production vs Interactions

February 26, 2009

This article by Bill Ives on the fastforward blog.

They say that traditionally the focus of business and IT investments has been on production rather than interactions. They added that in today’s post-knowledge economy it is interactions that count for the most.

I have alluded to it before.

It may be hard to determine an advance ROI on what we call the Web 2.0, or social media.

Or can we simply hope to provide those interactions – and work at just attempting to earn value from them?

I don’t have the answer.

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14 Responses to “Production vs Interactions”


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  2. Ken Kaufman Says:

    Elliott,

    Thanks for reaching out to me regarding this blog and the concept of ROI and social media. Here are my thoughts:

    Isn’t social media a form of branding? The relationships people make with a company or a person through social media has everything to do with how they perceive their brand. Social media seldom turns into paying clients directly. It often requires several touches until a prospect becomes a customer, or in some way directly adds value to your business (as a source of referrals, supplier, etc.)

    ROI on branding is hard to measure, although there are some good books out there about determining brand equity and brand value.

    In my mind, the only way to measure the effectiveness of social networking is to ensure it is communicating the right message/perception to a good part of your market. If you are hitting on these elements, the value from the social media activies will come…

    Hope that helps add a little more perspective to your thoughts.

    • elliotross Says:

      Ken, thank you so much for your input –

      “measuring” ROI on something that is as vaporous as ‘branding’ is an excellent way of looking at it.

      I have seen too many articles that try to investigate that ROI operationally or on tech alone.

      The ‘branding’ idea changes the texture of the discussion.

      Regards!

  3. the archaeologist Says:

    If I remove all the techno talk this really comes back to an age old discussion of marketing verses sales. Marketing people like to take the human element out and leave everything up to the medium, layout, design, optimization etc , etc ….. but in reality all of that is conjecture and speculation – as much as you would like a definitive ROI from blogs, social media or other non “face to face” interactions my feeling is you will never have an accurate number. the best these tools can do is pave the way for the real work that only the sales person can accomplish. Some of this is wishful thinking on the part of those who can’t really hack the human element.

    • elliotross Says:

      @archaeologist – thanks for dropping by!

      “..can’t really hack the human element.”

      Ouch 🙂

      I don’t think that Rick or I were looking at it that way –

      Leave out marketing and sales – think finance –

      Now I do I agree – the ‘accurate number’ is the issue.

      So if you are a business of any size can you state;

      a) we invest a quarter mil on this social media initiative and that investment will have a ROI of ‘x’

      vs

      b) if we invest a quarter mil on this social media initiative we have the *opportunity to generate value* from ….

    • Peter Caputa Says:

      @the archaelogist… Based on some hard data and a bunch of experience working at a company where marketing does generate ALL the leads our sales team can handle, I can safely say that it is very possible for marketing to start doing work typically done by sales. Our marketing team is rounding 1st base going towards 2nd.


  4. Interesting thread. I’m glad Rick pointed me to it.

    I don’t think there is a way you can determine in advance the ROI on “Web 2.0” or “social media” at a general level. There are too many variables to guarantee ROI. In my mind these variables include:
    – The places you go online
    – The way you interact with people on the sites
    – The people you choose to talk to
    – The way you approach
    – The way you engage
    – What your followers/contacts have to say about you
    – How diligent you are about follow up

    Because of all this I fall into the “you simply give them the opportunity” camp.

    Now, with all that said, I think more training and more structure and more planning and more diligence can improve all those variables. But all those things (and the productivity from these efforts) depend on the person – not the strategy. So since ROI varies on a person-by-person and case-by-case basis you set up structure, give people the right training and support, and let them go at it (just like you would a networking event). It’s the best you can do.

    So… I think I’m agreeing with everyone here!

    Mike

  5. Peter Caputa Says:

    Good conversation happening here.

    I’m not following it all. But, If I’m getting the major gist, you guys are trying to figure out whether social networking (on or offline) can be a reliable and predictable prospecting activity for a sales rep.

    For my customers that do it right, online marketing (including online social networking) is very reliable.

    And a good website, should convert 5+ % of visitors into leads. Figure that 1/3 of these leads are sweet spot leads and then, rep conversion percentages take over.

    More simply stated, social networking can be very reliable as long as it’s consistent and as long as results are measured. It’s no different from any prospecting activity. Consistent effort in + skills = revenue in.

    • elliotross Says:

      Peter – thanks for dropping by –

      The ‘social media’ we were discussing is less on the traditional web site than ‘web 2.0’ (or enterprise 2.0 if you keep up with the buzzword du jour) tools such as blogs, wiki’s etc (ie the facebooks, and myspaces of the world)

      Along with the concept (from a dollar investment standpoint) whether you can calculate a benefit (ROI) in **advance**

      Or simply try to provide the opportunity and skills that enable you to earn value from them (earn value being after the fact)

      Best wishes and regards,

      Elliot Ross

  6. elliotross Says:

    @Rick – Thanks for dropping by!

    I agree with all the above, here is where it gets iffy though;

    Keeping in sales –

    You can send someone to three networking events

    But can you calculate (in advance) a number of new contacts that could enter your funnel?

    Or can you just provide the people and the opportunity?

    • Rick Roberge Says:

      Elliot, I love this stuff. The short answer is, “I know that if I get 10 business cards, I’ll put 1 new prospect into my pipeline. Then the rest of my stats take over.” However, the unknowns are:

      “Is the someone going to the right events?” (“If you sell combs, do you really want to go to a bald group?) Marketers call it ‘targeting’.

      “Is the someone skilled at instant rapport and qualifying without being annoying and scaring prospects away?”

      “Does the someone have sufficient history that they can use their own statistics to forecast ROI?”

      Here’s a question. Your archives go back to January, 2008. How many articles have you written? How many comments have you received? How many real (telephone) conversations have you had with people that you met on your blog? How many introductions has that led to? How much business? What’s the ROI of a blog post?

      • elliotross Says:

        Rick! I like stretching the brain cells as well!

        Given; a) your skills, b) the opportunity – I can see that – If you can calculate that for every 1000 visitors to a blog, you have one firm lead – you can calculate your stats – (that assumes that you get those 1000 – so the **advance** prediction which ROI is based on has to make that assumption!)

        But let us throw a curve ball at this.

        You are selling a large solution – your contact is an aerospace firm. The proposal is going to massive – with input from your aerospace supply chain experts, legal, engineering and client services.

        You are a national company with facilities across the country.

        You then;

        a) spend days on the phone looking for the expertise you need

        b) use a ‘web 2.0’ tool to identify the engineering exert in Houston, legal in NY etc.

        The benefit here is the improvement in productivity (time = money!)

        But if I am an IT Manager proposing this Web 2.0 technology – can I truly state that it will save Rick ‘X’ hours on some ‘hypothetical’ future sales opportunity as an advance ROI for the project?

        Or can I simply state that (like an event) here is the opportunity – and then as the opportunity is acted upon (by definition this is *afterwards*) state that I have provided something that did generate value?

        In my opinion – the key here is that ROI is an advance guess based on certain statistics & assumptions. And it also assumes it will be used as per the assumptions. If you chose to use the phones anyway for three days tracking down the expertise – our assumptions are out the window.

        Generating value – is looking at the investment as more a leap of faith – then trying to quantify value as it is used.

        Thank you so much for your insight!

        Elliot

  7. Rick Roberge Says:

    Elliot, some people know their average deal size. Total business divided by # of deals. Some people know their closing ratio. I.E. – How many proposals turn into sales. Some people know what percentage of meetings turn into proposals and how many ‘at bats’ they need to do to get an appointment. So, how many social networking interactions turn into an at bat? Once you have that, you can figure the ROI of your Web 2.0 effort.


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