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By Mitch Glasser, March 25, 2013 3:31 PM

What’s the expected ROI from a scientific experiment?  Come again???

No one asks this question. Experiments are performed to test someone’s hypothesis: their curiosity about how things might work, or what might be true about a topic of interest; that is, whether the results predicted (or hoped for) can be produced.  They are done to advance the knowledge and understanding of some subject area.  We call this way of learning, research.

Asking for an ROI from a scientific experiment is essentially demanding a guarantee that it will produce a specific, desired outcome.  But it is, by definition, a test that’s run because no one knows for sure what the outcome will be.  The concepts of ‘experiment’ and ‘guarantee’ cannot exist in the same place at the same time.  People understand this about science, so the question is not asked.

However, for the goings-on of marketing and social media, the question of ROI is all over the place.  If there is a history of executing a specific type of activity, like web-based ads, it’s fair to ask for the expected ROI of a new execution; there is data on which it can be based.  However, when you’re trying something new, like engaging in an untried form of social media or testing website variations to see which one best provides the results, you are, in fact, performing experiments—market experiments.  Talking about an ROI for these activities makes as much sense as it does for scientific experiments; that is, no sense at all.

The reality these days is that with the frequent introduction of new technology-based marketing capabilities, businesses are constantly running experiments to see which tool or tactic or specific implementation bears the most fruit.  Companies beat themselves up (that is, the people responsible for planning and executing them are beaten up) trying to come up with an estimate of ROI out of what is essentially thin air—and being held to it.  It makes people gun-shy to try more innovative and creative approaches because even though their fact-finding tells them it might work, they don’t want to be held accountable to a specific level of performance from an experiment.  No one in their right mind would.

Sure, companies will report a nice return on their particular executions of an activity in their markets, but if you’re not targeting that same market with that same activity, all bets are off for assuming you’ll have the same result.   Positive outcomes achieved by other companies from implementing a social media tool should only be used as justification for testing it within your own market, and never as a benchmark for your performance.

Stop bludgeoning your marketing people to achieve specific ROIs from their marketing experiments.  Rather than seeing them as a source of immediate revenue (yes, I know that’s always important), look at them instead as the means for getting a better understanding of what moves your market so that, once learned, they can be used to design more effective, ongoing programs. Hold them accountable for the correct design, execution and evaluation of those efforts, not for the experiments used to determine which ones should be used.

Comments (1)

By Mitch Glasser, August 31, 2010 11:58 AM

Social media offers unprecedented capabilities to communicate and connect with prospects and customers.  However, it will only benefit your company if you first decide where it is your current communications activities need assistance to meet your mar-com goals.

Clearly, this last statement is true for all communications tools: print advertising, direct mail, e-mail newsletters, TV and radio advertising, event sponsorships, trade show attendance, speaking engagements, etc.  What makes answering this question for social media so acute today is the massive hard-sell going on among the ever growing list of social media vendors.

People buy using the same model they have always used.  What was important to buyers 30 or 50 years ago is still important.  What has changed is the variety of information and communication sources that exist and the ease with which they can be accessed.

For my money, social media can make major contributions to answering a number of buyer questions.  Specifically, which vendors:

• Have the offerings and capabilities that meet my specific needs?
• Are credible?
  • Have a track record?
  • Have customers?
  • Are experts about the industry issues and problems they purport to solve?
  • Can be trusted to deliver on their promises and stand behind their products?
  • Have a vision for and commitment to future product improvements?
  • Have customers who are happy to be their customers?

Social media affords you the potential of getting your answers to these questions in front of your prospects.  I say ‘potential’ because what has to be true is that your prospective buyers have to first be engaged in using social media for this to happen.  If you’re talking in places where they’re not listening, you’re wasting your money.

So the first step in your social media activities is to first uncover if and how your customers are using social media to stay informed about the industry in which you operate and the solutions and capabilities you offer.  How do you do that?  Well, as simple as it sounds, you ask them.  This will provide you with the information you need to direct your social media efforts and bear fruit from your investment of time and money.  Once found, then you need to decide what combination of awareness, credibility, trust, etc. needs form the majority of your social media content.

If collecting information from your customers and prospects about their use of social media is not the first step proposed by a prospective social media supplier, be very suspicious.  And if they don’t ask what communication goals YOU want to accomplish with social media, start looking for a new vendor.