the ROI of RONI – the risk of non-investment – in social media

Since moving to Paris I’ve become a lot more active in the French blogosphere, including finally having my blog in French, and have noticed a trend of English posts translated into French.

I thought I’d do the opposite, then, for a recent post by François Guillot, as it’s an idea I haven’t yet seen yet in the English-speaking blogosphere and absolutely needs to be passed around.

Taking full liberty in the translation (the bolds are my own), here is François Guillot’s

the ROI of RONI (risk of non-investment) in social media

ROI has been a legitimate problem for communications specialists for some time now. Anyone that’s willing to fork over their money has the right to know what he/she is going to get for it. It’s a transaction. The ROI is a product of this transaction, which is what I’m buying. Even if the transaction (an investment) has some risks that go with it.

There is no reason for social media not to be treated the same way. Investing in the social web shouldn’t be something that brands, businesses, and organizations do just for kicks, i.e. “maybe I’ll put little money into it and get lucky, but chances are I probably won’t see a return anytime soon”.

Of course we can define certain KPIs for measuring a social web strategy. The pertinence of the criteria will always leave room for an infinite number of disagreements, but the data is nonetheless substantial : traffic, click-throughs, conversions, number of subscribers, number of fans, SEO of your content, the number of times shared, etc.

An “indicator”/KPI doesn’t necessarily mean that it “measures ROI”, but it’s a start.

But that’s not the problem with ROI. The problem is that it is an element of an economic system all things being equal.

If I want to measure the return on my investment (be it manpower, advertising, R&D, external development, etc), it’s usually because I’m going to decide to invest, OR NOT. The very idea of ROI presumes that I can choose not to invest and allow my business to run as it were.

But the world doesn’t stay the same; it changes. Right now it’s changing in such a fundamental manner all its own with the development of certain new technologies, in general, and with the social web, in particular. And it’s changing whether you want it to or not.

We are not in a situation where all things are equal. Change brought about by the digital age is profound: it is the very structure of business that is being impacted (distribution of products, purchasing decisions, information flow, etc).

On a much larger scale this change is cultural, because it’s social. It is a cultural change that is characterized by a mix of emerging values (transparency, openness, sharing, etc), new types of practices (in journalism, for example, LOLjournalism), new codes (more informal types of conversation, for example), by a demand economy (à la Google), and by a return to consumerism.

It has therefore had an impact on the entire organization. Business practices are bound to evolveon a more or less short-term basis in all major traditional businesses : marketing and communications of course, but also HR, customer service, sales, etc. and even in the “traditional” Internet domain (too often reduced to the management of the company’s official website).

Don’t misunderstand me, I don’t mean to say that that means everyone’s job has totally changed, rather that there are new methods for everyone to learn (when hiring, for example, you can find out more information about the person that’s applying, her qualifications, past work experience, etc).

Of course not all brands or companies are going to have the same experience with the social web : the differences are tied as well to :

  • the business (the more likely the chance of a deal, the more the web is going to play a crucial role)
  • media exposure / brand notoriety
  • the size of the company (the social web doesn’t always mean the same thing for asmall or large company)
  • the nature of the company’s customers (it isn’t exactly the same thing if a company’s customers are the 15-24 age group or a B2B niche group).

But in these conditions the question of the social web is less a question of ROI (Return on Investment) than of RONI (Risk of Non-Investment).

In other words, the first question you ask yourself shouldn’t be : what will happen if I invest ? But : what will happen if I don’t invest ?

Some possible answers at random to start things off :

  • a misunderstanding of your business’s consumers, of his/her opinions, priorities, desires…
  • an inability to respond to your customers’ and stakeholders’ pertinent questions and expectations
  • lost opportunities for gathering feedback
  • a deterioration of customer relationships
  • a loss of impact from traditional campaigns
  • a lack of positive word-of-mouth
  • a weakening of the company’s network of friends
  • an ignorance of and vulnerability to the risks of online opinions
  • the circulation of negative or false opinions or even strategic information, in the case of leaks
  • a weak knowledge of the brand’s and company’s main rhetoric
  • outdated content on company executives
  • wasteful customer service costs (call centers, for example)
  • a lack of information needed for making decisions
  • obsolete internal processes
  • a gap between management and employees
  • a weakening of the company’s image in the eyes of Generation Y
  • a delay in terms of sales

….

We can have fun casting fear into the souls of people almost indefinitely. But for companies that aren’t convined or don’t necessarily have a predeliction for investing, it’s good to start by questioning the Risk of Non-Investment. The question of ROI will only naturally follow.

In other words, thinking about ROI as a basis for decision for your investment strategy in the social web is a mistake. We shouldn’t wait to see an ROI in order to advance. If we don’t choose the social web, we’re sure to have problems.

Thanks again to these words from François.

If you liked it, pass him your comments on Twitter and/or leave some love below🙂

All for now

m

9 responses to “the ROI of RONI – the risk of non-investment – in social media

  1. François Guillot

    Careful, you have twice the same sentence here:
    “In other words, the first question you ask yourself shouldn’t be : what will happen if I don’t invest ? But : what will happen if I don’t invest ?”😉

  2. @MiChmski ROI = Risk On Ignorance

  3. Superb post. I’m a new fan!

  4. Thank you, this has been a really useful perspective to add into our emerging social media strategy and also on some general work I am doing on risk management🙂

    • My pleasure. It’s really Franois Guillot you should get in touch with, this is a translation of his post🙂 I’m glad you found it helpful

  5. opportunity costs are never properly understood in businesses. But here opportunity costs(read lost time) are so high that it can even erode your existing business. the same way social media is not a quick-fix to growth, it is also not possible to wake-up later and push forward to arrive overnight. So I consider ROI as false objections and agree with @MiChmski ROI = Risk On Ignorance. Great post. Look forward to more on similar lines.
    @VaradhKrish

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