I’m a big fan of the work that Forrester does. I buy its reports, use its data, subscribe to its blog and use a lot of the frameworks it has developed in our everyday consulting at com.motion. In a lot of ways, Forrester is the pre-eminent thought leader in our space with the research capabilities to provide marketers with the data they need to make informed decisions about their target audiences and the technologies that can be used to reach them.
So I was a little disappointed to read the latest blog post on risk Avoidance and the ROI of Social Media, Insurance, Guitars and Tires. In particular, this part was hard to digest, in the context of ROI:
In 2009, what was the ROI of your investment in life insurance? The vast majority of you paid your premiums and filed no claims (or you wouldn’t be reading this). You received a negative ROI, so clearly that means you’re suspending your life insurance in 2010, correct?
Social Media is like corporate reputation insurance. You pay premiums in the form of building relationships, listening, responding, creating widgets, and building communities.
Now, I completely agree that the best crisis communications strategy is a proactive one – see my com.motion University: Crisis Communications presentation below. However, to argue that a major social media engagement is being undertaken in the off chance that an all-encompassing crisis overtakes a brand or organization is not something that many brand marketers I work with will sign off on.
However, I do agree that there are two ways to measure ROI – both of which directly affect the bottom line:
Sales and cost avoidance.
Both are important, both need to be measured but it doesn’t benefit our industry to focus on one and ignore the other, especially with analogies like the one Forrester is using.
What do you think? Am I off base? Does the life insurance analogy hold up and will your clients (internal and external) “buy it”?