Social Networking Your Car

An interesting article about crowdsourcing your car hit the wires this week.  Nissan’s new Leaf electric car (which began shipping recently) includes a wireless check-in feature that you can use to compete with other Leaf owners for energy efficiency awards.

It’s a pretty interesting idea: using the Carwings system (an OnStar-like system that originated in Japan) the Leaf wirelessly transmits your energy usage statistics to their servers.  The system then compares your usage to other Leaf owners in your region and awards trophies to the winners, which then display in the Leaf’s dashboard control center. 

In addition, the system uses data from drivers of other Carwings users (not just Leaf drivers) to aggregate and display near real-time traffic predictions, further enabling the Leaf driver to make intelligent decisions about energy economy.

This friendly competition seems an excellent way to encourage Leaf drivers to maximize their energy efficiency, but I wonder if it’s a good idea for the rest of us.  Let me explain: The concept of “hypermiling” (and it amuses me more than it should to include a hyperlink here) started a couple of years ago when drivers—particularly drivers of hybrid cars—began to wonder just how many miles-per-gallon they could actually get from their vehicle.  Unfortunately, some of the techniques they began to use were illegal and/or dangerous: things like tailgating to “draft” behind large trucks, turning the car on and off to coast in neutral, coasting through stop signs, and driving even more slowly in freeway slow lanes.

If we have hypermilers (including Leaf drivers) increasingly trying to use some of these techniques to optimize their miles, it may in fact cause those of us who aren’t hypermiling to burn more energy trying to avoid them or get around them.  The net effect is that if a hypermiler saves one ounce of fuel, but causes other people to burn more than one ounce of fuel, it’s a net loss for the energy system, not a net gain. (I do have to note that there are lots of ethical hypermilers out there that utilize *safe* and *legal* methods to squeeze those extra miles out of their cars, and I highly commend them.)

I’ve always been a proponent of giving people lots of information so they can make informed decisions.  The problem with the Leaf contest, in my humble opinion, is that without some education as to safe and legal ways to drive efficiently (and not inconvenience or endanger other drivers) is going to cause problems for other drivers.  Leaf drivers who’ve never heard of hypermiling or know what aspects of it are safe and legal may be encouraged by the competition to rediscover driving techniques that have already been tried by earlier hypermilers and discarded for safety reasons.  People seem to be very good at rediscovering inventive wrong things to do, and making them aware of safe ways to achieve energy efficiency should be a mandatory prerequisite to owning such a car.  Especially a car that encourages competition.

And if they really wanted this to be a fair and accurate competition as to who is using energy most efficiently, they should include mileage statistics from bicyclists and people working from home.

Social Media for the Holidays

I’d like to take this opportunity to wish everyone a Merry Christmas and Happy Holiday season. And in doing so ponder for a moment the role of online social networks in holiday celebrations.

I expect over the next couple of days to get and receive numerous Christmas greetings via Facebook and Twitter.  Also a few emails from those social network-challenged friends and family I have.  This isn’t a new phenomenon: people started to exchange holiday greetings via phone instead of mail (or in-person visits) early last century as phone technology began to be pervasive.  Similarly over the last 20 years, people started exchanging email greetings instead of phone or mail as email adoption grew.  It comes as no surprise that people would begin using online social networking tools to do the same. 

It seems different, however.  Before with Christmas cards, phone calls, and even to some extent emails, the greetings were more 1-on-1 (ok, granted you might have just sent an email to a Christmas list rather than individuals). You had to address, stamp and mail an individual Christmas card or dial an individual phone number. But now on Facebook, I can not only wish specific people a Merry Christmas, Happy Hanukah, or May the Force be With You, I can wish all of them at once.  Further, most of them can see all of my personalized best wishes to my other friends as well.  This seems vastly more efficient, and yet somehow less personal.  On the one hand I can easily get a message out to family members that are hundreds or thousands of miles away, and to old friends I haven’t seen or talked to in years; on the other hand, it seems to lack the intimacy of even a simple phone call.

And thus the world changes. Not so much in big sweeping changes but in lots of little ones that add up over time. (If you haven’t yet seen it, check out the Social Media Nativity video below made by some very inventive people at Excentric.  Brilliant!) I suspect people younger than I think that Facebook messages (or Twitter, or emails, or SMS) are just as “intimate” and legitimate as phone calls or snail mail.

However you choose to express it, please make sure to share your holiday wishes with those close and not so close to you.  As for me, it’s been a genuine pleasure having you join me for my weekly blog messages, and I hope you’ll join me here again next year.  Best wishes to all my family, friends, coworkers and Twitter followers.

Overcoming the Creepy Treehouse

Let’s say you’re a kid again.  You and your friends in the neighborhood have played together at the local playground and at various other kid’s houses around your neighborhood.  One day, you notice that the house down the street that’s been for sale forever seems to have new occupants.  You look around for new kids that might live in the house, but you realize the couple that has moved in is an older couple that doesn’t appear to have any.  Yet, inexplicably, a few days later you see a marvelous new treehouse in that big tree in their front yard.  It wasn’t there before, but it’s there now with a great big sign: “Welcome Neighborhood Kids – Please Play in Our Treehouse.”  What do you think? Strange perhaps?  Even a bit sinister (you’ve heard all those campfire stories)?  Definitely and most assuredly it’s creepy.

I first heard the term creepy treehouse a couple of years ago when I was facilitating a discovery session at a university.  For those of you not in Higher Education, it’s a term that apparently originated in 2008 and refers to social media sites built by universities and intended for use by students.  It has been suggested (and probably rightly so) that student adoption of many of these social media “solutions” is often low because students view them as creepy treehouses: something built by unknown adults to try to lure unsuspecting kids for possibly nefarious reasons.

There’s a bit of a creepy treehouse problem faced by most social media sites, not just ones in a university environment.  Consider those social networking sites sponsored and hosted by companies but intended for use by their client base (and prospective clients).  An immediate barrier to entry on the part of many first-time visitors is “Why should I engage in conversation with this company? Aren’t they just trying to get my contact information so they can try to sell me more stuff (or sell my name to some other company I’m not interested in)?” 

How does a company—looking to legitimately engage its client base for reasons other than simple marketing—overcome this “creepy treehouse” effect?  Perhaps the best way is to make a couple of things quite clear from the outset. 

First: What is the motivation of the visitor to participate?  Will they gain knowledge that they can’t gain anywhere else?  Will they be able to gain recognition from other visitors (or members) that participate in the site?  Will they be able to make better buying decisions?  Will they get coupons or discounts for participating?  Being upfront and obvious about the value proposition (sorry, I hate that term even though I feel obligated to use it) for the participant is important.  Value must be apparent not just from explicit statements on the site about potential rewards but also in the way the site works: it has to function in ways that obviously and immediately make visitors realize the value of their participation.   

Second and perhaps more importantly, the visitor must feel a strong measure of trust in the site.  Obvious settings and explanations that allow the visitor to control privacy settings, for instance, is one way to achieve trust.  Prominent methods and explanations of moderation rules should be available to assure visitors that their participation is both valued and protected. Having the ability for a visitor to send a message to an actual person and have a reasonable expectation of a meaningful response is also important.  Being able to see evidence that other visitors/member trust the site is also an important element.  As with perceived value, the trust elements of the site must be obvious.

There are, of course, many other elements besides value and trust to building a successful social networking site, and I’ll be blogging about some of them in future posts. For now, if you’re building or renovating a social media site, you may find it a valuable exercise to try to view your site as the creepy treehouse that first-time visitors are apt to see, and set in place elements to overcome that effect.  Otherwise you might find your beautiful new treehouse vandalized and spray painted with all manner of objectionable graffiti.  Or perhaps worse yet, it may sit empty and alone while visitors flock to other sites.

Social Media vs. the TSA

If you have been following any of the more popular social media outlets in the last few days (the usual suspects: Twitter, Facebook, Reddit, Gizmodo, Engadget, ArsTechnica, etc.) you know that there has been a huge outpouring of outrage over the new security measures recently put in place by the TSA.  As a frequent commenter on social media trends and a frequent flier as well, I'd like to put in my two cents worth.

I'll begin by saying I have a biased view. I've traveled as part of my job for over 30 years, sometimes taking as many as 120-130 flight segments a year. I've seen all the security measures instituted since the late 1970's.  Thanks to an injury in 2009 I now have an artificial knee, so I automatically get selected for additional screening measures at any airport without one of the new, controversial backscatter x-ray machines.  When I flew a couple of weeks ago I got to experience first-hand the new "pat down."  It is anything but.  It is a completely intrusive "feel up."  Now, keep in mind that if I don't set off the metal detector, I'm on my way in a few seconds (less the usual hassles of replacing shoes, keys, phone, jacket, etc.).  In the past, security would use the portable wand to ensure that it was indeed my knee making the machine go bonkers and I'd be on my way after only a few additional seconds.  Not so anymore.  In addition to the new "feel up," I have to endure a speech about the new methods that have been put in place for my protection and how it's necessary to ensure the safety of air travel.  I've seen comments like that from lots of people in the last few days: If TSA needs to "feel us up" or do a virtual strip search, it's worth it to keep air travel safe.

One problem: That's a lie.  You know it, I know it, and the government knows it. TSA isn't keeping us safe, won't keep us safe, and *can't* keep us safe. A determined group of individuals with time and resources can circumvent *any* security measures that the TSA puts in place--including virtual strip search x-ray machines. And no, I'm not going to tell you how. I will begin by saying that if you are allowed to fly wearing your own clothing and carrying your own bags, and without first getting a thorough cavity search with an endoscope, you are not 100% safe from terrorists intent on bringing down your plane.  Ask any security expert and they will tell you that another terror attack will indeed happen someday (and, like every other since 9/11, it will most likely originate overseas).

Now don't get me wrong: I'm all for security.  I flew on September 10, 2001 and would have flown home the afternoon of September 11, 2001 if they hadn't shut down all flights.  Never mind the TSA, *passengers* will never allow another hijacking in the United States.  Since 9/11 we've pretty much done everything we can while still permitting the public to fly.  Shouldn't we do even more?  Well, if we were 99.99999999% safe before, do virtual strip searches and personal grope sessions make us 99.999999991% safe (an improvement of .000000001%)? Does that additional one billionth of one percent warrant *any* additional security?

Let's consider a few statistics: TSA's own web site states that over 2 million passengers fly domestically in the United States every day.  Over a year, that works out to 730 million passengers (365 times 2 million, which I think is high, but I'll use their figures).  If the TSA catches one terrorist in a year (also high...I'm pretty sure their total catch is zero per *ever*...if they had caught anyone you would have certainly heard about what a great job they did) that's one in 730 million. By comparison your chances of winning a Powerball drawing are 1 in 54 million.  Let me restate that: The chances of you winning the Powerball are 13.5 times better than the chances are that TSA will catch even a single bad guy. 

In 2007, Americans died from a variety of things: heart disease (616,067), cancer (562,875), stroke (135,952), respiratory disease (127,924) were the top causes. But people died of all kinds of weird things too: lightning strikes, snakebites, killer bee attacks, etc.  Think of all the bizarre ways you've heard about for cause of death and then think of this: Since 9/11, your chances of dying from *that* bizarre way were better than your chances of dying in a terrorist attack on an airline.

In any security situation, you have to balance the cost vs. the benefit.  For instance, you certainly want to have homeowners insurance, but do you want to pay $1 million dollars a year to insure a $250,000 home?  No.  If your ultimate goal is to protect American lives, you have an additional consideration: The more intrusive the TSA methods become, the more people will choose to drive to their destination instead of fly. Guess what: people are much more likely to die in a traffic accident than in a terrorist attack.  So this is clearly not about saving lives.  If 10 extra people a year die in traffic accidents because the TSA has frightened them off airplanes, is that an acceptable trade off?  I don't see how.  Another consideration: how much time and effort are terrorists going to spend circumventing TSA security when there are about a zillion other places to attack that have no security?  Isn't heightened TSA actually increasing the chances of an attack elsewhere?

I would highly recommend reading a pilot's point of view here. He points out that before 9/11 there were several terror attacks involving airlines, but we didn't overreact each time. Commerce didn't shut down and people kept flying.  And airplanes weren't dropping out of the sky every day.  We need to take a more sensible approach to airline security.  If we were "safe" when we didn't have to take our shoes off before some idiot built a shoe bomb (and who didn't board a domestic flight screened by the TSA) are we safer if we take them off afterwards?  If we were "safe" before some idiot builds an underwear bomb (and who didn't board a domestic flight screened by the TSA) are we safer because they now do?  This is "barn door" security--closing the hole after it has been breached--and is no more than cover-your-ass security theater so that no bureaucrat will ever have to explain why a second shoe bomber attempted to board a flight when we already had one try.

And social media's role in all this: the outcry against the new security screening methods bubbled up to the major news outlets. What started as a few outraged tweets and Reddit posts became articles published by the AP, CNN, MSNBC and all the other major news outlets.  On Monday the 22nd, the White House announced that DHS would be reviewing the new security measures.  We shall see if they actually listen to the will of the crowds.

Social Media Business Case Final Thoughts

Over the last three weeks (here, here and here), I’ve talked about some key benefits to look for when building a business case for a potential social media solution.  This week I’ll finish up with a few thoughts about what makes a business case successful.
 

Although the numbers are indeed important, never forget that the business case is about believability and confidence: your audience (the people with the money that you are trying to convince) need to believe the information you provide and need to have confidence that your social media solution is worth investing in.

Let’s talk first about believability.  Let’s say I’ve built a business case and I intend to show you the benefits.  I present you with a link to a web page where you can enter all kinds of metrics: how many customers you have, what the average purchase size is, how long customers stay with you, and so on.  I sit down with you and collect a handful of metrics in 5 minutes, and then generate a 20 page business case with detailed charts, references, spreadsheets, etc. that show that if you invest $100,000 with me, in five years you will have saved $2,304,201.32.  What’s your reaction? Do you believe the numbers and write me a check on the spot? (If so, please give me a call…I have a web site I’d like to walk through with you.)  If you are like most people, you look at the business case with a healthy amount of skepticism: any methodology, no matter how sophisticated, cannot possibly be that accurate with such little input.  What if I spend the next two hours going over the business case with you to show you *why* the numbers are accurate: we look at dozens of research papers published by organizations you trust (or maybe even belong to), we look at the comparison of your numbers with your close competitors and show you what savings/revenue improvements they have been able to achieve with the same solution, and so on.  How do you feel about the business case now? Better?

When modern surveyors first measured the height of Mt. Everest with modern equipment (well, modern at the time) they calculated that it was *exactly* 29,000 feet high.  Rather than have people assume that the 29,000 number was an estimate only accurate to a few hundred feet, they decided to publish the surveyed height as 29,001 feet. It turns out that when measuring mountains and building business cases, credibility is more important than accuracy.  Your numbers can be accurate to a fault, but if you haven’t given the buyer reason to be confident that your numbers are believable, your business case will not be successful. 

One more point I’d like to make. There’s an old saying in sales that “When you’ve made the sale, stop selling.”  If you prepare a business case that presents four or five big benefits and 100 little ones, you are wasting time and effort.  If you can make the four or five big benefits believable (and reasonably accurate), there is no point in quantifying or attempting to justify 100 additional little ones.  In fact, you may be giving the buyer reason to suspect that your four or five big ones might be iffy, since you felt compelled to attempt to justify so many other benefits that, in comparison, really don’t matter much.

Finally in an act of shameless self promotion: if you want to read more about building business cases in general, I’d recommend that you look into an Executive Report on the subject I did for the Cutter Consortium.  I’m sure they would appreciate it (as would I).

Hurricanes, Snowballs and Social Media

Here at INgage headquarters in southwest Florida, this year’s hurricane season is starting to wind down, and will be officially over in a few weeks (I’m looking for some wood to knock on as I write this). And I just came back from a trip to our offices in Michigan, where cooler weather has descended (finally!) and snow season will be winding up in a few weeks. 

I find that analogies are often useful in discussing technology (especially new technology), and it occurred to me that both hurricanes and snowballs can be useful for describing conditions under which social media sites can thrive.

Consider: Hurricanes only exist in summer months, when prevailing upper level winds and warm ocean temperatures are conducive to their formation.  A “wave” of clouds, thunderstorms and lower atmospheric pressure rolls off the west coast of Africa and heads west every few days during the late summer months.  Some of these waves develop into hurricanes. Many do not. They remain a harmless cluster of thunderstorms and clouds until they dissipate or are absorbed into other storms.  They only form into hurricanes when conditions are just right: the spin in the clouds coupled with low wind shear allows more thunderstorms to build, more moisture to be pulled into the storm; which somehow causes the rotation of the storm to increase, building even more storms and pulling in even more moisture, and so on.  In other words, some of these storms create a kind of positive feedback loop with their environment, altering it in ways that make the storm spin faster and faster until a hurricane is born.

And snowballs?  Well, anyone that has lived in a hilly, snowy climate has at one point or another tried to make a large snowball and push it down a hill to see if they could get it to grow into a big snowball by the time it gets to the bottom.  It doesn’t always work.  Sometimes the snow is the wrong consistency; sometimes the snowball is too small and doesn’t roll; sometimes the snowball is too large and falls apart; sometimes the hill is too shallow for the snowball to roll very far.  But when it works: wow.  It works so well that I can use the phrase “snowball effect” and pretty much everyone will know what I mean.

Social media sites can behave a lot like hurricanes and snowballs.  They can generate enough positive feedback to snowball into huge, vibrant communities.  As they grow they attract new members, which contribute new content, which attract other new members, and so on. But like snowballs and hurricanes they can be awfully hard to kick start when they are new.  They need just the right social networking conditions and the right networking environment, and usually a helpful nudge or two before they can take off.  And without the right conditions—just like hurricanes and snowballs—they can easily fizzle or fall apart.

Kickstarting Snowballs: Growing Online Communities

In my last blog, I talked about the similarities between social media communities and snowballs. This time I’d like to talk about a couple of ways of getting the “snowball effect” started in a community.

To begin with: think like a casino. If you’ve ever been to Las Vegas (or anywhere casinos have gaming tables) you’ll notice that there is rarely just one player at a blackjack table.  Even if there is a dealer standing by at the ready, most players don’t want to sit down at an empty table and play one-on-one against the house.  It’s more fun (and some would say you have better odds) if you are playing blackjack with other people at the table, so new players tend to gravitate to tables that already have a few players.  So how do casinos draw in players during slow periods?  Shills.  Players, paid by the casino, sit at empty or slow tables so that they look busy.  Busy tables attract other players so they become more busy, attracting more players, and so on until the table is full.  Social media communities can also employ this strategy: while they are small, the organization that owns the community can discretely insert members who are paid to hang out, post comments, encourage other members, contribute representative content, etc.  Of course, you have to be careful to make this a discrete activity: if other members *know* that the shills are there, they might be discouraged from participation.

Another way to attract participants is to offer some sort of reward for participation in key areas of the community.  The reward can be an actual monetary award (or some kind of prize with actual value in the real world) or some sort of perceived award (like Foursquare “badges,” for instance, that may be worth nothing more than bragging rights).  Ideally, you would like to have the community members vote for and select the winning content, but the organization can reward desired behavior just as easily. I had some moderate success with just such a strategy long before the concept of social media crowdsourcing: my company ran a snarky website making fun of stupid things said about the Y2K problem, and generated a ton of email submissions by giving out a small prize each month (of course, the site had limited usefulness after the 1990’s).

Another idea I saw recently was a kind of real-world scavenger hunt leveraging people’s natural curiosity.  QR codes were posted without explanation in strategic areas where potential members of the social community tended to hang out in the real world.  Those QR codes, scanned into a mobile phone, directed curious visitors to an online community.  Visitors there got an explanation of the contest, the rules, and clues to locations of other QR code postings to go hunt down.  Winners got recognition on the web site and a small prize, but I thought it was a great way to show new people the site and to get people who were already registered to visit portions of the site they might not otherwise know about.  Done correctly, this strategy has the potential to be a success online and offline: the scavenger hunt could increase traffic at sponsor locations *and* generate traffic (and members) online.

There are lots of other strategies that might be employed to market the site, and I’ll pass along interesting ones in future blog postings.  One thing we know for certain is that the “Field of Dreams” strategy—“build it and they will come”—doesn’t work. 

Defining Social Media Benefits Pt 1

Let’s say you’ve been tasked with building a business case for a new social media project.  How does one go about building a business case for a social media solution?  Pretty much the same way you build a business case for anything else: begin by describing the benefits.

A benefit is some quantifiable statement of economic value (i.e., more to the point: a benefit describes how much money it’s worth to do something).  Simply put, all benefits boil down to one of two categories: they are either a) cost savings or b) revenue increases.  I’ve also mentioned intangible benefits in an earlier blog post, so you know how I feel about them: forget intangible benefits. In my experience building business cases I’ve discovered two things about them. The first is that no business case will ever be approved because of an overwhelming abundance of intangible benefits: there are just too many other projects with tangible benefits that will get approved first.  The second thing I’ve learned is that, with just a little thought and effort, intangible benefits can be converted to tangible benefits that can indeed be quantified.  For instance, “increased customer satisfaction” might seem at first glance to be an intangible benefit, but in fact it can translate into multiple measurable benefits such as “reduced cost of replacing lost customers,” “increased average purchase amount,” and “reduced marketing costs” among others.  All of these can be calculated and, more importantly, all of them can be measured and tracked before and after implementation. 

When building a business case, keep in mind that not all benefits are created equal.  Reduced cost benefits are generally more credible (and therefore valuable to your business case) than increased revenue benefits.  If you can show how a solution might save $20,000 you are more likely to be believed than if you try to convince someone that they’ll do $20,000 more business.  Even among cost benefits, those that reduce costs directly are more credible than those that reduce costs indirectly. Let’s say you have a benefit that reduces spending on an item from its current level by 10%: that’s a direct cost.  Another benefit may make it easier for an employee to perform a task, thus increasing their productivity: that’s an indirect cost reduction.  It’s “indirect” in the sense that it may or may not translate to a drop in costs on the bottom line (reducing the amount of time an employee spends on a task may simply allow them to spend more time on other tasks, and not translate into a reduction of dollars spent on the bottom line). 

So the best types of benefits to build a business case are (in order): Direct Cost Reductions, Indirect Cost Reductions and then Revenue Increases. Now that we know what types of benefits to look for, we’ll start examining some of the more common social media benefits to consider.  Stay tuned for part two of this discussion next week.

Defining Social Media Benefits Pt 2

Last week I posted about finding benefits for social media solutions.  To recap: for the most effective benefits you want to look for (in order) 1) opportunities to directly reduce costs, 2) opportunities to improve productivity, and 3) opportunities to increase revenue.  This week, I’m going to look at some of the obvious ways a social media solution might realistically be used to cut costs.  Keep in mind that not all these benefits I’m going to discuss may be relevant to your particular solution: your mileage may vary.

Perhaps the most obvious benefit provided by social networking is the ability to Reduce Customer Support Costs.  The use of member-supported forums is widespread in the technology industry, so this is not a new or Earth-shattering idea.  Instead of having customers call a support line and get help from an actual person, directing customers to a forum where other members have posted questions and answers to common questions is often a more economical solution than an actual help desk.  Of course, you probably won’t eliminate the help desk function altogether, but if you can use a forum to eliminate some percentage of calls that require support, you can probably justify a cost savings.   Note that there may be several potential benefits that can be called out in this regard: you might be able to Reduce Customer Support Staff (which is a hard-dollar benefit if you can truly justify needing fewer people); you might be able to Reduce Customer Support Facility Costs (fewer people might require less floor space, less environmental controls, less trash pickup, etc.); perhaps Reduce Customer Support Telecommunications Costs (fewer phone lines, fewer PBX switches, etc.); and perhaps Reduce Customer Support Equipment Costs (fewer computers, chairs, desks, etc.). 

Another obvious potential benefit is Reduce Marketing Costs.  Using a social network can often be a more cost-effective way of getting marketing messages in front of the appropriate eyeballs.  Even if the cost per impression (the cost of getting your message to one viewer) is higher than traditional methods (TV, Radio, Newspaper, Magazines, etc.) you might be able to demonstrate lower total costs in terms of marketing to the people you really want to market to.  In other words, it might cost you $10k to put out a radio add intended for your customers that’s heard by 100k people (most of whom are not customers); it might cost $5k to put out a social network add to 5k existing customers who are already members of your social media site: A higher cost per person, but a lower overall cost.

Two more related benefits may also be possible to justify on the basis of reducing actual costs: Reduce Cost of Customer Turnover and Reduce Cost of Employee Turnover.  In both cases, you calculate how much it costs to replace a customer or an employee, then calculate the amount saved by how much your social networking solution might reduce turnover.  The tricky part in this calculation is estimating how much turnover you will reduce.  To build a credible case for either of these benefits, you need good metrics, preferably from the same vertical in which your enterprise resides (if you are in technology, you need metrics from other technology companies; if you are in manufacturing, you need metrics from other manufacturing companies).  Bear in mind if you are in an environment with already low customer and/or employee turnover, this probably won’t be a benefit worth trying to justify.

One final cost reduction item I’ll mention this week is Reduce Travel Costs.  If your social media solution has elements of collaboration (file sharing, chats, group chats, content management, video, etc.) you may be able to justify some level of savings from reduced travel.  When employees in diverse locations can more effectively collaborate, the need for them to travel for physical meetings might be reduced.  Again, the key to justifying this benefit is gathering metrics on what other organizations like yours have been able to achieve with a similar social media solution. 

There are probably lots of other potential direct cost reductions that might apply to any given proposed social media implementation.  Next week, we’ll talk about some indirect cost reduction benefits and some revenue increase benefits that you might consider.

Defining Social Media Benefits Pt 3

In the first of this three-part series I blogged about finding benefits for social media solutions.  A brief recap: the most effective benefits you want to look for are 1) opportunities to directly reduce costs, 2) opportunities to improve productivity, and 3) opportunities to increase revenue.  Last week I mentioned a few obvious direct cost reduction benefits to consider.  This week, I’m going to look at some of the soft cost reduction benefits and revenue increase benefits to consider.  As with last week, not all these benefits may be relevant to your particular solution.

Most of the so-called “soft cost” or “indirect cost” benefits involve some type of productivity increase for internal assets, most notably employees.  A benefit may make an employee’s job easier, quicker, or more accurate, enabling them to perform more work or to complete the work they already have at a higher quality.  While on occasion these translate into opportunities for hard-dollar cost savings (if they, in fact, can be used to justify headcount reductions), repurposing employee time usually is considered a soft-dollar savings, no matter how much time is saved.  Instead of “cutting heads,” these productivity increases often come in fractions of a Full Time Equivalent (FTE). So in effect, you’re not cutting heads so much as fingers and toes—which aside from being frowned upon won’t save the enterprise any real money: what’s left of the employee still has to come to work and get paid.  Social media solutions can indeed present multiple opportunities for increasing productivity, and whenever the social media solution you are considering is primarily intended for use by employees, you should define and quantify numerous benefits in this area.  Some obvious examples are things such as Improve Employee Collaboration, Improve Employee Knowledge Transfer, Improve Employee Training, and so on.  Again, usually soft-dollar benefits are not as compelling as hard dollar benefits, but they can still be used to generate a decent business case.

The final category of benefits to consider is those that would result in increased revenue.  In my experience, these are the hardest benefits to build a compelling case for, but it can be done.  The social media solution you are considering might make customers more satisfied, resulting in Increased Customer Sales through additional up-sell and cross-sell opportunities. They might increase the time the users spend on your time, translating to Increased Revenue per Visit (and perhaps Increase Average Visits per Month).  While most people will readily believe some level of revenue increases, the trick to generating believable revenue increases lies in finding numerous (and credible) metrics from similar clients.  If you can find a competitor in the same space as your enterprise that has achieved measurable gains from a similar social media initiative, you are golden.  If you can’t back up your benefit assertion with credible metrics, you are probably better off just presenting benefits you can justify rather than trying to throw in every possible benefit you can think of.

A former colleague of mine made an interesting statement about business cases and finding value that has stuck with me over the years: “If you are solving a real business problem, a business case is always possible.” Put another way: if you can discover a solution that eliminates a major business problem, you can always quantify the value of that solution and present a positive ROI as a part of a comprehensive business case.