Interview on Social Media Business Usage with Valio’s Digital Marketing Manager Jussi-Pekka Erkkola
This interview on with Valio’s Digital Marketing Manager Jussi-Pekka Erkkola is an extract of the interviews conducted for my master thesis on Social Media Business Usage with some of the world’s leading experts on social media.
You can find the previous parts of the interviews here: Are Your Marketing Efforts Really Aligned? World’s Leading Experts Answer, Experts Discuss The Most Common Mistakes In Measuring Social Media ROI and Leading Experts Discuss Social Media ROI
The questions are preceded by my initials KCP, Kelli-Carolin Parkja, and the expert´s answers are indicated with his name. To contact me, write to me: [email protected]
KCP: How do you define the value of your marketing efforts?
Jussi-Pekka Erkkola: We are looking at the effect on sales of our campaigns. The quite traditional transactional value of how much more we sell or at the same time, how much we are saving, when thinking about choosing different types of media. Let’s say that investing in the online marketing might be more costly, but we might have the same effect in a better way online than through other channels. We are also looking at customer satisfaction, like increased revenue, decreased costs, customer satisfaction or loyalty, from that point of view. There are a lot of different measurements based on these, but those are the main things that we are looking into.
KCP: Of all the different mass communications tools your organization is using, which is raising the most euros/dollars (directly or indirectly)?
Jussi-Pekka Erkkola: TV is number one still, but online is reaching it quite fast. When you think about FMCG, the business that Valio is in, then at different markets the most products acquired, are low interest products. So mass media is still quite effective, but we are seeing quick results with online marketing, where our customers are. TV is first, online is a good second and after that you have print and more traditional media.
KCP: Why do you use social media and what does it mean to you?
Jussi-Pekka Erkkola: At Valio, in our business, we use social media in a lot of different ways. We use social media or social enterprise tools internally, for better communication within the organisation and with our partners. The internal part is one thing and then of course there is the external part. For us, that means B2B marketing for building better relationships and better networks, when it comes to thought leadership, because we are also selling technology. Mainly, it is consumer facing marketing activities. Social marketing is about how we can interact with our customers better, how we can add value. It may be related to helping them out, helping them understand how to use our products, giving them inspiration to do recipes or sharing something funny that they can just like. This kind of educating, engaging and inspiring them is one aspect. At the same time, we react when people are having problems with our products and our company. We want to be quick and answer these questions online. We want to cultivate this kind of a fan base for us, relations with food bloggers and people who are thought leaders in our industry. We value these people and we get something back from them – following product reviews online or people discussing about the brand or our products, for example. Through that we get more and faster feedback into our systems and we can utilise that in product development and in business development. Social media for Valio is a quite broad area.
KCP: How do you measure the ROI of social media activities?
Jussi-Pekka Erkkola: It depends on the activity. When it is about awareness that you want to reach, as much people as through traditional media, then it means calculating saved media costs. When doing something on Facebook, you want to know what is the reach, how much we save money when it comes to getting similar kind of results through bought media. We are using these basic media calculations. When it comes to wanting to do something to engage with our customers, then it might be a bit harder to calculate the media value, whether it is people recommending our products or again how much would it cost for us to get similar kind of impressions. Or how much we are saving time and money, when it comes to using social media online. In case of getting customer insights, for example, we want to know, what is the real effect on these kinds of business costs, on speed, on those levels. This is quite hard to calculate, because there are so many different ways of using it. The easiest way (we haven’t done it at Valio yet) is measuring how much more we can really sell through social, calculating those conversions. Through this activity we try to find out, how much more revenue we got. There are a lot of these cost savings and increased revenue calculations. But you also to need to somehow tie it into the media and media buying, traditional media.
KCP: Is there one specific formula that you use and if yes, what is it and why do you use it?
Jussi-Pekka Erkkola: There is not one specific formula that you can use to calculate all the benefits from social media for brands and companies. What we have been looking into, quite an easy measurement, is looking into the cost savings in other media value. For example, impressions in Facebook. How much would it cost if we got the same amount of people through more traditional online activities like bought media, banners, things like that. We need to understand, what is the reach, what are the impressions we are getting, then again what is the average value on this industry, for example CPMs (cost per 1000s). Then, what is the factor, how many times getting people to spread our message is more effective than bought media. That is one way of calculating ROI – the alternative costs. When I was working at Nokia, they were measuring “time to market”. That is one way, to see how much faster we can bring a product or an application into the market when we are utilising consumer feedback or open innovation. Also looking into cost per contact, that is quite an easy way of doing it when you think from customer service point of view – how much does it cost for one person to call the call-centre. That is usually multiple euros, but how much does it cost to serve people on Twitter, in forums or just in a chat? That in turn is much much more cost effective. Also, what is the cost when you can get people to help each other. There you can replace the few euros to a few euro cents in a way. So that is one thing you need to look into when it comes to customer service costs – cost per contact. How effective social media can be internally on the outside.
KCP: What are the industry standards that you know of, that exist in measuring social media ROI, and do you follow them?
Jussi-Pekka Erkkola: There are no standards yet. There are the media costs and you can calculate that. Otherwise, it depends so much on the company and what kind of industry they are in, what is their situation and how well they can isolate specific activities, social media campaigns or ongoing activities, for example. On the B2B side it is much easier to calculate the cost per lead and calculate leads and to track that into the sales. But on the consumer marketing side it is much harder. When you do not have an online status in place then how can you know, what is the last click, where did you reference it, where did the sales come from, how to get people to recommend your products, as it is known that people trust peers, and what is the value of peer recommendation as this can be really high. There is a way of measuring net promoter score. But what is the value of a really positive and outspoken person for your brand who is your brand advocate? It might be tens of thousands of euros. It depends so much on your industry. That is one way, to find out how much more sales you have been doing because of this advocate. It is hard to do but it can be done.
KCP: What are the most common mistakes that one can make in measuring the ROI of social media?
Jussi-Pekka Erkkola: One of the common mistakes is just to look at it from one point of view, one perspective. There are multiple point of views of how you can calculate the value. If you want to look at what the cost effective media is, how much more we are getting impressions when we are doing something on Facebook for example, then you need to also count operating costs. That depends on the company whether you do or you do not count those as costs.
KCP: What has proven to be the most efficient social media metrics and why?
Jussi-Pekka Erkkola: That is a hard question. Coke, for example, has this kind of framework they are talking about like impressions and engagements. Then again, the most effective way is to show the business impact, how much more sales was gained or how much was saved from customer service costs. There is not only one metric or metrics’ framework. You have to at least calculate some kind of a financial figure. The more you can show sales or gains on some business metrics or marketing metrics, like customer satisfaction, the better you are.
KCP: So the traditional thinking of ROI of social media, should it be broadened?
Jussi-Pekka Erkkola: It is this kind of a wider perspective of how online and social media can benefit your business. At the same time, there are always possibility costs. For example, when there is a crisis and you have prepared for that, but you are not fast enough and you did not follow social and online discussion. Then, of course, there are these possibility costs, when you don´t act fast enough then there might be a loss of sales or loss of business. You need to somehow prove, how much it would have cost if you had not acted on social so it is a broad perspective. It is also about cost avoidance. That is something usually forgot, that it is not only about increasing sales or increasing costs, but also about cost avoidance.
KCP: Is the best way to prove the value of social media to the management via ROI or in some other way (what other way)?
Jussi-Pekka Erkkola: I would say both. The more you can show the revenue from social then that is a start, but also qualitative things like blogger relations or lead users studies online are important. You might not be able to put a number in that, but we get a lot of good consumer insights, previous influence, social advocates and hard core fans. So how can you show what was the value from this really in-depth data that we got from these sources? When the research is much more in-depth than through more traditional marketing research techniques, show them both. Quantity, the numbers, and the quality – that this was the best way of doing something.
KCP: What is the non-financial value that you gain from social media and how do you measure it?
Jussi-Pekka Erkkola: That is branding, consumer branding or employer branding. For example, we are active in Twitter and our potential future employees are there and the people see that we are doing cool things, they think that maybe they would like to work with us. So calculating this kind of value for employee branding activities is though, but we need to somehow do it. When you compare it to different communication activities like customer care or contact centre or press release, then what is the value for one press release. Sometimes you can count it, sometimes you cannot, so you need to examine these more qualitative things and research both benefits.
KCP: How do you measure it?
Jussi-Pekka Erkkola: When you are doing consumer research and fetching insights from trends, in our case food-trends, for bloggers and we follow what people are discussing, it might be based on these insights. We want to bring products faster to the market and also we want them to really fit in the consumer segment that we are trying to achieve, so it might be better customer satisfaction and they spend more on us. Or HR activities or employer branding, it might be that more applicants come through social channels or more applicants come through the web. There is a way of measuring.
KCP: What is your customers´ viewpoint of you using social media in your enterprise? What have you gained/lost through that and how to explain it?
Jussi-Pekka Erkkola: It is really positive because we as a brand, we are recognized here in Finland, also Sweden and Russia, people like us quite a lot. But we are still quite traditional at least in some customers´ mind. When they see us on Facebook or Youtube or our web service, they think it is very cool. We are pushing the boundaries in this industry when it comes to using social media. That makes us a good benchmark, people like it much more because they have a faster, more open channel to get feedback or give feedback, so it is really positive.
KCP: What is the future perspective of social media in your enterprise and in general in the business scene in your opinion?
Jussi-Pekka Erkkola: In our enterprise it is more about enterprise 2.0 thinking internally. When it comes to external, it means more and more social CRM kind thinking of how we can serve people better, not depending on which channel they are contacting us. Show them how we have value, how we serve better, how we bring better products into the market. Thinking about social CRM, there is a lot of feedback that people want to give us. There are a lot of people, who want comment on our online services. How do we get that data faster into our systems, how do we identify, who these people are, and how to serve them better through products, through customer service, through online or other channels is the challenge. There is a lot to do on that side as for social CRM there are not really ready systems yet. A few global companies have started to use it, but they still are fragmented. There are systems that they call social CRM, but they might be social media management suites. These social CRMs are coming and we are looking into these solutions, but that will happen in around three years.
KCP: Is there something you would like to emphasize, to add?
Jussi-Pekka Erkkola: I would emphasize that social is much larger than only social marketing. It transforms the way organisations are working internally with their partners but also with customers, with B2B and B2C customers, that is the main thing. You need to look into social from different levels. Not only is it Facebook or blogging, but you need to look at what are the effects that it brings into organisations and businesses. We do not know all of them yet, so it means learning every day. As one of my old colleagues said, „It’s not a campaign, it´s a commitment“.
Posted on: June 18, 2012
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