Social Media: Yes, It Will Make You Money!

I’m just back from Social Media World Forum , where I’ve been in a panel about the use of social media in a business-to-business context.

I was the only journalist, alongside people who do social media for a living, for mobile tech company Psion and insurance/savings company Prudential.

It got interesting when we discussed how you go about justifying your firm’s investment in social media. The difficulty is that the benefits are often unquantifiable – and so are the costs. But the good news is that, if you talk to the right people, in the right language, it can be done.

The day I justifed email

The idea took me back through the mists of time, to a day when I found myself editing a paper publication, in a company which had no email.

I had to persuade my employer to get online. Never mind talking about being modern; if we were going to buy a modem (costing £100) and pay monthly costs to a bulletin board, I had to show cost-savings to cover that expense.

It was an easy job. I simply took our courier bill, showed how easy it was to email files instead of sending floppies on a bike, and convinced the boss the modem would pay for itself in four months.

Of course, the real benefits of the system for me were vastly distant. Through instant communications with writers around the world, I could make a better journal and, as online services came along, I could make use of them.

Why you need social

Justifying social media is similar. If you work for IBM of course, you can use deep analytics to show the online perceptions of a company, and convince them that if they don’t get into social media, their reputation is at the mercy of others, in a very important set of forums.

But for most of us, within a company, we can see that social media will make things better, we just need to prove it to someone.

One approach is the internal one. Kelly Thomas, on the panel, is head of marketing for PruProtect, part of Prudential. She told how her company has forums for its staff and partners. In many cases, simply opening up new lines of communication within the company pays for itself.

IBM reckons that socialy-enabled employees are happier, and IBM’s sandy Carter told  me recently: “if we retain one percent of our top talent, we save $50 million a year.” There’s a figure that should more than cover the modest cost of doing social.

External justifications are also possible. According to Jonathan Brayshaw, Psion answer about five percent on its helpdesk support needs by having forums in which users answer each other’s queries, with a little supervision from Psion people.

Again, five percent of your helpdesk is a real cost, and should cover most companies’ needs for social media investment.

The real benefits are greater

Of course, the real benefits of social media go beyond these small comparisons – just as getting online in the 1980s, was about much more than saving money on courier bills.

But it’s harder to justify that. “It’s allowed us to have a whole new business model,” said Brayshaw, only to have the panel chair, marketing consultant Peter Young, point out that a new business model isn’t automatically a good thing. It might be a worse one.

The benefits – as with email – will in the end be stark. The business world is moving into the social media space, and if you don’t you will be left behind. The only problem is, at this stage, it’s not necessarily obvious.

Next week, we are launching some research which will help make this more clear. eWEEK Europe’s parent company, Net Media Europe now has a research unit, whose debut project looks at the use of social media in business to business buying decisions.

It’s an area that has had little coverage compared with business-to-consumer social media marketing, and it’s come up with some interesting results.

The details will be available next week, but for now, consider this: we spoke to hundreds of people across Europe, who buy IT, and asked them if they use social media in their choices. Only 12 percent said they did.

But when asked in more detail, about their actual use of different kinds of social media, it rapidly became obvious that their real use was much more extensive, and there is now a very widespread use of information gained form some sort of social media.

In other words, social media is well on its way to becoming a default way to do business – but it may be hard to get a handle on because it’s so transparent, and for many people has become something they do without thinking.