2008 proved to be the year of the demise of bad investments. It had to happen sooner or later and the financial world has suffered because of it. The lessons to be learned from bad investments can be applied to any form of currency, including your time and effort.
Investing in Social Networking and Marketing
I started thinking after reading about Robert Scoble pondering whether he had done the right thing with social networking. Robert has invested his time in gathering as many followers and friends as he can so that his position as a self-proclaimed “thought leader” has as big an audience as possible. But gathering people is not his “core business”, communicating ideas is.
Investing in something that is not part of your basic business is going to be detrimental to your business.
Robert has been focused on numbers, and numbers are meaningless without focus. Are large numbers helping Robert being a thought leader. Nope. They are just people.
The beauty about social networking is you can leverage more communication through less people. Providing good content and conversing with the right people would be a better model for Robert’s effort. Seeking out the hubs and communicating to them, not blanket bombing hoping he will hit the target once in 100 followers.
It takes a LOT of work to service thousands of followers when you use a reciprocal model of social networking. The noise is deafening and the feeling of responsibility must be enormous. None of which is helpful to a business.
Profit + Leverage
The widely understood definition of “being in business” is that you are exchanging goods and/or services for money.
The smart business person will try to make as big a profit as possible in doing that. When it comes to time and effort you might see people talking about leverage, and that is basically looking for a larger profit/result in the amount of time or effort you spend on something. The goal of a profitable business should be to profit not only in cash, but in time and effort.
Heretical statement : If your market is not yet using social networking/media then consider very carefully how much time and effort you are spending in trying to build a relationship with your market. Can that time be better invested in relationship building in other areas that will profit you better?
Take my local Indian Restaurant – Castle Taj. Every couple of weeks we order over the phone for home delivery of their delicious Indian food. They have a static website with their menu on it (which has an awful design fault of not having the phone number on the menu pages!) and when I give them my address they are friendly and remember me.
Yesterday in the mail came a hand addressed and written Christmas card to me and my family, from the proprietors of Castle Taj (haven’t got the card here to refer to their names sorry). In role playing game terms they earned +10 reputation points for that gesture. What was also nice was the card was a charity card, so I could see they were thoughtful about others, not just only their customers.
That investment of 5 minutes writing addressing and sending the card (and 50c for the stamp) has earned them a year’s worth of loyalty from me (20 orders of about $50 each = $1000!). A great investment!
If we were looking at how to help Castle Taj with social marketing we could suggest Castle Taj friend all Australians they can find. Create a newsletter, send out emails and tweets about Indian cooking tips etc, more time and effort; and in the end that will not help their core business of exchanging Indian food for cash. In short it would be a bad investment.
Alternatively they could seek out everyone they could find from Castle Hill (same amount of time as looking up Australians) and follow them, then offer a “Twitter Only” special or similar and only Tweet regularly a few times a week and they have a social marketing model that is in tune with their core business. Less effort for a larger profit.
So think about your business for a moment and determine whether you are making a good or a bad investment in how you spend your relationship building vs social networking time. It may be that you need only make a tiny investment online in this area and more time offline.
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