I love Gary Vaynerchuck. A lot of people hate him and I understand why, but I can’t help to get passionate about Social Media every time I hear him speak. In the video above he answers a question on LeWeb’10 how to measure the ROI of Social Media. Blunt as ever he throws in some jokes and weird connections, but he does make some valid points.
All of us know how much money we’ve spent with people we either know or that we are recommended to. This is how we buy things. Word of Mouth is the currency of how people spent their money. That is where this entire ecosystem is build on.
This is how we have spent our money since the dawn of time. Peer influence and recommendations have always been a major influence on our buying pattern, together with price of course. The difference with Social Media is that is has become more visible and more measurable. The current state of internet technology gives us the tools to bridge the gap between the real world and the virtual world.
The word Media in Social Media is the whole problem. The word Media requires ROI. If we rename Social Media to ‘Relationship with the Consumer‘, the question about ROI fades instantly. Everyone knows how valuable that relationship is.
I truly believe in that. Having a visible, understandable and mutual relationship with your customer is priceless. The difference with the internet is that it brings scale into the equation. The internet brought us a communication cost of nearly zero and a scale we couldn’t apprehend before. When with the introduction of Social Media our customers could not only consume but also interact with us as producers a new type of relationship was born. When you are able to interact on a near personal level with your customers by using Social Media then that is your ROI and Word of Mouth is your currency.
Of course Nielsen or McKinley will come up with a number like Gary says and maybe it will indeed be $3.09. But the real value of this new relationship will be far greater and we all know that.