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Internet Marketing

The "ROI" of social networking

Use different measurements when calculating the return on investment of your social media activities

By Adam DeGraide and Tim Sawyer

Mention “tweeting” in a room full of insurance industry decision makers, and you’ll most likely get a combination of sarcastic laughter, nervous shifting, and bemused nodding. Insurance professionals are known for their ability to assess and manage risk, so the thought of opening themselves and their businesses up to public commentary from anyone with a keyboard and Internet connection is a cringe-worthy prospect for some.

And, according to the court of public opinion, insurance is not exactly at the top of the coolness food chain.

So given this, it’s easy to understand why so many independent agents are still hesitant about participating in social networking—Facebook, LinkedIn, Twitter, blogging, YouTube, and such.

But consider this: The social networking communities are no different from a local chamber of commerce function, an 18-hole business meeting, or a three-martini lunch. Are the relationships a bit more superficial? Sure, but the ability to connect with hundreds, even thousands ofprospects in a way that fosters trust, educates, and shows that your business is focused on the right things does more to plant seeds for the future than quaffing any number of martinis.

There’s a fundamental shift occurring in the way people shop, communicate, and get information. Regardless of whether or not agents choose to accept the shift, as technology develops and everyone is able to access information more rapidly, this shift will continue and the importance of digital technologies and Internet marketing will only increase.

Social networking has moved beyond the realm of college kids sharing drunken pictures from the weekend party and homebodies posting updates of what they had for breakfast. People trust recommendations from their social graphs more than mainstream media or advertising messages. The news we want now finds us thanks to the Twitter feeds we follow, the RSS feeds from blogs we read, and the fan pages we like. Failure to reach people at this level means a failure to connect with new prospects, earn referrals, and differentiate against the competition.

Educate, don’t sell

No one joins Facebook or watches a YouTube video to be sold insurance. Agents need to remove the “killer sales” mindset from the equation and create relevant content that establishes the agency as a resource in the consumer’s mind, even when they don’t need insurance, This, in turn, will put the agency in the best position possible when that person finally does need insurance.

Online communities aren’t built through coercive messages and shiny giveaways because neither achieves trust or community loyalty. However, a genuine dedication to helping others combined with a consistent, focused approach keeps the agency front and center with customers using messages that have little to do with selling, but everything to do with differentiation.

When looked at through a different lens, social networking is actually perfect for the insurance industry since it’s more about sociology and relationship building than it is about content and technology. Obviously content is what reaches people and technology allows it to reach people, but without a vision of why the content matters and the strategic relationships to push it outward, content will just be words on a page. Good for search engine optimization (SEO) maybe, but not exactly a strong “social” presence.

Many of the agencies that are active in social networking have a staff member whose responsibilities include the upkeep and oversight of the agency’s social media activities. These managers act as live nodes on a constantly flowing wave of information. Agency departments or co-workers help feed them relevant content that reaches an ever-expanding online community of media, vendors, customers, and thought leaders.

On the other side, information constantly flows in from the online community. With proper monitoring, this information can enhance operations and provide valuable feedback about brand perception while helping agency owners or executives forecast trends and prepare for the future.

Return on investment

Agency owners frequently ask about the return on investment (ROI) of social networking…the hours spent status updating, blogging, and tweeting.

Erik Qualman, author of the best-selling book Socialnomics, is known for a fairly well-publicized quote: “The ROI of social media is that your business will still exist in five years.” While the quote stretches reality to some degree, especially given the size and value of our financial institutions, the core of his point is right on.

Agencies, big or small, that can execute social networking effectively will be in a much better place in five years than those who choose to ignore or make a lackluster effort.

The message seems to be: Embrace and grow, or ignore and shrink.

There are myriad ways you can look at assigning value to a social networking program. The easiest way is to simply monitor whether your fan and follower counts are increasing, and at what rate. In that same vein, you can track referral traffic from your social sites to a landing page or your home Web site—especially helpful when you have a quote form or other lead-capturing tool that grabs follow-up information without a real person ever entering the equation.

If you want to get a bit more complex, you can run a specific social media campaign and simultaneously track the growth of leads generated, policies written, or any of the traffic and follower metrics listed above. After the campaign closes, take a widescreen view of the campaign and determine whether numbers increased over the same time from the previous year or even the previous month. Other factors come into play, but it provides a quantitative look at the effectiveness of social networking as well as lessons about what works and what doesn’t.

On a less scientific level, there can be great ROI gains in reputation management. A couple of scathing reviews or a scandalous news story on page one of Google’s search results can be the only impression people need when considering where to shop for insurance or other financial services. The ability to bury the negativity, or at least counter it with wholesome transparency, can be one of the most important roles social media can play.

 Aside from the time the agency puts in, social networking is basically free. For this reason, it makes more sense to focus on the “R” (return) as opposed to the “I” (investment), since the agency can attach its returns to specific business goals without worrying about financial collapse. It’s tempting to view social networking through profit and loss statements, but the true ROI is almost incalculable because feelings and perception aren’t easily quantified.

The Internet represents a world of potential for every business owner. And while a strategic social networking plan won’t manage your employees, it can play a critical role in the success and growth of every department. Reputation management, lead generation, brand awareness, and thought leadership are important returns, but relationships are what drive social media.

Insurance is a relationship industry, isn’t it?

The authors

Adam DeGraide founded Astonish Results, a digital marketing company, in 2006. Tim Sawyer is president of Astonish Results.


It's tempting to view social networking through profit and loss statements, but the true ROI is almost incalculable because feelings and perception aren't easily quantified.











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