Return on Relationship
The phrase Return on Investment (ROI) has become well associated with social media and is used as a way of measuring if social media is effective for helping the bottom line grow. But I think another phrase that social media has introduced or at least emphasized is Return on Relationship (ROR). The difference between these two terms is important to understanding how business is changing.
Return on Investment is focused on the bottom line, “What’s in it for me”. It’s mainly about determining what the benefit is from doing all the activities, and it is useful in the sense that its important to know that your effort is yielding results that you can integrate into your life. A business does need to measure ROI in order to understand what strategies and actions are effective.
Return on Relationship is focused on what’s in it for everyone involved. In other words, the measurement is on relationships and determining how everyone has benefited from the relationship, as well as how everyone can continue to benefit from it.
Social media has made the return on relationship more visible, because its a very public medium where people can and will discuss the relationships they have with businesses. As such businesses are starting to recognize that their behavior is a lot more visible and that they need to consider the relationship as well as the bottom line. Businesses can do this by adopting a perspective that examines ROR and determines how it fits into ROI, while also still developing a relationship with clients.
It’s important to acknowledge that relationships can effect the bottom line. A client’s loyalty can turn into a lot of business, both from him/herself and and also from people s/he refers, but its contingent on how much a relationship the client feels s/he has with that business. If a client feels like s/he is a number, then there is less incentive to stay in a relationship with the business. If a client feels that the business is invested in the client then s/he will be more likely to return. Businesses that recognize that also understand that ROI alone can’t fully measure the success of a business, if there is no understanding of the relationships that enable profit.
Categories: social influence, Social Media, social media behavior
Tags: customer service, return on investment, Return on Relationship, ROI, ROR, Social Media, Taylor Ellwood
