During last week’s BusinessWire sponsored panel discussion at the City Club in Cleveland (video above), every panelist agreed that determining social media ROI should be a distinct component of any social media campaign. So why do so few companies track any form of ROI?

Because it’s boring.

There, I said it. The cat’s out of the bag. Determining social media ROI is tedious, dull and boring. It requires you to read reports, check analytics, create timelines and check data against specific activities and website minutiae that are profoundly uninspiring, yet absolutely necessary.

Getting a social media program off the ground is fun. It requires strategic planning, creative execution and active engagement. Everything is fresh and exciting. Every new conversation is an affirmation and every relationship is a success.

Tracking the results of this activity, however, is considerably less fun. Although there are excellent software tools, like Radian6, that will measure the success of your social media efforts, most of these cost money. Social media is supposed to be free, isn’t it? So, most small companies will likely develop some home-grown, spreadsheet based tracking mechanisms to determine their ROI.

And then, they’ll be largely ignored or neglected, like 84% of social media programs.

Because tracking ROI requires you to know what you’re measuring, how to measure, how to interpret the data, how and when to establish a baseline, how to measure impact and requires you to track specific transactional activities.

And where’s the fun in that?

This past week saw the public release of three of the silliest attempts by professional sporting associations to manage and control the use of social media channels. The NFL, the SEC (who count as professional in my book, since three of their teams could beat last year’s Detroit Lions) and the USTA all published social media guidelines intended to control the dissemination of information by players, coaches, media representatives and even fans.

The SEC was first out of the gate with their near universal prohibition on any and all social media communications during a game. Yep, their first draft even prohibited college gameday fans from tweeting about or, heaven forbid, sending a photo of, their team’s gridiron splendor. To their credit, the SEC revised their published guidelines and acceded to the desires of rabid and frequently gun-toting fans to celebrate through concise tweets the magnificence of their student-athletes and their impressive SAT scores 40 yard dash times. As long as there are no commercial interests attached to their 140 character broadcasts.

The NFL, in all their controlling authority, were next to publish a set of draconian restrictions on social media participation. This time, the league’s prohibitions were directed at players (and anyone representing them), coaches and officials from engaging on any social media channel from 90 minutes before gametime until after all media interviews after the game’s completion. The media were also put on warning about sending any tweets or other messages that could compete with the broadcast of the game. So, a fan sitting a row below the press booth can tweet the score, but the reporter sitting six feet above him cannot. Makes sense to me.

The USTA released the silliest and least enforceable social media policy, warning against the dissemination of “certain sensitive information” that could be considered “inside information” about a match. Even Andy Roddick commented on the lameness of the USTA’s efforts. Specifically, the USTA is concerned about:

“information about the likely participation or likely performance of a player in an event or concerning the weather, court conditions, status, outcome or any other aspect of an event which is known by a Covered Person and is not information in the public domain.”

But, once someone tweets about court conditions or weather, doesn’t it immediately become public domain? Are there really any super-sensitive tennis secrets that, if revealed, would alter the fundamental nature of the sport itself?

I can understand the league prohibitions on tweeting during games. Players, coaches and officials should be focused on the game itself, not on satisfying their Twitter followers or Facebook Fans with status updates. But prohibitions on media members and even fans is both ridiculous – do they really believe we won’t tune in to watch the game if we can get a Twitter update instead – and utterly unenforceable.

Want some reasonable social media guidelines?:

1. explore ways to engage online before, during and after the games. Post a scrolling Twitter feed on the scoreboard with a scrolling feed of all comments that include your team’s hashtag. I did this during the Final Four, and the Twitter feed was more fun than the game. There are some hilarious tweets flying through the ether that could be shared with the entire stadium.
2. toss up a twitter poll during the game to make the game more interactive. Twitter poll question: Will Tom Brady throw for more yards today than the entire Cleveland Brown offense generates? 63% say YES.
3. put a highlight YouTube video up on your Facebook Fanpage at halftime and again after the game. Tweet about the video so fans can click a link and watch in the stands on their iPhones and Blackberrys.
4. sponsor contests that spectators can enter via Twitter
5. publish online stats, again distributed realtime via Twitter and Facebook
6. accept the fact that you cannot control this social media phenomenon. You can continue to publish more and more specific prohibitions and narrowly defined exceptions in a vain effort to wrestle control of these assorted publicly directed channels, but you are tilting at online windmills. Embrace the brave new world of social media, and learn how to harness its power to fulfill your own goals. They shouldn’t be too different from your fans’.

Social media can be your friend. If you play nice.

A recent study released by Universal McCann reveals that we are immersed in the fourth wave of internet usage characterized by social networking participation. Their study notes that social networks are becoming the dominant platform for personal interaction and content creation and distribution.

The global internet audience now totals 625 million people, with almost 100 million of those users located in the United States. Nearly two-thirds of these users are active in one or more social networks.

What’s also revealed is how these users spend their time on the social networks. The most popular activity was watching video, followed by listening to streaming audio, blogging and connecting with friends.

What does this mean for you or your industry?

First of all, the place to connect with people – whether personally or professionally – is on one of the social networks. They’ve made their choice how they want to interact with others, and it’s not through email. For professionals, this typically means LinkedIn, though Facebook is being used more and more by professionals who have learned to adjust their privacy settings so as not to share overly personal information with other professional contacts.

These trends also mean that you need to generate content that is interesting, engaging and compelling enough to generate views and inspire your connections to share your content with their own network of friends and colleagues. The dominant format for this content: video. If you’re not creating videos to put on your site, your blog, your LinkedIn page, your Facebook Fan Page, then it’s time to start.

But don’t stop with video. Over 70% of social networkers also post photos to their pages. People want to see who they’re connecting with, and a thoughtfully designed series of photos can generate a powerful impression. For the professional, these can include images of your office, your personal workspace, your coworkers and even photos from events that you participate in. Sharing some personal visual insights will increase your familiarity, strengthening your connections with your networks.

Finally, if your company really wants to engage online, you need to create a community that’s worth joining. That means frequently updated, compelling content. The promise of interaction with other, like-minded people. A thoughtful, meaningful – even delightful – user experience. And the ability to listen to your community members and adjust your activities to satisfy their needs, not yours.

I wrote yesterday how Continental Airlines lost my luggage Sunday night on my trip from Tulsa to Cleveland and yet managed to salvage their reputation by accepting responsibility, apologizing quickly, detailing how they were going to solve the problem and then following through and delivering my bag to my house.

But I got to thinking last night how they could have turned their failure into a memorable example of their customer commitment with the application of imagination and creativity.

The steps I detailed yesterday are the customer service minimums necessary to assuage an aggrieved customer. But what if you want to do more? How can you transform a customer service mishap into a distinctive, memorable, brand building event?

Let’s consider Continental’s dilemma: they lost my bag and must return it. So, how could they transform this simple logistical exercise into a memorable experience? Off the top of my head I can think of several.

1. Provide me with text messages, Tweets or email notifications when my bag makes it onto the plane, when it lands, when it’s put in the delivery van and when it’s delivered. Every bag is barcoded and it would not be difficult to extract this information along the bag’s route and keep me posted regarding its progress home.
2. When delivering the bag, put a special luggage tag on the bag, preprinted with name, address and frequent flyer number that connotes special bag handling treatment on future flights. The tag could instantly communicate to baggage handlers that this customer was inconvenienced before, let’s make sure this passenger’s bag is never mishandled again. It would be nice to know that my bag was being treated like a VIP on future trips.
3. How about popping a free upgrade into my frequent flyer account for use on my next flight to compensate me for my inconvenience?
4. Attach an envelope to the returned bag with coupons for free drinks or movies on my next flight. The envelope would be designed to stay attached to the bag so that I would have them in hand the next time I went to the airport and checked in.
5. Send me an email apologizing for the airline’s error and providing a link to an assortment of perks that I can print or send to my smartphone to use on my next flight.

Instead of putting the failure behind them and forgetting about it, they should use it to provide continuous reminders of their commitment to passenger comfort and service. Celebrate the mistake, bring it front and center, let other Continental staff members recognize those passengers that have suffered from less than stellar service so they can make up for it. Track the mistakes, publish them, and make sure your staff is aware of your trends and rewarded for eliminating poor service.

Or, they could follow United’s example and just break my stuff. Any other ideas?

This week saw the debut of a YouTube video United Breaks Guitars by Canadian songwriter Dave Carroll that satirized United Airlines’ negligence and indifference to the way their O’Hare baggage handlers damaged his guitar. The video went viral and accumulated more than two and a half million views and over 14,000 comments in less than a week.

The attraction and impact of Carroll’s video demonstrates the enormous potential of social media tools when wielded skillfully and exposed the vulnerability of sclerotic organizations with no social media aptitude or capacity to engage their clients in substantive dialogue.

Do you want your SM content to have the same impact? Follow these lessons:

Lesson 1: Tell a story. Marketers continually preach the value of storytelling for a reason: stories stick. Carroll’s song tells his entire story from witnessing the guitar carnage at O’Hare to the denouement nine months later when his claim is finally rejected by the kind Ms. Irlweg. There was no recitation of United’s lost baggage policies, their industry ranking in bagage claims or even details of the damage done to his guitar. Raw data simply doesn’t have the impact of a well crafted story. No one who views his video will forget his basic narrative: United broke my guitar, they don’t care, they don’t take any responsibility for their negligence and he’ll never fly them again.

Lesson 2: Keep It Simple. Carroll’s song reinforces a simple message directed at United: You broke it, You should fix it. Simple, easy to grasp and powerfully true. If you click through to his personal website, he provides a written narrative that contains all the gruesome details of his nine month saga. But the song is actually more powerful because the core elements are all contained in his facile lyrics.

Lesson 3: Be Authentic. Authenticity is powerful and persuasive. Carroll doesn’t embellish his story, but relies instead on understated frustration and anger that thousands of his viewers can empathize with. Although he may be entirely justified in ranting against United’s casual indifference, his temperate presentation enhances his believability and strengthens his message.

For those wanting to emulate United, these simple lessons should help you enrage half a million clients yourself:

Lesson 1: Design Client Interactions to Maximize Anger and Frustration. One of the reasons that Carroll’s video resonates so powerfully is that it perfectly captures the indifferent response that so many travelers have encountered with the major airlines. While several upstart airlines like Virgin and Southwest have adopted business models that reflect a genuine concern for their passengers, the legacy airlines, including United, American and Delta retain business models that appear to be designed to antagonize and disappoint their passengers. Until the advent of accessible social media channels, they could get away with boorish behavior, but not anymore.

Lesson 2: Refuse to Engage Purposefully In Any Social Media Channels. United has a corporate presence on a single social media channel: Twitter.  And that presence appears to exist for outbound dissemination of ticketing specials and other company promotions, not to engage passengers in active dialogue. Is it any wonder that they appear coldly imperious and uncaring?

Lesson 3: Outsource Your Limited SM Participation to Public Relations. Visit United’s Twitter page and their profile reveals that the account is managed by their public relations department. Not by someone on the front lines of customer service. Not by anyone who has the authority to solve problems immediately. Nope, United apparently views Twitter as another media channel to be managed for their corporate interests, not as a method to interact in real time with their passengers. Want to complain? Not our department.

Lesson 4: Limit Your Response When Confronted With Execrable Behavior. In a case study for what not to do when confronted with appalling corporate behavior, United has limited their response to two brief Twitter messages (right) asserting that they intend to make it right with Dave Carroll and to use the video in future training so everyone receives better service from us. This anemic response is being overwhelmed by over 14,000 nearly universal negative comments attached to the YouTube video. As the video gains more exposure, it will be picked up in other media outlets and has the potential to inflict serious damage on United’s precarious brand image. But it appears that their ingrained, insular culture will trump any creative response that takes responsibility for their negligence and embraces serious change in their service delivery.

Imagine if all the social media tools and channels that we rely upon today were available back in the 1930′s while Stalin extended his dominion over the Soviet empire.

Eager to propagandize stories documenting the unrivaled success of his agricultural collectivization and industrial expansion, Stalin would have turned to his battalions of Party apparatchiks and impelled them to repeatedly Tweet the wonders of Sovietization. And like the advertising agencies slammed in today’s AdAge article, Stalin’s Soviet Ministry of Communications Enterprises and Functions (Digital Formulations) would have been an abject failure.

Mimicking Stalin’s command and control methodology, today’s behemoth advertising agencies are simply attempting to appropriate the assorted social media platforms as yet another ancillary broadcast channel where they can propagandize their uniformly one-way message.

Pursuing social media tactics that would have made the commissars proud, these ad agencies lack a few significant components that differentiate successful SM campaigns, including:

1. Transparency – the best SM programs enlist senior executives to participate in the conversations. They may not tweet with the regularity of their employees, but their participation sends a distinct message that dialogue with their clients is important for everyone in the company.
   The laggards outsource their SM chatter to ad agencies or other third parties, clearly communicating to their own staff and their clients (who will inevitably discover their dereliction) that social media is employed simply as another tactic, not as part of any strategic communication or brand building plan.
2. Authenticity – Twitter posts from named executives and employees resonate with clients and prospects. When the CEO pronounces his commitment to customer service or product quality in a global, open forum, that proclamation has significant meaning and impact. It’s not a nameless, faceless corporate voice, but Zappos CEO Tony Hsieh or Richard at Dell making these statements. Real people articulating real promises in their real voices.
3. Conversation – Social media is about dialogue, not broadcasting. Relationships aren’t built or strengthened when you yell your message at an individual over and over. He resents it and you derive no value unless your hectoring somehow compells him to purchase your product. Not likely. SM is all about generating conversations. Getting to know others online, building relationships, engendering trust and maybe, just maybe, finding a way to transact business together.
4. Longevity – Mars, Inc, the candy company that produces Skittles, followed the advice of their ad agency to make a highly visible commitment to convert Skittles’ entire online presence to Twitter. It turned out to be a huge failure. One of the biggest mistakes was for Skittles to cannonball directly into the Twitter pool and expect an enthusiastic welcome. Although their splash was huge, their welcome was not. Skittles had made no effort to create an online community, to engage with their customers or to provide any type of customer support or interaction. The strongest SM participants are in for the long haul. Their employees establish online reputations, contribute to discussions, interact freely with all participants and integrate their SM activities with their daily routines.
5. Community – Ad agency employees need a huge banner strung across their  ergonomically pure, ecologically sustainable Herman Miller outfitted cubicles reading: It’s Not About You. Self interest may be the single defining quotient of Twitter accounts that are managed by ad agencies. They formulate dozens of clever ways to announce their new product, to roll out a contest or slick giveaway and to link to their own promotional websites. What they don’t engage in is dialogue of any kind.

Cheezhead this week wrote about Monster.com’s recent announcement that they will (for a hefty fee) execute a social media strategy for their clients.

What’s noticeable about this announcement isn’t that large companies are becoming aware of the value of social media and are trying to cash in on the gold rush of consulting fees that uncertain and unfamiliar companies will fork over to play in the social media pool.

No, the shocking thing about this announcement is that Monster.com has absolutely no social media presence themselves. They don’t tweet. They have no Facebook page. And I can’t find a Monster blog. All of which suggests that perhaps they’re not the best source of social media advice.

What’s also disturbing is that they don’t promise any tangible ROI, just a number of impressions. That’s right, for a mere $12,000 they will set up a Facebook page and Twitter profile for your comapny and promise that a banner ad will appear on 2 million Facebook pages.  Are you whipping out your checkbook yet?

Developing a social media strategy isn’t something that you can outsource to a third party. It should be part of your strategic marketing plan with specific objectives and an anticipated ROI. Company participants need to engage online in genuine conversations. Bloggers need to write about their real world issues. Problems. Successes. Difficult issues. Complex questions. With an authentic, human voice.

It’s not easy, it’s not cheap, it’s not quick and it’s not someone else’s responsibility.

Living in Cleveland, as I do, I have frequent conversations with executives who run prototypical rust-belt businesses. Heavy manufacturing, industrial distribution and professional services that support these core businesses that are decidedly unsexy and unremarkable.

What’s surprising about these discussions is how many of these executives view their own companies as unexceptional and nondescript. Which begs the question: If you don’t think your company is remarkable and unique, why would anyone else?

As the former owner of a manufacturing company that produced labeling machines (it doesn’t get less sexy than labeling) I can attest to the dysfunctional industrial mindset that dominates entire industry sectors. Manufacturers are obsessed with their physical equipment, not what it is capable of providing. Distributors are the sum of their products, not the value they add in knowledge, responsiveness and expertise. And service companies have absolutely no idea how to separate themselves from nearly identical competitors.

When I hear these executives describe their own company in these terms, I see boundless opportunity. In most cases, their competitors behave in exactly the same way, enabling a savvy, thoughtful  and creative marketer to create a distinctive and memorable presence in their industry sector. And with the proliferation of penetrating social media tools, the ability to create an impression and reach your targets with precision and frequency has never been greater.

So if I can see the opportunity, why can’t they? I hear the same excuses over and over, including:

1. My customers aren’t on the internet. I was wondering who it was that wasn’t on the internet at all. Turns out it’s always the clients and prospects of every industrial executive I speak with. Theirs are the ones who don’t use e-mail, never watch anything on YouTube, get their news exclusively from newspapers, still use film cameras, listen only to CD’s and still deliver presentations from a stack of transparencies. I don’t believe it. What’s more believable is that these companies have never provided any reason for any of their clients to use the internet to gather information, gain knowledge or, heaven forbid, entertain.
2. My customers buy on price, so what’s the point? The point is that you’ve never given your clients any reason to base their buying decision on anything other than price. That’s the fundamental problem. You need to become more valuable, and a thoughtful social media program can communicate your distinctive abilities, and reinforce the true value you deliver.
3. What would I say? At first, it’s not about what you say, but how you contribute. How can you help? What do you know that you can share? It’s about them, not about you. Link to articles that you think they would find helpful and interesting. Link to videos that are instructive and entertaining. Link to research that will help their strategic business decisions. And write about the successes that you’ve contributed to and the problems that you’ve helped overcome. Nobody’s expecting brilliance. Insight will do.
4. I don’t have the time. What priorities do you have that are greater than developing your business? Building close relationships with your prospects and clients is not something you can outsource to a marketing firm. Your web developer cannot substitute Flash for real conversations. Want to demonstrate your commitment? Spend some time each day participating. If you don’t commit and engage, neither will your staff.
5. I would lose control. For many old school executives, the concept of social media participation is downright scary. What do you mean people can leave comments? What if they say bad things about us? How can I control what my employees say online? For the command and control executive, the openness of the social media channels strikes fear in their heart. For these executives, I can only commiserate and offer the limited consolation that the new world of social media marketing won’t be that bad if you’re authentic, open, truthful and helpful. Now is that too hard?

I had a meeting this morning with Michael DeAloia, Cleveland’s former TechCzar, who has spent virtually his entire career involved in assorted aspects of business development. As the founder of several technology start-ups, an advisor to emerging technology companies, former director of technology development for the city of Cleveland, former company owner, CFO and director of business development for several Cleveland area technology firms, the TechCzar is intimately familiar with the essential financial elements that enable business growth and success.

He’s also a social media maven, with two blogs of his own, a daily fixture on assorted social media platforms and the founder of two social media startups. Basically, he’s got the credentials, the experience and the detailed understanding of the potential of social media to advance specific business objectives. So, when he talks about executing social media strategies, a lot of savvy people in town listen.

That’s why I wanted to hear his perspective on social media ROI – a topic that’s inflamed the Twittersphere since Olivier Blanchard published his series of blog posts that excoriated the pretentious social media gurus who promote unreliable and flawed ROI models.

So, does ROI it exist? Should it be tracked? And, if so, how should it be measured?

As Michael makes clear, an essential element of any social media strategy is how that strategy contributes to business development. And business development is clearly defined as activity that generates revenue. It really is that simple.

Salesforce.com recently introduced tools that integrate the online CRM system with Facebook, LinkedIn and Twitter, thereby enabling their users to track contact and activity originating in the social media sphere. Salesforce’s integration an acknowledgement that companies need to track all of their business development activities, not just those emanating from the historic direct marketing channels. As marketing investment shifts to the new social media platforms, executives will need firm data to determine the efficacy and effectiveness of their assorted social media channels.

Sorry if this sounds so Web 1.o, but this is the real world, where investment decisions are based on hard data, not on warm feelings. Bottom line, if your social media efforts do not translate into an increased number of transactions, larger transactions, increased margins or reduced costs, then your insistence on the value of your conversations, retweets and Fan Page subscriptions is a pure and limpid farce.

As Michael concludes: “Dollars in the bank, baby.” Truth.

The blogosphere and Twittersphere have been buzzing this past week over a series of blog posts by Oliver Blanchard on his blog, The BrandBuilder, discussing how to communicate social media ROI to skeptical executives.

The posts sparked dozens of comments and hundreds of Tweets from social media aficionados that split between those who castigated Olivier for daring to introduce crass mercantile interests into the pristine world of social media and those who recognize the business realities involved with securing investment and executive support and need practical guidance to pitch their social media plans.

Olivier was precisely correct when he wrote that executives need to hear how any social media plan will generate a tangible and measurable return on their investment. These executives are responsible for dispensing a finite amount of corporate resources among departments. It is practical, desirable and reasonable that they dispense investment dollars to those projects that will advance the company’s financial position the farthest. That’s reality. Now how do you deal with it?

Once you understand their agenda – maximizing the return on their finite investment dollars – you can frame your social media plans effectively, in language that is compelling and convincing.

Rule #1: do not talk about Twitter followers, the number of retweets last month or the number of times a Fan Page was shared on Facebook. They don’t understand and they don’t care. Zip it until next month’s local SMC meeting.

Rule #2: Speak in language that they understand: Process, Plan, Cost and Return. CEO’s will want to understand the SM process and know that you have a precise plan to execute. By the way, it must be written, or it’s not really a plan.

Rule #3: Do not tell the CEO that the cost of your social media plan is zero or you’ll lose all credibility. Although Twitter, Facebook, LinkedIn and WordPress do not charge their users, their cost is not zero. Their actual cost must include the human costs of participation, engagement, content development and management. How many employees will be involved? At what level? How many hours per day? Per week? Although the company doesn’t write a separate check for social media costs, they are paying for participation, and the total cost may be significant.

Rule #4: Focus on Quantitative, not Qualitative returns. Qualitative returns include the impact of your participation on your company’s reputation and the value of extended online conversations in relationship building. The CEO doesn’t care. I know you do, and I know your CEO should, but that’s not how he measures success. He wants Quantitative metrics. How many new customers did your efforts generate? How many new sales? How much did the average sale increase? What impact did your efforts have on gross margin?

Rule #5: Understand how the F.R.Y. metrics explain and support your social media goals. As Olivier described in his blog post, a compelling social media strategy should improve:

Frequency Increasing sales revenue by shortening the interval between transactions.

Reach (breadth) Increasing sales revenue by increasing net new customer count.

Reach (Depth) Increasing sales revenue by helping customers buy deeper into the product line.

Yield Increasing sales revenue by driving customers to want to increase their average per transaction spending.

Rule #6: Be prepared to detail how you intend to track sales that emerge from the social media channels. You must be able to track results to prove that your SM participation justified the company’s investment.

There. That wasn’t so hard. Now head up to the CEO’s office and tell him how you’re going to improve the company’s bottom line. And you can blog about it later.