Social Media Forum

Social media: How to assess its costs

Monetary costs aren’t the only factor to consider

By Tom Wetzel

One common concern that insurers and producers share with me is the actual bottom-line cost of social media participation—the process of creating, reading and commenting online and deriving value for the effort. Many still view it only as a discretionary expense, an activity they don’t yet fully understand or for which they see little payback on the investment. These same managers may not be subjecting social media to the same scrutiny as other communications tools. If they carried out a cost-benefit analysis, for example, they might be surprised.

The fact is, social media is changing the manner in which consumers gather information about goods and services. To cut through the overwhelming clutter of institutional pitches (think pop-up, pop-under and hover ads, robocalls, etc.), more and more consumers are using social media to talk to each other about goods and services and to share reviews and buying tips. This process is gradual and does not, in any way, spell the end of advertising, telemarketing and direct mail. On the other hand, the presence of a corporate social media program will prompt changes in a company’s mix and amount of expenditures in other marketing activities.

Insurers already using social media have discovered its power to reach niche markets at a lower cost, in contrast to more expensive and intrusive mass media techniques. In fact, one recent study by HubSpot, an inbound Internet marketing company, suggests that social media is one of the lowest cost lead generation tools available. In today’s economy, staying in touch with potential customers is critical for any company. Social media is not for the hard sell; however, it is the perfect forum to create and/or join online communities around common interests, e.g., one’s home, auto, etc., and then share new insights on those interests.

Have a plan

Almost everyone has discovered by now that social media participation on the corporate level is not free. Setting up a Facebook page or a Twitter channel is free, but then comes the challenge of creating content that people want to read and share with others; reading and analyzing what is posted; deciding on when, if, or how to comment; and finally evaluating “what it all means.” That takes time. Yet, all too often it seems that many producers (and insurers, too) who do decide to participate begin without a written plan or a clear vision of what they hope to gain. It is little wonder, therefore, that some managers question the expenditure of any significant employee time on the effort.

The producers and insurers who already realize or will realize tangible benefits from their social media participation are those who proceed on the basis of carefully crafted strategies, plans, and agreed-upon operating guidelines. A homebuilder would not build a house without a blueprint. So producers and insurers should not decide to participate in one or more social media sites before understanding the medium, what objectives they want to meet, and what steps they will take to reach them. With the right plan, there is little or no wasted effort to attain clear, measurable goals.

Legal ramifications

Corporate participation in social media can help pay for itself in another way—by providing greater liability protection through active monitoring of social media sites, timely response, and reasonable and enforced guidelines for employees. Whether or not they realize it, all producers and insurers already are participating in social media through the at-home activities of their employees. By initiating a corporate social media program, including rules governing employees’ references to the company (inad­vertent or not), a firm may well avoid certain legal penalties that can arise in a number of areas such as contracts, intellectual property, privacy, and market conduct and insurance trade practices.

The fact is, companies also may be held responsible for what their employees post online, even when not on the job. So imagine that you are in court involved in litigation regarding what an employee posted online, and the judge poses this question: “To what extent did you anticipate this problem and prepare for it?” Courts and regulators are more likely to look favorably on those companies that have taken steps to adopt policies and guidelines on their use of social media.

Last, there is an assumption by some that because the social media is driven in large measure by individuals on their personal time, insurers and producers will have a limited role in these online conversations. Aside from the fact that a growing number of producers and insurers are participating successfully in social media, it is precisely because individuals are using social media to such an extent that insurers and producers must participate now, not later.

Today’s consumers crave informa­tion about goods and services as much as ever—not, however, from the institutions themselves but from their fellow human beings. Those insurers and producers who can use social media to “talk” rather than “pitch” to their customers will enjoy more success than those who do not. As a consequence, the cost of non-participation or the wrong type of participation can be significant.

Bottom line? The cost and benefits of any new corporate communications program need to be assessed on multiple levels. Social media is no different.

The author
Tom Wetzel is president of a full-service, insurance-exclusive marketing communications/public affairs firm with a special practice devoted to social media in the insurance industry. He can be reached at twetzel@wetzelandassociates.com The company’s Web site is www.wetzelandassociates.com. He is also on Facebook and Twitter.