DEF: Risk aversion is the reluctance of a person to accept a bargain with an uncertain payoff rather than another bargain with a more certain, but possibly lower, expected payoff.
Two days ago I spoke at a social media conference with Fresh Business Thinking at London’s Microsoft HQ and walked away with one strong gut reaction: The majority of organisations are dipping into social media and spending time on the social tools; yet, few know how to measure the return.
One dessert business owner gleefully explained that after starting twitter this year, (a few hrs investment x week) she had amassed a couple hundred twitter followers and so far had at least a dozen sales resulting from twitter. She said she loved that social media was free.
Hold on.. FREE?!
INVESTMENT: So let’s say 3 hours a week x 6 months (26 weeks) = 78 hours total investment.
RETURN: A dozen treats at let’s say 10 pounds each, so 120GBP total earnings. That’s 1.54 pounds an hour. Fail? That’s 78 hours of time she could have invested somewhere else to do business.
Social media is far from free and can be very risky. My mate Robin Block (founder Red Sky Vision, who works with brands like Coca-Cola to improve their internal comms) shared this video he produced with me today that may help you explore the question every business leader needs to ask: Will social media and these internal/external social channels help my business be more successful?
It’s 12 minutes long and probably the best video to show your team at your next internal comms meeting to get a useful, honest discussion going on the return/risks of social media.
What stands out to me in the video is the urgency of starting with the ROI in focus first. What you stand to lose and what you stand to gain.