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Quest for the Social Media Production Efficiency (SMPE) Ratio

I admit, I spend way too much time on sites such as Facebook, Active Rain, Digg, Delicious, StumbleUpon, and RE.net blogs. I also have profiles on YouTube, MySpace, Twitter, Zillow, Zolve to name a few. From time to time I get asked, why? Specifically they ask me why I spend all this time and effort on the Internet.

Recently I’ve begun to ask that question myself.

I know I have received business from these efforts, so I’m not going to say it’s not worthwhile, but my question is have I reached the point of diminishing returns. My sites all rank very well. My AimeeLoans.com site is #1 in Google for “home mortgages in phoenix” and my Active Rain profile is #3 for “lender in phoenix”. I have a steady stream of visitors to my blog and quite a bit of subscribers.

More importantly, I get three to five mortgage related inquiries a week from my blog and so far I’ve been able to convert about a quarter of them into applications. I’ve converted a select few of these applications into actual loans. Not bad. But after all this time and effort I’d like to see this thing humming like a well oiled machine!

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Since this has not happened, I’m asking myself if I have entered the zone of diminishing returns. Meaning, that no matter how much more time and effort I spend, I can not expect to correspondingly increase my output. To better understand where I’m coming from let’s review the Law of Diminishing Returns.

Here is how Wikipedia summarizes this law:

… the principle of diminishing marginal returns to a variable input …states that as you add more and more of a variable input, you will reach a point beyond which the resulting increase in output starts to diminish.

To apply this to Web 2.0 marketing, the input variable is time and effort in blogging, reading blogs, networking etc. You would think that for every extra input (marginal input), there should be an increase in output (marginal output). I’m not saying there should be a one to one relationship. All I’m saying is that shouldn’t there be some kind of relationship, so that I can expect a corresponding increase in business output for every unit of input? Or, is Web 2.0 the quantum mechanics of business where classical laws do not apply?

Since I’ve been thinking about this I’ve given a name for what I’m looking for. I’m calling it the Social Media Production Efficiency Ratio (SMPE Ratio). And I want to know if we can ever quantify the SMPE Ratio? If so, I’d like to know if in my current environment I’ve exceeded the SMPE Ratio.

What are your thoughts?

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Written By

Writer for national real estate opinion column AgentGenius.com, focusing on the improvement of the real estate industry by educating peers about technology, real estate legislation, ethics, practices and brokerage with the end result being that consumers have a better experience.

2 Comments

2 Comments

  1. Benn Rosales

    November 15, 2007 at 10:20 pm

    I don’t know that there has ever been a measure of networking and the effects, most just say it works. I imagine this nifty way of networking online simply makes networking simple to the degree that you can execute 4-5 social gatherings from your desk at the office- you are more productive.

    I’ve been preaching for a while that diving off the deepend into the web2.0 water may leave you drown in shiny colors and flashy beta fish. I’m all for riding the edge of the beach with one foot in the ocean- there simply is no substitute for face to face contact, but social media is a very close second so what do you have to lose, so long as you didn’t bet your entire business on it. I agree there is no solid measure, and if you’re really asking if there is one, I would have to say no.

  2. Shailes Ghimire

    November 15, 2007 at 10:45 pm

    For me, as a BNI member, that is my frame of reference. With BNI I’ve been able to quantify how much business I have received from the input variable. In addition to the annual membership, BNI costs me a 2 hour meeting once a week and 2 (one hour each) meetings a month with different members. In three years I’ve found that with this combination, I can generate between 1-3 loans a month. These are my numbers. It varies for everyone and how your group works.

    However, with social media, it’s been harder to quantify. Having said that I have been able to network with a lot of agents and I know that is valuable.

    I’d be curious to see what others think.

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