Social Media and ROI
Using social media to increase a business’ bottom line is a long-term commitment, especially when so many people research and learn about products online and purchase in real-life, complicating the ability to demonstrate immediate return. But a company would never ignore a customer’s questions or comments in a brick-and-mortar, so why would they do that online? We get questions from our clients everyday regarding the ROI of social media and the quantification of a social user, and the answer is never an easy one. Social media initiatives can provide a significant amount of non-financial impact that can most certainly lead to ROI, but measuring this can be difficult.
The first step is to determine your objectives. What are you looking to accomplish? In my experience, most social media objectives roughly fall into these standard categories:
- Reach- using these channels as an outreach tool to create brand awareness
- Influence- brand building and increasing positive conversation sentiment
- Engagement- communicating with customers directly, building a sense of community
- Conversion- increasing sales, registrations etc.
The next step is to focus on the appropriate metrics that directly speak to these objectives. There are endless social analytics tools available that will provide many (unnecessary) points of data and really pretty charts…. I recommend staying away from compound metrics and tools that don’t provide a thorough explanation of their algorithms. Using Twitter as an example, the metrics I would focus on for measuring reach are:
- Followers (Twitter)
- Velocity (Twitalyzer)
- Unique Retweets (Klout)
- Legit Followers (GraphEdge)
- 2nd Level Network (GraphEdge)
It is also important to remember that you shouldn’t look at social analytics data in a silo. It is impossible to quantify the value of a social user with social data alone. By comparing timelines of social data with web data and transactional data, and then tracking against execution activity (types of communication, content posted etc.) it will allow you to identify patterns. Isolating these patterns will show what types of activity are affecting social media activity and, ultimately, allow you to quantify these deltas.
Facebook is in the process of developing a conversion tracking tool that will provide brands with the ability to determine the exact dollar worth of a Fan. With the increased need to demonstrate social media ROI, I’m sure we will see more social platforms working to provide this service as well. However, in the meantime, marketers need to be prepared to provide a holistic, channel agnostic assessment of social media measurement as it relates to all aspects of a brands’ bottom line.
