Social media was all the buzz in marketing and PR in ’08 and ’09. In ’10 the buzz is how to measure social media Return on Investment. There are so many theories, explanations and metrics being pushed and preached as gospel by social media “experts”–I would argue that there is no such thing as a social media expert, but that’s a different discussion. Some social media gurus are even so “revolutionary” as to say there is no ROI in social media. To that, I say bologna sausage! (Sorry if that’s a lame expression, but my mom used that term when she really, really wanted to express disbelief in something.) Seriously folks, there are a hundred ways to measure ROI on social media. Some are monetized and quite tangible, like sales, traffic. Some are more abstract, like brand awareness, brand sentiment and engagement. No one should enter a marketing or communication campaign–social media or otherwise–without defining what they want to achieve by setting measurable goals.
I’ve sat through many social media seminars, read hundreds of blogs, seen a gajillion presentations on SlideShare. My frustrating conclusion is that many of these ROI theories do not hold water. Instead, they present ambiguous questions, promote “changed thinking”, and redefine time-tested marketing methodology. Don’t let the syntax slight-of-hand fool you. Social media is measurable. In real terms that you are familiar with. But it does take some data mining and defining your goals and metrics up-front. As obvious as that seems, so many companies do neither.
While there are hundreds of metrics for social media success, almost every client I’ve ever talked to defines “more sales” as their overall social media goal. Fantastic. But how do you get more sales? You create more selling opportunities through:
1. More traffic (to store or site)
2. More customers (new accounts)
3. More purchases per customer
4. More repeat customers
5. More customer referrals
Look, if you have a crappy website that doesn’t convert, social media isn’t going to help you create more sales. Period. It will send a bunch of traffic to a dead-end street. But if you are converting, you can easily monitor traffic, sales and accounts to assign ROI to social media. BEFORE you start or modify your social media campaign, create a report with the following data:
1. Traffic (unique visitors per day/week/month)
2. Customer counts (how many do you have total)
3. Avg. # of new accounts per day/week/month
4. Avg. sale amount
5. Total daily/weekly/monthly sales for the last year
These are your control numbers–your Point A. Keep track of all your social media activities on a daily/weekly/monthly basis. Track hits and conversations with a tracking software–there are many tools out there, some are basic ($), some are robust ($$$). Track it all. As your campaign progresses, you can watch these numbers change. If all other marketing efforts remain unchanged, the changes can logically be attributed to social media. You should also be using unique URLs, social media-specific promotion codes, and Google Analytics to track traffic and sales directly from these sources.
Social media ROI does exist. It just takes effort and data. For a more detailed explanation of tracking ROI with real numbers, check out this fantastic social media ROI presentation from Olivier Blanchard.
