The debate continues, can we measure social media ROI? Well, there are two ways to answer this question. The first would be to ask a counter-question: Do you debate the value of having a phone? Or, how do you measure the ROI of PR? The second option is to get really serious about data and start crunching numbers.
It’s interesting that we’re so obsessed with the ROI of inbound marketing, but it would be seen a preposterous to debate the value of having a phone, even a smartphone. And truly NO iPhone owner debates the need to buy over $100 a year in iPhone apps and games.
Likewise, rarely do we debate the value of PR, although it is very hard to measure the financial ROI. Every business owner (and most individuals) would love some press, even when they’re not quite sure what it does for them.
Yet when it comes to social media ROI, we debate endlessly, questioning how and when and why social media should be measured and we hold it accountable for aggressive ROI!
Now let’s shed all preconceptions and let’s take a look at multiple benefits which social media can provide and how to quantify those benefits.
Five Areas and Ways to Measure Social Media ROI
1. Drive incremental traffic to your website.
Websites should be built as conversion tools. Thus, more traffic means more conversions and conversions means revenue.
If you’re doing social media with a purpose, then that social media traffic will be your most targeted – your best leads – so small increases in that traffic are more valuable than large increases in general traffic.
If you’re using Google Analytics, use the Google URL builder to append tracking codes to your urls, different codes for different social networks. This way you’ll be able to track traffic and conversions by social network.
In other words, you’ll be able to measure Return On Investment.
2. Generate soft leads.
I like to call this “a plan to collect addresses.” In other words, capture the means and permission to work on building a relationship. These are email addresses, Google+ circlers, LinkedIn contacts and all manner of social media relationships.
Use Facebook sweepstakes to collect email addresses. Use a marketing automation system to collect data through white papers, webinars, etc. and continue a conversation with these new contacts. Use spreadsheets to track contact points and results. Use whatever works for you, just make sure you have a system.
Over time conversions will happen and if you are focused and if you get organized early enough, you’ll be able to track back conversions to these “soft leads.”
In other words, with a bit of patience, focus, and an analytics trail, you’ll see the ROI.
3. Retain customers.
Recently someone claimed that social media is not customer service. In other words, Corporate Gods forbid that we actually help our existing customers, publicly, online, where they look for help. Collect all communication data, and run the analysis to measure the lifetime value of a social media customer vs. a non-social media customer. (Never mind, in 12 years in marketing I’ve only known one company to actually dedicate the time and resources to wait 3+ years before having enough data to measure lifetime customer value.)
Here’s a tip, in case you can’t wait 3 years: you will have an easier time calculating cost-savings from servicing customers online versus over the phone. And if you can teach your social media customer service folks to upsell, you can measure more and more.
In other words, where there’s a will there’s a way to measure ROI. In time…
4. Get obsessed with tracking.
Following up on point #3… to measure ROI you need the infrastructure, discipline and manpower to record, measure and evaluate all actions you take online.
Honestly, not everyone can do this. It takes an analytical mind and organized personality. It takes an analyst! Invest in a good one and you’ll measure ROI!
5. Plan to use social media to be gddamn awesome!
Everyone knows there’s ROI in being awesome. I mean, truly awesome – smart, giving, courageous and open. Teach, help, be involved. And what happens when others see you’re awesome? They trust you, they want to be around you, they want to be associated with you.
You will get more business. And that’s ROI.