To be successful in social media you need to have the right resources. You need skilled people, time and technology and each of these has a specific cost. If you want to measure social media ROI you need to be able to quantify these costs from the outset.
Accountants and successful business managers measure things in terms of hard cash. Are sales up? Are profits good? Are costs limited?
Other organisations have similar ‘hard goals’…votes tallied, behaviours changed, individuals recruited.
The finance director doesn’t tend to care about clicks, friends or mentions. The struggle for us in social media is to express our successes (or failures) in terms of hard business and organisational objectives.
However, if you want to accurately measure the return on your social media investment, there is a process to follow. But, it takes forethought and planning; rushing to your CFO with irrelevant statistics, such as the number of retweets, will only lead to disappointment all round.
It’s been said that the three biggest myths of social media are that it’s free, it’s easy and anyone can do it. It’s a shame that these are all lies.
As with all communications and marketing…social media has inherent costs in terms of time, materials and other resources. Social media success takes skilled people, time and technology and each of these has a specific cost, all of which needs to quantified from the outset.
Also, it’s important to have a clear understanding of the starting point in terms of key business indicators such as sales figures, revenues, footfall numbers, when embarking on a social media campaign of any description. This benchmark will be key to understanding the ROI going forward.
Keeping an eye on these indicators as campaigns roll out helps in judging their overall effect. But patience are required: it often takes a few months to see the effects and understand trends.
Make all metrics are as specific as possible. How many new customers have been recruited? How much does each customer spend? What kinds of transactions are being measured?
Observe how things have changed since the baseline measures were taken. Benchmark this against the social media activity undertaken. Observe the effects of that activity in online communities.
Now the challenge is to determine if and how the social media activity caused the changes in performance indicators. Some things can be assumed.
If social analytics show website traffic coming from Twitter or Facebook, and online sales are up can the assumption can be made that one caused the other?
If a huge rise in the number of Facebook fans coincides with a boost in footfall at an event…has there been some direct impact?
With the right planning and efficient collection of data long the way, it’s not difficult to come up with a hard number to describe social media ROI. Example: ‘We realised an ROI of 3 to 1 on our social media investment.”
Take current reality measurements and compare to the starting point data. Subtract the costs of the campaign from the difference of the two measurements to reveal the net benefit. Divide the campaign costs from this figure to understand the total return on investment.
It’s something the accountants will understand. It’s a number the boss can brag about. And, with all the other data just described, it’s easy to see what’s working and what’s not.
It might be clear that investment in social media should be increased. Who knows? But when by speaking the language of accountants at least there is a fighting chance of securing more resources.