A Great Starting Point for Social Media ROI

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Yesterday, I wrote about my beef with the popular cliché that “ROI for social media is Return on Influence.” This latest take was prompted by Connie Bensen’s ROI of a Community Manager post that has some great thoughts when it comes to measuring the value of social media.

As I put in my last post, quantifying the results of your social media investment is a worthwhile endeavor. Mapping those results to business value can be tricky, but it’s important to make the effort. As I implied yesterday, a Darwinian Take on Business says that the key decisionmakers are probably pretty sharp about the business they’re helping to run. They’re probably not sitting back and making every decision based on a simplistic ROI calculation. Talk to them about the business when you’re talking about social media.

Connie’s post has a pretty great point to start with this exercise. And, at the risk of exhibiting excruciatingly poor form blogging-wise, I’m just going to repeat it here. This is Connie’s list of the ways that investing in social media can provide value to the company. The investment can:

  • Humanize the company by providing a voice
  • Nurture the community & encourage growth
  • Communicate directly with the customers
  • Connect customers to appropriate internal departments
  • Ensure that messaging will connect
  • Build brand awareness through word of mouth
  • Lower market research costs
  • Add more points in the purchase cycle
  • Provide support to customers that have fallen thru the cracks
  • More satisfied customers because they’ve been involved with product development
  • Shorten length of product development cycle
  • Build public relations for brand with influentials in the industry
  • Identify strengths & weaknesses of competitors
  • Collaborate & partner with related organizations
  • Provide industry trends to the executive level

Which of these resonate the most with you as something that your company values highly or that your company is struggling to do effectively? How do you know that? Are there anecdotes that are widely circulated? Are there metrics that get shared regularly to either illustrate how important the area is to the company…or how much of an uphill battle the company is facing?

Start there. Don’t jump from what you come up with on that front to “…and here’s what we’re going to measure.” Start there and then develop a social media strategy (read more of Connie’s blog…and Jeremiah Owyang’s…and Chris Brogan’s…and Geoff Livingston’s…and others for tips on that). From that strategy, you can then develop your measures — the way you’re going to assess the value of your social media efforts.

Photo courtesy of cambodia4kidsorg

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  1. This is one of those areas where one of the great lesson of business school – it’s marginal changes that matter! – is really helpful.

    I find it frustrating to hear people coming up with cutesy ROI adaptions like “return on influence” because they’re not useful: that’s punchy, but if you can’t measure the R and I the whole exercise is pointless. You’ve listed some great things to consider, but how do you measure them? Well, you don’t.

    You estimate how they will change. Here’s a reasonable hypothesis: we can use social media to increase customer retention by 5%. Or to increase our win ratio by 3% because we’ll increase the reputation of our brand. Or we can shorten the sales cycle by 10%. Or accelerate product development. Or…

    It’s very hard to measure the value of customers having heard of your as an abstract thing, but you can say “here’s where we are now, what if we could improve these metrics related to that issue by some reasonable amount?”

    It’s not, of course, the perfect “Put X social media fuel into the engine and Y will come out,” but it’s a useful way to quantify expectations. In many ways social media puts marketers back into the days of old-fashioned offline brand advertising; you can measure a lot of things, but drawing causal links is very hard. But you CAN make reasonable assumptions and test them out.

  2. I see you found my mashup of Ruff the Crime dog — was going to use for a presentation I did on ROI and Technology for Legal Services, but went with a Law and Order metaphor ..

    I also did a case study slam – social media and nonprofits – did a little “ask later” style – and had a few nonprofits tell their stories

    Love Connie’s writings about ROI – and a great post. Thanks

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