Wednesday, Jan 17, 2018

Social Media Metrics and Business ROI

From Facebook and Twitter to blogs and videos, social media has become part and parcel to modern marketing efforts. However, convincing the rest of the business of social media’s value is a tough task for marketing trail-blazers.  Many business naysayers have yet to be convinced that social media is a worthy marketing strategy while many wonder if it’s not just the latest black hole for marketing dollars.

First of all, let’s debunk a well-established myth: social media is not free! It takes people, technology, and time, all of which are limited resources. You invest your budget in marketing, IT, advertising, sales, human resources, you name it. Each of these resources comes with its cost and it yields its own results. These resources generate 100% of your business so losing even only 1% of its efficiency could seriously ruin your day.

If your organization is investing time and resources in social media, it is important to determine the value gained from those efforts. There is a growing importance on ROI as more companies like yours start to scrutinize their social media efforts. For the past couple of years, the objective has been to simply get a foothold in social media and establish a presence. This has allowed you to experiment and figure out how social media can complement your communications, marketing and sales strategies.

As the novelty surrounding social media disappears, you should focus, as a savvy business owner or manager, on getting a better handle on what benefits the investment in social media is actually generating – be they increased sales, new business leads, website traffic, brand awareness or better customer service. The return on your investment can only be assessed by going the full nine yards. Only measuring digital or social is not enough for a good reason: ROI is 100% media agnostic. ROI is a business metric and not a media metric.

Social media monitoring can measure not only the activity expended on social media outreach, but how those activities are impacting business. The many positive results from an organization’s investment in social media activity, such as website visitors, click-throughs and Facebook friends, must be translated into how they result in financial impact to your business. The number of followers, comments, click-throughs, impressions, web site visitors, etc mean something only if they translate into positive financial results. This is the ultimate level where you should measure the ROI. Does social media generate a cost reduction somewhere in your business , does it generate any increase in revenue? The only way to determine is to establish a baseline “before social media” and “after social media” and monitor a few key business metrics: evolution in the number of business transactions (room bookings, rentals, ticket sales, product or service orders, etc), the sales revenue generated by these transactions. Beware though, transaction data should be specific. Measure how often customers transact (number of transactions per month), how many customers are you reaching (net new customers), and how much they spend (dollars per transaction).

Once you see variations in the business metrics, you can start analyzing their correlation with you social media efforts. Assess the business metrics connection with the number of positive mentions on social media, the volume and quality of web site traffic generated by social media, the number of potential customers attracted as fans and followers of your social media profiles. Create a timeline of your social media efforts and overlap it with the business chart or Google analytics chart and see if there is any correlation. Were there more business transactions during the social media campaign you ran? Were there fewer complaints filed after you have started tweeting?  Look for patterns and determine relationships between social media activities and business results. In the end, you should be able to determine the cost reduction or revenue gains.  After all, businesses don’t do social media to be social, they do social media to grow sales and revenues. Is your business any different?

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