What is social media ROI? The definitive answer.
I was recently asked why I don’t have many posts talking about the ROI in social. And initially, I was slightly stumped for an answer. But, after giving it some thought, I realized I know exactly why I haven’t written many: because I feel that the ROI of social is absolutely obvious. It’s a necessary piece of strategy for a brand, and the why doesn’t need continual explanation.
But, I know that not everyone feels the way that I do, and defining ROI for social is extremely important in many cases. So, I have combined the best explanations from brilliant minds across the social sphere, covering the core angles of ‘what is the ROI of social?’
Relationship Building: “The relationship between consumers and the brands they buy from involves more than just a single transaction or a subscription. Every touchpoint between a company and a customer is an opportunity to advance or decline the relationship. Businesses have come a long way in doing that for specific departments such as marketing, PR, sales and customer service. But with the advent of social business and social media empowerment across the organization, the threads of dialog between employees and customers becomes diverse very quickly.” – Top Rank
Market Research: “There is an incredible amount of market research. This is being generated from online analytics; the tools already exist for monitoring. Chat questions can be designed to reflect what marketers want to learn from the community. There can be surveys and with follow up via all the social media channels. Q/A continues on Facebook. Building or joining an existing community relevant to the brand, can streamline this research process into a win/win situation, and jumpstart collaboration with already trusted relationships with the established community”. – 12Most
SEO: “Our social media initiatives are a part of, not apart from, your other marketing activities. And your website is not likely to be taken dark any time soon. While it’s not a good idea to habitually kick customers from social media platforms to your web site, your social media content and activities can be used to improve your search rankings.” – Social Times
Brand Reach: “Many assume the reach is as simple as looking at the number of fans/friends/followers you have, but it’s much more complicated. The key to understanding reach is to first estimate your true organic reach from your fans. Facebook shows impressions in page analytics, which is a good way to determine reach, and on Twitter it might be 20 percent or less of your followers. The value doesn’t stop there. When others interact with your brand, they are also providing brand impressions to the people that they are connected with. This means that when someone interacts with your brand on a social network, their interaction gives you reach with their connections as well. Brand reach = number of followers x number of posts x 5 percent actually seeing posts. Social network amplification = number of interactions x average number of followers x 20 percent actually seeing posts. Value = total reach x cost per impression of other media” – Click Z
Audience Sentiment: “Text analytics has become all the rage in the media research. With the wealth of user generated content on the Internet, marketers need to utilize technology to wade through the enormity of the data. Data mining techniques, such as CHAID and regression trees, allow marketers to link certain keywords to desired outcomes. Do words like ‘love’ and ‘always’ signify consumers who are more engaged? Should you filter out mentions that use words like ‘cheap’ or ‘dangerous’? Once you develop a keyword set, you can further segment consumers based on their actual conversations. Developing a segmentation strategy based upon any or all of these criteria helps you better understand not only the value of your fans but how you can best communicate with them.” – Fast Company
Fan Affinity: “Social media provided a way to measure something fan affinity in a way a TV spot never could. Why? Social media communication is two-way. It’s a dialogue versus a monologue. Instead of promotions, it creates conversations, sometimes unprompted conversations that can be listened to, recorded, and measured. No longer did we have to say, “Trust us, our fans really like the team.” Suddenly I had data to show how fans really liked us.” – Harvard Business Review
Customer Service: One in five consumers (17%) say they’ve used social media at least once in the last year to obtain a customer service response, and this relatively small group of consumers is extremely engaged and vocal. People who have used social media for customer service at least once in the last year are willing to spend substantially more (21%) with companies they believe provide great service – in contrast with the general population (13% more) and those who have not used social media for customer service (11% more). They are also far more vocal about service experiences, both good and bad. In addition, more than 80% of these consumers say they’ve bailed on a purchase because of a poor service experience, compared to 55% overall. – Business Wire & American Express® Global Customer Service Barometer
Executed Actions: Every social program must be associated with a call to action. Subscriptions to email lists, product purchases, signing up as a Facebook fan or downloading a free trial are all examples of calls to action. In order to measure monetary contribution to business goals, the marketer must assign value to the social program’s call to action and then track the conversions. Too often, social purists take a passive approach to program execution. The call to action need not be a sale. In fact, it could be motivating users to generate content to be added to a brand’s online community. The point here is that a defensible value for the action must be defined and tracked. – Social Media Examiner
Visits to leads: Social media helps drive traffic to your site, but traffic doesn’t bring home the bacon. Track (network by network, and as an aggregate) how many of those visitors convert into leads. Knowing exactly how much of a role social media plays in lead generation will help you meet your monthly lead goal by giving you the historical data to set an educated goal based on how much social media brings in, and what that rate of growth looks like month over month. – Hubspot
Money. Money. Money: Economic Value is the sum of Revenue plus the Business Value created by the macro- plus micro-conversions on your website. So when someone visits your site and signs up to receive email, and does not buy anything, that is not a failure. That is a micro-conversion because that first date will lead to a second, a third and a seventh (if you play your cards right!). Every micro-conversion creates economic value for your business. It engages in the awareness, consideration, comparison, purchase slow dance. It delivers higher macro-conversions (revenue!) over multiple visits by the same person by incentivizing you to behave optimally, in sync with your customers and at their speed. It gently encourages everyone in your company to obsess about the micro-conversions by saying they are of business value, to create better designs, more prominent placement of content/images/stuff customers want. Over the long term it shifts your company from the corrosive single-session, conversion obsession to a pan-session, way-beyond-a-one-night-stand experience that delivers higher Economic Value. – Occam’s Razor
To wrap up our delve into social media ROI, I want to leave you with a great quote from Erich Marx, the Director of social for Nissan North America, “There is something more important than ROI: COI, which is cost of ignoring”…”anyone not taking this seriously as a reach media is going to be left behind”.
Are you trying to define social ROI or are you just content knowing there is ROI and social is a necessity?