Measuring the return on going social can be difficult for businesses, for a variety of reasons. Typical challenges include:
- A lack of agreement or understanding about how social media supports business goals
- Uncertainty around the best metrics to use
- A growing number of social media accounts
- Monitoring and measurement tools that don’t fully meet user needs
Later posts will address the issues of measuring proliferating accounts and the tools to measure them, but this post will focus on determining what to measure.
Let Business Objectives Guide Your Social Media Use & Measurement
First, your social efforts should be based on a clear strategy to achieve certain business objectives. Why are you using these marketing channels and tactics? An Altimeter Group report found that 70% of businesses believed social media could meet business objectives, but only 43% had a formalized strategy for how social would meet their specific business goals. Don’t be part of the 43%, be clear about what you are trying to achieve and be ready to show the ROI on your programs.
The Social Media Measurement Compass (see below) from Altimeter Group provides some of the most common business uses for social media, including:
- Brand Health
- Marketing Optimization
- Revenue Generation
- Operational Efficiency
- Customer Experience
- Product or Service Innovation
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Measure What Matters for Your Business Objectives
Your business goals will impact not only what social media you engage in, but also how you measure your social media programs. Some examples are provided in the table below.
|Reason||Area to Explore||What to Measure||Insights to be Gained|
|Understand your company’s brand health||Conversation andSentiment Drivers|
|Gather Innovation Insights||Idea Resonance|
|Measure call center savings||Call Containment / Deflection|
|Determine revenues driven by social media||Revenue Drivers|
You’ll notice that there are both non-financial and financial metrics listed in the table above. Return on Investment (ROI) is just one metric businesses should use to evaluate their social media programs.
But Be Prepared to Measure ROI
Nonetheless, at some point, in order to articulate the strategic business value of social media to the company, you will probably need to show a positive ROI.
As an eMarketer article points out, only 25% of marketers are measuring sales associated with social media. “In 2012, marketers will need to focus more sharply on hard metrics to gauge digital and social marketing ROI. They will be pushed in this direction by economic and competitive forces, and by rising expectations from internal stakeholders.…”
In other words, you will need to show that the programs either:
- Increase Revenue or
- Reduce Costs or (preferably) Both
The pyramid below shows how social media programs and metrics can demonstrate ROI and support a company’s business objectives. It shows how, by resolving customer service calls via a social channel, a company may be able to reduce call center volume and its costs of handling service requests, thereby reducing its operating costs and improving its financial performance.
Whichever metrics you choose, focus on results-oriented rather than just action-oriented measures. As the Altimeter Group says, “Every metric should pass the “So what?” test in the context of your business goals. If you can’t answer “So what?” to your metric, question the value of measuring it in the first place.”
You’ll find a more complete listing of metrics by business objective in the Altimeter Group Report, A Framework for Social Analytics.
How is your company focusing and measuring its social media efforts?
special image thanks to Get My ROI