Is it possible to measure the return on investment (ROI) for social media? This is a question that every person who works in social media, or uses social media as a business marketing tool, has wondered at some point. But trying to measure social ROI is sort of like trying to measure the effectiveness of a billboard.
Are billboards effective advertising tools? Undoubtedly, yes. Is it possible to track how billboard advertising boosts sales? It’s not impossible, but it would be difficult to obtain accurate data. A company could have a unique phone number or URL on a billboard, or even a special offer, but it would be hard to figure the true number of “generated actions” that came from it.
Many studies show that when people answer surveys asking “How did you hear about us?” somewhere between twenty-five and fifty percent of the time they will just guess. They will say, for example, “I saw your ad on a billboard” when the business that is doing the asking doesn’t advertise that way. Or, “I heard about your product on the radio or in the newspaper,” when the business has never placed a radio or newspaper ad. People who answer incorrectly don’t want to be misleading. They give an answer because they want to be helpful.
The point is that social media isn’t only about ROI. And it isn’t only about sales. Social media is about branding, opening channels of communication with customers, building loyalty, being transparent and establishing good will. And if you cover all of those bases, then guess what? If your product or service is worthy, you will most definitely see a return on your investment.
Think your CEO or CFO still needs some convincing? What do you think they would say if you told them: “I have this cool device ... It’s easy to use ... It practically forces people to tell their friends about our excellent product ... It’s magical!” Chances are very good they’d say, “Heck, yeah. Let’s invest in that!” It’s called word of mouth, and social media is word-of-mouth technology.
While you’re at it, some other things you might want to let that reluctant CEO know:
Social Media has Revolutionized B2C (and B2B) Communication and it’s Here to Stay
You have to be where your customers are. And guess what? They’re on social media, using Facebook, Twitter, Pinterest and more. They’re not thumbing through the yellow pages. They’re watching fewer and fewer TV commercials, and listening to radio ads in ever-shrinking numbers. In fact, customers are hardly even picking up the phone these days. Instead, they are using social media to find information, to ask questions of brands about their products, to ask friends about their favorite brands and get basic customer service. Once they’ve done all that, they’re telling everyone they know about their experiences.
Social Media is Part of an Integrated Communications and Marketing Strategy
Today’s customers want a two-way conversation. It is no longer enough for a brand to do only “outbound” marketing. In decades past, a company could blanket the airwaves, use direct mail to send out fliers and coupons, and fill the newspaper with cleverly crafted messages about their brand. This is not nearly as effective as it used to be. This doesn’t mean that companies should ditch all other advertising and marketing efforts and invest only in social media. Instead, social media should be part of an overall strategy. The key is to make sure that there is a consistency across all the various options.
Let Your Sales Force Do What They’re Best At
Plenty of companies use social media as an advertising vehicle for their product or service, just as they would with “old” media. But it just doesn’t work that way.
People who are active on social media are there because it’s a way that they can engage with their friends, family and favorite brands. As a marketer, you have to think about how you use Social Media personally, and then adapt your marketing strategy so that it fits in. When you go from looking at pics of your friend’s kid, to responding to another friend’s event invitation, a post screaming “SALE! SALE!” will stick out like a sore thumb.
Instead, post things that are conversational, or things that are just fun or lighthearted. Remember, this is a platform to build your brand’s identity and personality. People should want to do business with your company because they respect your values, admire your culture or appreciate the hard work you do to create your products and services.
What are Ways You Can Use Social Media to Market?
- Show images of creative uses/applications of your product. It’s still featuring your product, you just aren’t saying “LOOK AT MY PRODUCT!!!”
- Ask questions about things relevant to your product or service. If you sell real estate, start a dialogue about your worst moving experience or simply ask: “What does your dream house look like?”
- Post free advice. Position yourself as an expert. If you clean carpets, maybe you could post about how to get pet stains out of your conference room carpet. You’re not killing business for yourself, because people will still come to you when they don’t want to do it or they will refer you to friends. DIY people will find the tips anyway so they might as well be from you.
For Those Who Must Measure ...
If you simply must crunch some numbers, there are a few data points you can look at -- connections (fans and followers), page views, video views, engagement rate, “talking about this,” reach and so on -- that will definitely tell you if your messages are getting to your customers. For starters, here’s a nice infographic that shows the reach of social media. Then there are companies like Radian 6 and Eloqua that will analyze all sorts of social media data for your business.
But the bottom line remains: don’t get too hung up on the numbers. Remember that social media is about branding, building loyalty and good will and opening a channel of communication with your customers. The value of all that? Priceless.
Editor's Note: To read more by Jim Belosic: