First off… I don’t like numbers. So, I’m not particularly fond of social media calculators as I believe that the true value in a social media strategy is about building relationships, conversation and influence, and NOT about the numbers. Social media is an investment that has intangible ROI that is not only often difficult to measure, but its value isn’t found in short-term results, but instead in long-term growth. Influence isn’t born overnight, but built over time.
In his article, Social Media ROI Less Accepted Than Traditional Media, Jason Falls has some great suggestions on ways to consider measuring social media ROI for your business:
First, determine what you want to measure, whether it’s corporate reputation, conversations or customer relationships. These objectives require a more qualitative measurement approach, so let’s start by asking some questions. For example, if the objective is measure ROI for conversations, we start by benchmarking ourselves with questions like:
- Are we currently part of conversations about our product/industry?
- How are we currently talked about versus our competitors?
Then to measure success, we ask whether we were able to:
- Build better relationships with our key audiences?
- Participate in conversations where we hadn’t previously had a voice?
- Move from a running monologue to a meaningful dialogue with customers?
There are companies that offer services to assist with this kind of measurement, which requires a great deal of human analysis on top of the automated results to appropriately assess the tonality and brand positioning across various social media platforms. Radian6, Brandwatch, SentimentMetrics, are just a few of the many companies working toward more comprehensive and impactful social media monitoring and engagement metrics.
Sometimes Long-Term ROI Requires Short-Term Tools
However, to get senior leadership to invest in social media, you oftentimes are required to dot the lines between the online engagement to the offline results. And to say that there is absolutely no costs associated with social media is not only inaccurate, but just plain silly. There’s ALWAYS cost… even if it’s correlating the cost of one employee’s time to manage and implement your social media tactics.
Decision-makers want to know, “If I spend X amount of dollars on social media, what does it get me?” And Twitter followers doesn’t impress them. You can build a business case for building a community of engaged consumers, noting that the lifetime value of a consumer is worth more than one-off sales of your product. But to truly build a vast community of loyal customers that can impact your bottom line in “good ROI” ways takes an investment of both time and resources.
Unfortunately, statistic-based metrics seem to be the primary way communicators feel they can secure approval and budget for these programs from their management teams. If you’re one of those unfortunate souls who must show monetary benefits to key stakeholders first, then you should definitely check out these tools below:
- Dag Holmboe’s Social Media ROI calculator — an extremely in-depth Excel spread sheet for calculating the Social Media ROI. Identifies 13 parameters that play a role in determining the ROI of Social Media. You pick the parameters that make sense and for each parameter and calculation, determine the offline cost. Then, compare the offline cost with the estimated cost of gaining the same results (increased revenue, decreased cost, more customers etc) using online Social Media, to determine the ROI.
- Dragonsearch Social Networking Media ROI calculator — Tip of the hat to the Blog ROI piece in Groundswell, by Charlene Li and Josh Bernoff – this Social Media ROI Calculator has been extended and modified for all Social Media activities.
- Frogloop — You can use this tool to calculate an estimate of cost and return on investment for the recruitment and fundraising efforts of your staff in social networking sites like Facebook or MySpace. It works sort of like an online mortgage calculator. Just enter the starting assumptions in the yellow boxes below and the tool calculates results automatically.