Most business follow a simple rule when it comes to adopting new technologies or paradigms – If it boosts my business’ ROI, it’s worth the investment. Social Media is no exception to this rule. Unless, businesses see value addition from social media, they are not going to take the plunge.
Therefore, as a social media activist, one of my primary responsibilities is to educate businesses on how they can measure their social media ROI. This helps them understand and appreciate the impact of social media on their business. This post explains the various aspects of Social media ROI from a business’ perspective.
Is Social Media ROI Measurable?
Of course, it is. Otherwise the social media world won’t be full of millions of success stories for boosting ROI using innovative social networking tools. Now, that the “If” hurdle has been cleared, comes the all important question of “How”.
How to measure Social Media ROI?
I’ve come across many social media marketers who claim that it’s a challenging task to measure social media ROI because there are no rules/ guidelines to do so. I beg to differ. Though I admit that there are a number of variables and qualitative factors in the equation, measuring the ROI is a critical part of the social media adoption policy for any business.
Simply put, ROI is (Revenue – Investment)/ Investment. Social Media helps boost an ROI because it
1) Helps in boosting a business revenue therefore increasing the numerator
2) Requires minimal investment therefore decreasing the denominator
Define Goals & Create a baseline
It may sound difficult to believe but a majority of businesses find it difficult to come up with clear and concise goals for social media adoption. It is crucial to create a baseline with the current status-quo as it helps to quantitatively access the gains from social media.
Jot down your current numbers and your goals. It is equally important to know where you stand now as it is to know where you want to get. No ROI calculation is complete without a concrete baseline.
From a social media perspective, a baseline may involve the following numbers
* Twitter Followers
* Facebook Fans
* Unique Impressions from Twitter & Facebook etc.
Is it just revenue?
While in financial terms, ROI usually relates to revenue and profits, it’s a different proposition when it comes to social media. The gains from Twitter, Facebook and any other social network may not always be measurable in financial terms. They may help boost traffic on your business website or simply spread brand awareness or improve your goodwill in the customer community. Of course, one of social media’s ROI contributors to boosting ROI is the enormous amount of savings. A well-planned social media strategy can help a business drastically reduce its advertising and marketing budgets.
Periodically monitor and Act
Most businesses join the social media bandwagon and are so awe-struck by its sheer powers that they are happy with whatever returns they get. In fact, a majority of businesses end up underutilizing social media when compared with its true benefits.
It is important to periodically assess and review your business’ progress by matching it with the baseline. If your business is not achieving the set targets, there’s time for retrospection and action. If your social media strategy achieved the desired results, do not sit back and relax. It is time you take your social media efforts to the next level.
How does your business measure its social media ROI? Do you think it is difficult to track the business value of social media? Please share your opinion by leaving a comment below this post.