Social Media ROI for Beginners

This post is the first in a series dedicated to understanding how the ROI for Social Media can be calculated. The entire series will include many points for you to use this knowledge and understand the social media marriage with business objectives.

These posts will prepare you to demonstrate ROI before your management team knocks down your door and at the same time to make them understand the influence of social media.

Social media in itself is not magic and has no ready-made ROI models.  The way each business uses it will depend on the specific strategies and goals of the organization. However, I have tried to come up with common themes for how businesses can measure social media ROI. To start with, few basic points to remember:-

Social Media will Save Your $ $ $

Identify places where social media can replace/enhance a business process or system. For example it is several times cost effective to serve a customer on social media (like Twitter, Facebook) than in a call centre. Virtual social media training can save enterprises tons of money. You can even use social media in market research, consumer surveys, and business intelligence and as a part of day-to-day operations that saves you considerable amounts of time & money.

Social media campaigns are cost effective in nature that will help you to replace or target better in advertising and PR, and save dollars from those budgets as well.

Business Leads from Social Media

Social media represents another evolution of media that allows two-way communication between customers and brands. Use social media to find new connections for your business. Share tips, resources and information that add value to your audience. Promote you brand in an interactive way and look for opportunities to partner with them.

Monitor conversations with people looking to buy what you are selling and interact with potential customers & past customers.

ROI for Social Media

Strategic Objectives & Business KPIs

Social media reach & reputation of brand is a key success indicator. Insights from Social web not only give insights into day-to-day operations, but also directly influence business growth, innovation, revenue and profitability.

Insights from the social media can play a key role in reaching strategic business goals such as improving customer experience or understanding customer’s business problems. If you want to stay ahead of the curve and determine customer needs, you have to set specific business goals and track your progress.

It is important to understand the impact of reaching these business objectives, which in-turn will help you to quantify the ROI of social media easily.

Finally, report these business KPIs on a regular basis. Do good things and tell people what you’ve done.

Here is an interesting old post from Altimeter on business objectives and social media ROI – Social Marketing Analytics. Even Wikipedia provides a good overview on this topicROI of Social Media. This will set a good base to start with.

There is no single way to use social media, but if you don’t know where to start, focus on the “Big 3” – Facebook, LinkedIn and Twitter. Social media strategy isn’t a one size fits all solution, but with few basic things in mind brands can go beyond deploying social media from “awareness” & “engagement” to real “ROI” and save valuable marketing dollars while significantly expanding your reach on social media.

As this post has highlighted the basic things required for measuring “Social Media ROI”. In next posts, I will come up with attribution models and new examples of successful ROI calculations.

It will be very interesting to know your thoughts on this. What do you think? How do you evaluate social media ROI? Share your thoughts…..

And stay tuned for future blog posts…. 🙂

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2 Responses to Social Media ROI for Beginners

  1. Silvia says:

    Lately I have been toying with the idea of coming up with the ROI with the per webpage value. Each company designates some $ value for each visitor per page. Can we try and arrive at the total $ value of our referrals with this methodology? It may be definitely not be EXACT, but atlest a step towards getting the actual value for the Social Media visits to the webpages….my brain is teased with this….thought of leaving a note for others to think….

  2. RK says:

    Nice thought Silvia!

    Value of the site visitor/web page is another piece of the puzzle. Here I believe, it is important to define goals to understand the ROI. Let us take an example of a campaign or websites that you want to know where to channelize your energies…..

    Here goals could be: Online sales; product inquiry or phone calls; completed call to actions; or your goal may be just to get traffic (visitors) from the campaign or websites. Now assign weight-ages/define conversion rates on these parameters and try to prioritize your referral sites based on the results you get. Here the idea is to use the data (results) to target advertising or have a stronger presence in those sites which deliver the most value. This is just one of the ways, but any campaign or a referral site should be analyzed much more thoroughly….

    Thanks for your comment….

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