If you search for “measuring social media” or “social media ROI,” you will likely find a variety of social listening tools and a few vendors who offer to track the number of video views, comments, shares, etc., but the search results will be noticeably void of any tools that measure the impact of social media on your company’s bottom line. Similarly, digital marketing and social media conference speakers will focus on tracking mentions or Twitter follower churn, but few discuss tracking return on investment. This needs to change.
Foremost, we need to accept that measuring social media is difficult and requires effort. Monitoring brand mentions, fan counts, or video shares – from a technological standpoint – is fairly straightforward, which is why we see so many vendors offering this service. On the other hand, measuring the impact of a brand’s Facebook fan page or Twitter profile requires work.
The first step in measuring social media is to define objectives. What are you trying to do with your social media properties? Are you trying to build awareness of a new product, answer customer service questions, or survey your customers? Once your goals are defined, you should lay out a plan for tracking and measuring social media. A few examples:
Length of Sales Cycle
Social networking sites connect potential new customers with brand evangelists who can help sell your product for you. Hearing a fellow consumer rave about your product can help future customers make the decision to buy your product more quickly. Also, consider showing a potential prospect all the five star reviews on Yelp or how often customers discuss your product on Twitter. To measure decreases in sales cycle, compare length of your company’s sales cycle before and after running social media campaigns.
Call Center Volume
Using social media properties to manage customer service can greatly reduce the number of calls to your company’s customer service department, especially when companies utilize their customers to answer customer service issues. Products such as Get Satisfaction’s Facebook support tab provides a place for customers to ask, answer, and search if they have an issue. Can a social CRM replace the high costs of a call center?
Social media updates allow you to regularly engage with your customers. You can share a holiday promotion or the company’s latest blog post. Measure the impact of updates that direct users to your site by looking at onsite behavior from referral traffic from social media sites. Segment social media traffic and compare time on site, pages per visit, events (e.g., video views), and micro-conversions. How does social media traffic compare to traffic from other channels?
A recent study published in the Harvard Business Review demonstrated that when customers became a fan of a local bakery, they went to the store 20% more frequently and were more likely to tell their friends about the bakery. Is this true for your company? Measure brand loyalty through visitor frequency or Net Promoter Score (how likely a customer is to recommend your company).
Lifetime Value & Average Order Value
Frankly, you should be measuring lifetime value (LTV) and average order value (AOV) across all marketing channels, and social media is no exception. How does LTV or AOV from social media customers compare to customers from paid search or email marketing? Based on LTV and AOV of your different marketing channels, how many resources should you be dedicating to social media?
Product Innovation Costs
Social media provides the opportunity for your customers to collectively provide input about your brand and collaborate on ways to improve your product. Crowdsourcing can cut down on product research costs, and the money saved on product development can be attributed to social media.
Market Research Costs
Social media is a direct channel to the consumer. Use this line of communication to learn more about your customer. Conduct surveys and polls on LinkedIn, Facebook, or Twitter. What do your customers like about your product? What do they dislike? What do they like about your competitors? Measure savings in market research costs.
Social media monitoring tools would have a tough time measuring the aforementioned examples, but they excel at measuring increases in brand or product mentions. What marketing efforts lead to spikes in visibility? Is this good visibility or bad visibility? Social media monitoring can help you identify influencers and brand evangelists and gain insight into customer feedback – powerful information that can be used to strengthen your brand.
Clearly, measuring sales from social media makes sense, but attributing those sales to social media can be difficult. What role did social media play in the buying process? Are visitors coming directly from Facebook or Twitter? Did a recommendation from a brand evangelist on Yelp lead them to buy your product? Customer surveys and web analytics can help provide the answer.
Despite all the hype and hullabaloo, social media is just another marketing channel. Marketers need to demonstrate social media’s effectiveness in order to justify allocating company resources to the channel. Fortunately, social media is measureable. The first step is identifying what you are trying to do with social media. From there, you have all the tools you need.
Mike is the author of an article in the upcoming Summer issue of Search Marketing Standard print magazine that will delve into this topic in greater detail. It’s still not too late to subscribe to the magazine in order to receive the Summer 2010 issue. Visit this page to subscribe prior to May 5th to be certain to receive that issue.