Now that 2012 is just about over, I can officially state, with all appropriate certainty, that the social media question I heard the most often this year was, “How do I determine social media ROI?” The main reason returns on social strategies are so important, of course, is that success (or the lack thereof) almost always determines budgets, and every now and then it even determines jobs. Which makes this a very important question indeed.
Some people will tell you that you can’t calculate social media ROI, but I respectfully disagree. Measuring social media ROI isn’t impossible…it just isn’t straightforward.
When you calculate return on a traditional financial investment, there’s a simple, straightforward calculation that allows you to quickly determine your return: ROI = (Gain from Investment – Cost of Investment) / Cost of Investment. The reason this formula is so straightforward is that all the variables are distinct. You know how much money you’ve invested, and you know how much money you’ve gained from that investment. Simple.
The reason social media returns aren’t quite so simple to calculate is because the variables aren’t as clear cut. What, exactly, have you invested? Employee salary? Graphic design costs? Social media software costs? Facebook ad expenditures? Product giveaways? Where do you draw the line between social media resources and everyday business expenses?
And how about that return? Ideally, of course, you’ll see an increase in revenue as a direct result of your social strategies, but that’s not the only type of positive return you can get. What about engagement? Social media is all about building communities of people who, when the time is right, will rally around your product or service…so high levels of engagement are important, aren’t they? And how about brand strength? If you can manage to move your Facebook likers from fans to brand loyalists, what’s the dollar value there? Certainly that’s a positive return. The same goes for customer service. If you use your social media as a customer service tool (and you should), isn’t customer satisfaction a positive return on that investment?
The problem isn’t that social ROI is impossible to calculate; the problem is that there are just too many ways to calculate it. In order to get an accurate return measurement, you’ll need to settle on the type of return you want to measure. Here are four suggestions on getting started, with a little help from Gremln:
I’m interested in positive Customer Satisfaction returns!
And well you should be! Researchers at Maritz recently found that more than 74% of people who complain over social media say that they are satisfied after receiving a social media response from the company. You don’t have to resolve the problem over Facebook, and you don’t have to make their issues disappear in 140 characters or less…you just have to show that you’re listening and that you’re willing to help them or to point them in the right direction to find someone who can, and ¾ of your angry customers will be pacified. Talk about a positive return.
Gremln’s search tools give you the power to track mentions of your company and products, even when those customers don’t use @mentions. Through the Gremln dashboard, complaints can be addressed with the click of a button, and just like that, your customer satisfaction rating goes through the roof. As for the actual measurement of just how much more positively your customers feel about your company after these interactions, read on to learn about Gremln’s Sentiment.al tool…
I’m interested in positive Brand Management returns!
Sounds like you need some sentiment analysis in your life. Gremln’s forthcoming sentiment analysis tool, Sentimen.al, allows you to type in a keyword or phrase…let’s say Your Company Name…and scan all the publicly available information from Facebook, Twitter, LinkedIn, and the major blog networks for mentions of that keyword. Every time Sentiment.al finds your keyword mentioned, it’ll give it a sophisticated positive or negative grade based on context. When it’s finished with every mention, it will aggregate the scores and give you one number to show you exactly how positively or negatively people are talking about your keyword at any given time.
Keeping “sentimental” tabs on the names of your company and your products will show you just how strong (or weak) your social brand has become since launching your social media campaigns. (And Gremln’s Reports tool will make it simple to track and present progress!)
I’m interested in positive Engagement returns!
Engagement is the key to community building and social success. High engagement levels are extremely important when measuring social ROI. Gremln offers an entire suite of tools designed to keep tabs on your engagement statistics for all three major networks, Facebook, Twitter, and LinkedIn. You can set engagement goals, monitor your progress, and create presentation-ready reports when the time is right. There’s no simpler way to understand your social engagement!
I’m interested in positive Financial returns!
This is the big one. Most decision-makers want to know if all this social media investment is going to pay off, literally. Gremln offers a smart solution for revenue return called Target Pages. Here’s how it works; you pick a page on your website that customers see after they’ve made a purchase on your website, like a “Thank You for Purchasing!” page. The only time people see this page is when they’ve increased your company’s revenue, right? Right. Gremln’s Target Pages tool gives you a little snippet of code that you (or whoever runs your website) can drop into that particular page on the site. It won’t change the look of the page at all, it’ll just initiate the tracking sequence. From that point forward, any time you post a shortened Brev.is link to your homepage on Facebook, Twitter, or LinkedIn through Gremln, our software will count off each and every person who arrives at your “target page” (in this case, the “Thank You for Purchasing!” page) after clicking on the link you posted to your social networks. And just like that, you know exactly how many people made a purchase on your site because of a specific social media message.
The Bottom Line
Social media ROI really can be measured, but it's not always easy. The first step is to determine which resources will count as "social media investment" and which sort of returns will count as your official "social media returns." These are just a handful of ideas on how to measure the successful return of finances, engagement, brand management, and customer satisfaction. There are other important returns too (in fact, we'd love to hear how you measure ROI in our comments below!), but no matter how you determine your social media success, Gremln is here to help!