Can You Measure the ROI of Your Social Media Marketing?

You can. But it requires a new set of measurements to measure the ROI SMM (social media marketing) that begins with tracking the customers’ investments – not yours.

As social networks take significant role in the integrated marketing communication, the questions regarding the return on investment on social media marketing increase. Social media consultants or industry experts are still unable to device a mechanism to measure ROI. This subsequently adds to the problems of the marketers who are repeatedly questioned by CEOs and CFOs about the potential ROI SMM before allocating marketing budgets. The marketer’s desire and pressure to quantify the return on social media is understood but the approach to achieve it needs to be altered.

Turning Your Thinking Upside Down

While calculating ROI SMM, most managers tend to measure the cost involved in launching of blog and social media profiles. Instead managers should think about the marketing objective that blog will accomplish (like brand engagement), what would make customers visit the blog (to know about products) and how would their behaviour engage with the blog (post comment) once they are there. These behaviours are considered as customer investments in the marketer’s social media efforts.

This suggests that returns from social media investments will not always be measured in money, but also in customer behaviours (consumer investments) tied to particular social media applications.

These investments can then be used to measure key marketing outcomes such as changes in brand awareness/engagement or word-of-mouth increases over time and active investments such as comments/shares on Facebook page.

Social Media Objective – Drive Social Media Metrics

The social media metrics would be linked to the likelihood of the user engaged to buy the product in future or the increase in reach of brand keywords through word-of-mouth and subsequent conversion to future sales. For instance, Vocalpoint, Procter & Gamble’s social networking site, has over 350,000 followers who talk about P&G products; by linking these customer investments in brand conversation to sales, the site is credited with market response increases of up to 30%. This example shows that firms can measure ROI and see some success of their social media experiment.

• Brand Awareness

On online media, leading people to company’s online footprints leads to exposure of the brand. Naked Pizza, a New Orleans, Louisiana-based business catering to health-conscious pizza lovers, tweeted about its pizzas in 2009 and successfully drew around 4,000 followers in just a few months. The company triggered the customers to follow them on Twitter by advertising on a billboard outside their shop. 85% of company’s new customers credited Twitter for inspiring them to buy Naked Pizza making the campaign a huge success.

• Brand Engagement

Social media campaigns involving user-generated content increase loyalty to brand in a long term. Online media measures engagement by the continuous active participation by users. A Facebook application, ‘Circle of Moms’ best describes the brand engagement on social media. This app lets mothers post messages, arrange carpools, set up back-to-school checklists and click through to promotions on the Target site. The app generated more than 20,000 visitors in six weeks.

• Word of Mouth

 Once consumers are aware and engaged, they are in a position to spread a word about the brand to other potential consumers. Happy and loyal consumers spread positive word-of-mouth toward the brand and prospective consumers. Disappointed customers are more likely to spread negative word of mouth of social media. In 2005, technology journalist Jeff Jarvis blogged about the shoddy customer service he received from Dell as ‘Dell Hell’ which spread like wildfire on the Internet and main-stream media. Owing to this, Dell saw its customer satisfaction score drop five points in one year.

Done right social media strategies put the brand to work for customers

Firstly, as it is true that consumers have greater control over their online experience, managers must exercise a fair control over the rules of brand participation on social media. For instance, keeping a control on who can post on their blog or social media pages and employing industry tools to keep a track of consumer conversations about their brand.

Secondly, managers must accept social media environment to be highly dynamic and rapidly evolving. Marketers think the worst that can happen during a campaign is not getting any response. However, the rules and dynamics of engagement are quite different from traditional marketing. Marketing experts, who weren’t mindful of this, have experienced worse than the worst they could think of.

Most managers still consider social media applications as ‘just another’ traditional marketing communications vehicle. That’s a mistake. The social media environment is largely consumer-not marketer-controlled.

Managers have to make sure that their social media efforts are efficient, even if ROI SMM social media marketing measurement seem to be less satisfactory. Well planned social media campaigns afford phenomenal opportunities for relatively easy and cost-efficient measurement of customers’ online investments in a company’s brands.