Fleeting look on the combination of Social Media and Finance seems to be a weird combination, just like oil and water. However, the combination holds very important meaning. Social Media is not free, as misunderstood by people. It involves resources like People, Technology and Time. Hence, the question that is to be addressed is – why companies are investing such limited resources in social media? Are there any returns to be expected? How do the return from that investment should be evaluated? Are there any success metrics? What should be those metrics? There are still ongoing debates over measuring social media investment. One side where brands are inspired to join the proverbial conversation without any plan or predefined strategic objectives, the other side there is a lack of ROI measurement standards, due to which companies avoid engaging their brands into social media until the above mentioned questions are addressed.
To address the question – “what is the ROI of social media?” the companies need to decide on the following things:
1. Social Media Goals
There must be a connection between social media activities and their measurement metrics. For that, one needs to set up clearly defined social media goals. Businesses have to set up the objective for measurement. What is it that they are looking for and want to improve, change or accomplish? Is it conversation? Sales, Links, Referrals, Votes, Cost Reduction, Process Reduction, Decrease in customers complains and issues, Customer acquisition, Lead generation, Promotion, Awareness, Conversion, Reduced sales cycle, or is it Inbound activities, etc? The goals should be defined even before plunging into social media and clear cut strategy should be designed for it. Only then, on can reap huge benefits from social media and can rightly measure its returns from such efforts.
2. Defining the True “Returns”
The term ROI relates to “Return on Investment”. Now in terms of social media activities, one invests their time, efforts and funds to achieve the defined social media goals. Returns achieved form social media efforts are sometimes intangible in nature. Hence, the term ROI has various connotations like – Return on Engagement, Return on Relationships, Return on Trust, Return on Contribution and Return on Reliability (WEAVE Model concepts of Social Media ROI). These returns are to be tied with different tangible metrics that are relevant to business. For every business there are different Returns, as each business have their own social media goals. This is not as simple as counting fans, followers, likes, clicks, etc. It is something beyond these metrics. Sometimes businesses don’t see the returns coming over night and they quit doing social media activities. This is where they fail. Social Media Returns are best realized in the form of Loyal customer base, increase in customer recommendations and referrals, decreased complaints, increase in positive word of mouth, etc. This is something that is known as the “Soft” side of Marketing.
3. Social Media Measurement Framework
Social Media efforts can are measurable. It is just that the metrics are different than the usual business metrics. Each social media activity captures an action. Those actions have certain values. For e.g. ‘Listing the company’s address in Foursquare’ is a social media activity. The ‘Check-ins’ by the people that are current or potential customers are ‘Actions’. These actions shows “Value” in terms of – ‘interest of customers for availing store specials, or sharing with friends about their location and favourite spots, interest in specific offers, etc. Hence, each action has its specific value. These values are to be measured for realizing social media ROI. Consumer actions on social media are intent based and thus businesses have to define the metrics that indicates the ‘intent’ of the consumer.
To pull off returns from social media, one needs the right metrics and above that the right attitude towards social media. The combination of both can result into a right formula for accessing the investment in to social media efforts. Are you ready to plunge in to social media? Have you already started using this medium for your business? Are you facing problems in realizing true benefits of social media? This is the right time to let us know your needs. We understand social media deeply and have expert team with social media skills. Whether you need a complete social media marketing strategy, want to train your employees, or would like to conduct workshops for your firm. We will help you create your own social business. You can refer to our services for more information and request a free social media audit report. You can also subscribe to our “social diary” for free social media resources that will help you get started doing social media marketing.