Social ROI – We know you love your mother
From the early days of social media, measurement was an afterthought. At first, the investment in the channel was relatively low, and companies were willing to take the risk of just putting stuff out there without necessarily having a plan for it to yield returns. Then came the obsessive vanity metrics tracking, and that seemingly unanswerable question: “What’s a ‘like’ worth?” Then came the measurement detractors, claiming that trying to measure social media was wrong, and that we shouldn’t do it because it was like trying to measure the ROI of your mother. Enter, the Business Insider (BI) with a report that calls social media ROI a ‘myth’:
Between 2010 and 2013, the percentage of marketers using a revenue-per-customer metric on social media went from 17% to 9%, according to the February 2013 CMO survey. The percentage tracking conversion rates also dropped, from 25% to 21%.
The argument goes like this: Social media involves building long-term customer relationships. Putting pressure on these relationships to yield short term transaction sales goes against the entire purpose of social media. Therefore, we should stop trying to measure the ROI of social media.With the close of 2013, it’s time to dispel a lot of these notions.
Yes, it’s true, most social media won’t yield an immediate sale. Then again, neither will most other forms of marketing. The notion that we therefore shouldn’t be measuring social is utter hogwash.
Very few social marketing channels will yield immediate conversion to sale. Many of them are designed to yield awareness, interest, conversation or leads, which can then be converted to a sale as a prospects moves further along the path to purchase. Just as marketers had to learn not to put pressure on every single other digital channel to yield last-click conversions, they are learning to do so for social media. Social formed a part of the decision process for virtually every transaction that took place online or offline in 2013. Understanding what worked and what didn’t, or how to measure success, is the key.
The BI report didn’t suggest that there are no returns for social media. It simply called attention to the very true fact that these returns may take different forms:
“They’ve realized that social media isn’t a transactional engine or sales machine, so they’re dropping half-baked indicators that gauge secondary effects, such as financial return. Instead, the new metrics evaluate social media strategies in terms of audience-building, brand awareness, and customer relations.”
Let’s leave aside the characterization of financial return as ‘half baked’ — indeed, it can be tracked pretty credibly for many forms of social media investment, but it’s true that in some cases it’s a stretch to make a direct connection. The thing is, audience-building, brand awareness and customer returns are all forms of return on investment, too. People dismiss these as ROI metrics not because they’re not valuable (they are) but because they have traditionally had a tough time quantifying them.
But in fact, they are relatively easy to quantify. We just need to shift our focus:
- Instead of ‘audience-building’, think leads: Instead of spending money to build anonymous large audiences, move towards building databases of customer leads. Social media lets us not only capture information from those who like or follow us, but to overlay it with all sorts of other social indicators. The best marketers are moving away from one-to-many broadcasting and towards one-to-one conversations. Treating every audience member as a lead means spending time learning about what they need and want, and then following up with them to lead them down the path to purchase. This slight shift in thinking won’t only help ROI metrics by supporting a cost per lead calculator, but it will also change the way marketing plans flow following the lead capture.
- Instead of ‘brand awareness’, think brand advocates: Is your brand top of mind for people in your audience? Awareness surveys will give you a general indicator. But metrics on conversation volume, spikes and trends can indicate exactly who is talking about you, what they’re saying and where they’re saying it. Influence is more than just a number of followers or Klout score. We now have tools enabling us to track the influence of a single person on eventual conversion metrics all the way to the sale. Do you have a cost per advocate? A revenue per advocate? How much are you investing on reaching out to these folks and fostering these relationships?
- Instead of ‘customer relations’, think CRM: The dog that didn’t bark in the nighttime is sometimes the most important measurement of all. Did you have fewer complaints this year than last? Were customer service issues resolved to the satisfaction of your customers? It’s important to put numbers on the value of a sale that wasn’t lost, on a customer who was not allowed to depart angry. If you haven’t put numbers against this yet, then you’re probably underestimating its importance to your bottom line (and your brand).
Social ROI is here to stay. BI Intelligence reports, top marketers expect to devote nine percent of their marketing budgets to social media in 2014. That’s just what is easily placed into this little box called ‘social’ media. The lines are blurring between social and other forms of digital media. Search is social. Display is social. Websites and mobile apps are social. With the significant budgets being devoted to digital and social media marketing, the pressure on marketers to demonstrate real returns is only going to increase.