Truth be told, many of the companies I've worked with have had difficulties tracking and measuring return on investment when it comes to social media. There are a couple of basic means of producing a value on the social media efforts of your organization:
- What would the volume of traffic to your business cost you in Pay Per Click? – Since keywords and costs of pay per click are published, you can match your keywords in analytics to costs of pay per click for the same terms. Add up the numbers and you usually have a very nice story to tell your organization on how much money you saved the company.
- How much sales volume could you directly attribute to social media? – Tracking direct sales from social media sources is a surefire way of proving return on investment. Included in this, of course, is search engines – which will typically drive a large amount of traffic to your company through social media.
Many online marketing and social media professionals are nearsighted. The impact of return on investment is well beyond those direct clicks. One of David Armano's diagrams from years ago is one that I continue to share:
The ancillary return on investment is not as simple to measure, but it exists. My messaging with clients is that we can start with measuring return on investment with the first two ways – but there will be many more ways in which your company will see a return on its investment in social media:
- Becoming a thought leader in your industry – if you don't think sales can come from simply getting your name out in the industry, you are wrong. A key to social media is adding a human aspect to a brand because it builds trust. Trust is key to a business' success. Once you begin participating in social media actively, you are often invited to speak at industry and partner conferences, events, webinars, etc.
- Building a Personal Relationship with your Customers – it's difficult to leave people we grow to like. People are sometimes the glue you need in business relationships to retain customers. It's not all facts and figures, many times its that little bit extra that people do. It's the staff that makes the difference and social media allows you to see behind the brand and connect personally with people in the business.
- Word of Mouth marketing – has been proven to be one of the most effective means of marketing a business, but it's not something that can be artificially generated (many try). In conversations of social media, I recommend companies, products and services whenever I can. This is often the behavior on networks – ask for assistance or promote a service and people spread the word!
- Building a Reputation – Reputation is everything online, and generating a great reputation on your site, in your social networks, and in your customers' sites and social networks is the foundation of trust that will generate business. Trust is paramount in any business transaction, and it's easier to overcome trust issues by connecting personally with people behind the brand.
- Building Authority – along with building a reputation, you also build a history with search engines that is measured both in citations and backlinks. That ongoing reputation, relevant to specific topics and keywords, will continue to propel the content that you share and the sites that you write on to the top of search engine results. Search is a huge source online marketing return on investment. Don't be fooled – your social media success attributes greatly to that authority you're building with search engines.
- Indirect Sales – Many people who research on the web will read, leave, read, leave, read, leave, then come back and engage. If the reading is done on a blog but the conversion happens on your ecommerce site or corporate site, it's sometimes impossible with web analytics to attribute a direct visit to social media. The fact remains that many of us have connected via social media but you've done business with me directly without mentioning my blog… but it was there and it made an impact.
- Service Cost Savings – When your customers are reading your blogs, you can have a significant impact in the number of service and account management costs by educating them online. Social media is often a one-to-many medium. Instead of writing an email in response to a customer, you could have written it online and put it out for the masses. It's difficult to measure work you didn't have to do – but it's there!
- Content and Messaging – every day your company participates in social media is a day of your employees learning, practicing the crafting of your message, and publicizing it. The more I speak, consult, and blog about social media and its impact on businesses, the easier it is for me to help new prospects and clients understand how to leverage it. I'm participating in the conversation, reading what other experts are saying, seeing what's succeeded and failed, and able to apply that to my clients. There's incredible value in this but it's difficult to measure the ROI.
Promote Your Investment in Social Media
The exceptional targeting opportunities and low cost per click on social media advertising makes it a unique promotion medium that you should absolutely be taking advantage of. If you're investing time in building a social media audience or community, then why wouldn't you double up on your investment and ensure that it's reaching more people within highly relevant networks? Not to mention the fact that Facebook and other platforms are giving far better placement to paid promotion over organic!
It's not ALL or NOTHING.
Some experts within social media don't recognize the value of other social media and social networking sites like Twitter, LinkedIn, Facebook, etc. They believe you should spend all your time doing one thing or the other. They like to compare the platforms and the strategies to point to their strategy as the only one to spend all your resources on and that you should spend nothing on others.
What I've witnessed in social media is the effective use of each medium to promote its strengths and avoid its weaknesses. Twitter is a great means of reaching a lot of people with very little effort…. but it's not an effective medium for topics (like this post) which require detailed explanation of a topic. My blog is a perfect medium for the detailed explanation. So – in a few minutes a tweet will automatically be posted, via Hootsuite to over 80,000 of my personal and professional followers… leading many visitors back to my blog, some to share the post, and the return on investment will be quite nice.