Can you measure Social Media ROI?
Many communications, PR, sales and marketing professionals have started to utilise these new social media channels, lured by the hope of a marketing Holy Grail, but only to realise that they are lacking a vital piece of information: return. There is much uncertainty regarding the tangible financial outcomes of investment in social media marketing.
There is limited benchmarking data available and it often feels too aggregated and circumstantial. Although it is not my intention to discourage the usage of such information, I always take the stance of following a structured approach to measurement and readjustment of activities towards those with better performance. The key to success when using social media marketing is always testing, testing, testing.
The purpose of any company is sales, whichever way you choose to phrase it. Yet does social selling even exist to begin with? The short answer would be yes; it has always existed. Although social networks have essentially changed the sales process, from both a business and marketing perspective, every action is still geared towards closing the sale. The sales process may no longer look like a funnel, but many other models have arisen, such as those representing marketing and sales as a continuous loop, thereby representing the consumer journey as a non-stop process.
People (us human beings, your customers!) used social networks to interact before the advance of technology changed what we consider to be a social network. The actual concept remains the same, however there is now an increased dynamism of actions (buying and selling, interactions, comments, complaints), more data is available to be analysed and more channels to which one can attribute conversion. This last factor is the one that is currently creating the greatest hurdle in the measurement of social selling: how to attribute conversion to social media channels.
Although I may be somewhat simplifying the sales flow, you, as a business, need to understand how your target market becomes aware of your brand or product. Awareness translates to interest, which translates to 'desireability', which in turn translates to action (in this situation the action would be closing the sale). In social selling, ie. the process of selling by means of social media platforms, interest can be measured by the number of page views, fans and / or followers, and the majority of social media metrics of which you may already be aware. The trick is adapting your measurement strategy to your target market. As per the action side, number of transactions, revenue, average price, unique customers and profit margin all relate to hard cash metrics!
This leads us to the crux of the issue; linking the upper side of the funnel with the lower end. In other words, have our social media efforts paid off in terms of increasing our financial results? Has our presence online (ie. Facebooking our ethos, Instagramming the catalogue, Tweeting our customer base, etc.) had the desired outcome: stronger sales?
It is the intricate nature of both social networks and social platforms, and the interface with sale flows, which make the search for an answer a complicated task. To begin with, not every exposure of your business or product to the potential customer will be purely online. For example, has Joe bought from us because he watched our YouTube video or because Laura watched it and recommended him to do so? This ambiguity continues when we consider that not every sale will take place online and in many industries a large share of the sales will be brick-and-mortar transactions, thus making us further challenged to track the source of the conversion.
The positive aspect is the fact that we will soon have many tools at our disposal to help in bypassing these problems, from very elaborated statistical techniques (ie. marketing mix modelling, which FMCG companies are using to assess their ROI), to simple ones such as correlation analysis, the usage of affiliate marketing strategies which allow tracing back the source of the conversion, or even, God forbid, asking the customer! In any case, I would always recommend looking for at least one or two cases that may help you to assess the relationship between the social campaign and activity before you start applying more resources to the quest of social media ROI. But has anyone told you yet? Measuring ROI has its own ROI, too; but that's a story for another day ...
For more information, please visit: gsm.org.uk