This post is part of the Social ROI Blog Carnival at Think Customers: the 1to1 Media blog. Visit the blog carnival post “Calculating the ROI of Social Media” to check out the full lists of posts from numerous well-known social media thought leaders.
In August, I published a research report entitled, “A Framework for Social Analytics,” written partially in response to The Single Most Terrifying Question In Business Today:
“What is the ROI of Social Media?”
I’ve heard many people stumble over, punt and otherwise avoid this question for the past several years. But if you happen to ask Gary Vaynerchuk (@garyvee), he’ll shoot back with this little gem: “What’s the ROI of your mother?”
Yes, it’s a cocky, seemingly glib answer. But that doesn’t mean you shouldn’t take it seriously, because it acknowledges that relationships are priceless. And not priceless in the unicorns-and-rainbows sense; priceless in the sense that some things in life–family, friends, education, health–accrue many and complex benefits that we can barely comprehend. This is true of social media, which is also a relationship, albeit one between organizations and their (now empowered) communities.
But we live in the real world–a world in which “many and complex benefits that we can barely comprehend,” will get you kicked out of meetings. The ROI question is unavoidable. I would suggest, however, that we not confuse the tool (media) with the objective (better relationships with our customers and community) or the hoped-for outcome (driving business value). So if the ultimate goal of social media for business is to drive value, how do we know we’re being successful? It’s time to do the math.
The first thing to remember is that there is no magic bullet, no single way to quantify the business value of social media. This is partly because it has broad impact, and partly because different companies value different things. In “A Framework for Social Analytics,” I propose six primary use cases for social media measurement, (each of which has associated KPIs), as follows:
The essence of this approach is that it distills the amorphous term “business value” into more concrete, approachable components. For example, how does DIRECTV identify and resolve potential service issues before they escalate? How does Best Buy reduce the frequency and length of certain types of customer service calls? How does Amex determine whether sponsoring concerts influences brand reputation and/or purchase intent? All of these examples accrue to top-and bottom-line value, though in different ways.
The good news is that social media can be measured in ways that resonate with the executive suite. The bad news is that these metrics–and the tools with which to measure them–are still very immature. The worse news is that immaturity of tools isn’t even the biggest issue; most organizations don’t yet have the structures, processes, resources and training to measure social media effectively, although those with a cross-functional social media “Center of Excellence” or “Community of Practice” are a step ahead of the game.
The ideal state–and one that companies should start planning for right now–is actually to build social media programs to ensure that they are measurable at the outset. That means a repeatable process informed by a deep understanding of how social media supports business strategy, an understanding of how that success will be evaluated by management, a clear and honest appraisal of the organizational impact and, yes, the tools and data required to make it all work.
The Ticketmaster example from the Facebook Apps for Timeline launch in my previous post provides a good illustration. If, for example, you consider engagement (using the app), consideration/intent (I want to go/RSVP), conversion (Find Tickets/Buy) and sharing (Invite/Recommend) to be key performance indicators, you can build those right into your measurement framework (and your app!) at the outset, creating a self-justifying program.
The goal of social media measurement, ultimately, is to get ahead of the ROI question before it finds you. Even better, architect your social media programs so that their value is so glaringly obvious that the question never gets asked.