One of the most common questions we hear from brand marketers is, “How do we measure the ROI of our social investment?” To which we reply, “What’s your ‘R’?”

Social ROI isn’t all that complicated. The confusion seen in the marketplace stems from a lack of asking the right questions at the outset. Without knowing what one is trying to measure it’s near impossible to determine ROI. Yes, for most companies the “return” ultimately comes down to revenue, but many brands aren’t using social to directly prompt purchases. And those that are also need to take into account other externalities, such as changes in brand loyalty and lifetime customer value.

Unlike traditional advertising, which is directly focused on brand perception and sales, social is a hybrid; it has components of email, TV, word-of-mouth and media. Social can be effective for customer retention, sales generation, brand perception shift and even awareness. Which means that the ROI of social is a topic important to all internal stakeholders. For some, this might be the reinforced brand loyalty and affinity sparked by resolving a customer service on the “wall” or in the Twitter stream. For others, it’s procuring the ideal employee from a job posting on the company Facebook page. And for another grouping, it’s impressions earned by successfully implementing a viral sweepstakes. Depending on one’s goals and expectations, the “return” on a social investment can be vastly different, illustrating why there are so many divergent opinions on social’s value. Nonetheless, this “return,” and the investment for that matter, are clearly important to all, despite the uniquely held goals.

With social media mirroring the effects of more traditional marketing channels, starting with the right definition of “return” is critical to demonstrating success in the medium. So, when you’re next questioned about social ROI, start by asking, “What’s my ‘R’?”

1 comments
Gingerpop
Gingerpop

This is a direct, simple and powerful answer to a key question posed by every potential customer for Context Optional's SAS Enterprise Solution. One of the most vexing elements of selling this solution into a company is not establishing rapport, quantifying the prospect's needs, or any of the benchmarks required to close a deal. There is a rarely expressed, complex and oft ignored aspect of the equation. Insuring that the message (as to what the solution provides) can be communicated and evangelized for by the person who has made the decision to utilize it. Senior executives tend to have a short attention span. They require information presented to them in easily digested bytes, executive summaries and the like. The challenge is avoiding the use of lingo and vernacular which inside a corporation is required to indicate one's cultural affinity. Thus, the specific terms used to communicate in one setting lose their power in another. The challenge for a successful Business Develoment person is to be certain that the prospect not only agrees that the solution offered is desirable, but that he is able to communicate its features and benefits in another setting. The simple answer would appear to be a concisely crafted one sheet which can be used to define and express the solution. Creating such a one sheet and having it used as an effective tool is more complex than it would appear at first glance. No matter what is written on the piece of paper or in an email, many senior staff will not read it. A few years ago a valuable piece of information was shared with me by a colleague trying to help resolve an intra-office conflict. My co-worker told me that roughly 10% of conversations are recalled accurately. The figures for written communication are so small that knowing them might prevent any of us from choosing the written word again. Such is the dilemma. Personally I find short (1 minute max) You-Tube videos to be the preferred method to solve this predicament. I write this in the hope that someone, somewhere will read it in the course of trying to bring an innovation to market. If we remind ourselves that the language we use to communicate can become a barrier to communication, we will collectively save ourselves much frustration. The sale itself is absolutely not the end of the story.