When I consult with clients for the first time, many of them ask, “What’s going to be my ROI with social media?”
This question always leads to me starting off with a disclaimer: Social media is not magic! It’s not just another advertising channel and it is definitely not a one-way ticket to immediate profits. Social media is a form of communication; a platform for building relationships. And, like most relationships, it can take time, effort, and energy.
Marketing managers are increasingly being put under pressure by senior management who want their respective company to “be on Twitter,” but many seem to forget that social media is actually a communications tool and that consistent action must be taken to engage a following.
Compare measuring social media ROI to the task of calculating the ROI of a business card. Conference attendees rack up hundreds of business cards, but how do you calculate the ROI of all of the business cards that you hand out at a conference?
Just like a Facebook fan or a Twitter follower, a business card merely represents potential — so, you can’t accurately measure the ROI of a business card, just as you can’t measure the value of a Facebook fan.
This concept shouldn’t seem new, though, because traditional marketing, such as email marketing and telemarketing, runs by these rules. Marketers don’t ask, “What’s the ROI of this email newsletter?” Instead, they ask, “What’s the conversion rate for our email campaign?” And telemarketers don’t ask, “What’s the ROI of a phone call?” They ask, “What’s the conversion rate of our sales calls?”
Social media should be treated the same way. You can’t just ask, “What’s the ROI of social media?” You have to ask, “What’s the ROI of specific activities that we engage in via social media?” This is more commonly known as the Return on Engagement, or the ROE.
While traditional ROI may be hard to track in this networking, word-of-mouth, virtual world of Social Media, ROE is a trackable and measurable metric. You can count the number of clicks, tweets, retweets, posts, comments and, more as a simple way to gauge the interaction you are having with current clients, client prospects and potential referral sources.
These numbers are crucial as they allow you to look at how engagement on one social network can justify increasing your presence onto another, in addition to the number of people you’ve connected with in your conversations and the types of conversations and revenue generating opportunities you uncover along the way. Today, we can even track the social contacts that convert. With all this information, you’ll be able to calculate your ROE.
So, stop solely focusing on Return on Investment and remember that unlike traditional marketing methods, social media isn’t a one-way channel that starts and stops with the single hope that there is more business at your doorstep at the end of the run.
Social media is a way to build the relationships that establish trust and enable people to feel comfortable buying from a business. Return on Engagement is a measurable and long-term metric which will give you a much clearer picture of how having an online profile on social networks is important for your business.
How do you evaluate the ROI of Social Media? Is it a question that you have been asked before? If so, how did you answer it? I’d love to hear your views!