How DO you measure your social media ROI? And here you thought pondering the answer to life, the universe, and everything was a tall order. My boss asks me this question. He should. It’s what he pays me for. My friends ask me this question. What can I say? I have some pretty geeky friends. Even complete strangers in line at my local Smog ‘N Go ask me this question. Yeah, it’s that kind of neighborhood.
With marketers spending almost two billion dollars on social media last year, it’s understandable that all of us don’t just “want”, but *need*, to accurately measure the return – the ROI – of our investments in social marketing. Here’s my answer.
My usual disclaimer before we start – all opinions expressed here are my own, and come from my experience running social marketing campaigns, managing social marketing teams, and advising social marketing clients. Because every brand is unique, your mileage will vary.
Why? What? How?!
Despite there being SO much written about measuring our social media marketing efforts (10.4 million+ results on Google as of writing this post), the fact that we marketers continue to ask the question, tells me none of us are satisfied with the answer.
Before tackling the ‘how’, let’s be perfectly clear on why you must measure the results of your social media marketing investments. Said bluntly, ANY effort that consumes your financial or human resources needs to be “worth it.” By the way, if your answer to the question “why bother to measure?” is a nasally-whined “my boss makes me do it,” then I recommend you seriously consider that career in flower arranging.
Our existence as professional marketers depends on our seemingly magical ability to maximize revenue by creating and executing strategies that meet, and even exceed, the results demanded by our organizations at an agreed upon dollar and time cost per unit of results.
We do this by measuring the return on the investments we make in each of our paid, owned, earned and [now] social media marketing efforts. So, let’s get to the punch line: what exactly do we social media marketers need to measure?
WHAT should I measure?
New customers. Sales. Revenue. Choose the key performance indicator (KPI) that best matches your company’s most important business objective. If your most important goal is to acquire new customers, then measure the number of new customers. Just don’t forget to also measure your cost-per-acquisition, because spending more to acquire a customer than you can generate from the lifetime value of that customer will not help your career in marketing.
Which KPI is best for you to measure? Start with a good list of the most common social media metrics. This will help you to quickly identify the specific indicators most relevant to your product and audience.
It helps to remember that most social media metrics can be broken down into three basic categories:
- Good: The number of social connections
- Better: The quantity of positive (and negative) brand content
- Best: The amount of direct brand engagements
The research-backed takeaway here is simple: The more your target customers connect with you, talk about you, and directly engage with you on social media, the more likely they are to purchase your product or service.
The bottom-line? It is critical for you to identify the specific metrics that have the strongest correlation to the financial success of your business.
HOW do I measure?
A large part of social media is actively listening to the multiple, simultaneous conversations going on 24x7x365 about your brand.
No surprise that this monitoring cannot be done manually, even if you are fortunate enough to have a large team. There are multiple for-pay, “big boy” solutions, including Radian6 [and their *many* competitors] and HubSpot.
However, I have always been a big fan of “fast, easy, and free” social analytics tools like Klout, Twentyfeet, and Crowdbooster. Also, check out Ken Bubary’s great list of paid and free social media analytics tools.
Finally, don’t forget to make full use of the free/freemium analytics tools built into most popular social networks, including Facebook, Twitter, LinkedIn, Slideshare, Flickr and YouTube.
The magic, however, is not in the tools, but in strategically and consistently using the combination of tools that gives you the most actionable insights into the use of social media for your business.
In other words, do NOT produce a “weekly report” for your boss. Instead, produce a dashboard that enables *you* to analyze the fewest possible metrics which will provide you with the deepest possible insights. The aim here is to gain the actionable information you need to make data-based business decisions about what works (and what doesn’t) for your marketing.
On the very first day, of my very first market research class in graduate school, my professor told it like it is. “If you’re not going to use the information to make business decisions, don’t waste your time and money collecting and analyzing it.” While he couldn’t have foreseen the advance of the Internet or social media when he said this, his advice has never been more true.
To recap: it doesn’t matter whether it’s paid media, owned media, earned media or social media marketing. Clearly articulate what it is you want to achieve with your measurements, and STOP tracking any metric that is not helping you to make better business decisions. Instead, identify the “critical few” KPIs that are actionable in driving growth for your business.
What do YOU think? How do you measure the ROI of your social media marketing efforts? Please share your thoughts with us in the comments section below.
Editor’s note: Do YOU have a question about social marketing technologies, tools, and best practices? Tweet your question with the hashtag “#DearKen”. All tweets will be acknowledged, and considered as being submitted for publication.