Your problems measuring social media ROI have nothing to do with social
Measuring your company’s social media ROI may be more complicated that you thought, writes Joe Cothrel.
If you are responsible for your company’s social media programs, I have some good news for you: it’s not your fault that you can’t measure return on investment (ROI) to the satisfaction of your boss or your CFO. This is not a new struggle. I started writing about this challenge 15 years ago. That’s how long we’ve had to figure this out. So why are you and everyone else still struggling?
Here’s the reason: your problems measuring social ROI have nothing to do with social.
Let me explain. A new article on social ROI comes out almost every week. A skeptic might say that this illustrates the oft-remarked paradox that the less that is known about a subject, the more it gets written about. But they would be wrong. There’s actually a lot of good advice out there.
I saw one just today. The first step, says that author, is to get Google Analytics. In Google Analytics, you can track all sorts of good stuff, like the traffic coming in as a result of your social efforts, the number of visitors who convert, etcetera, etcetera. Sounds great, totally true, good advice.
But wait: you own social, but do you own the website? In my experience, you probably don’t. Someone else owns the website, and consequently they own how it’s measured. Do you have access to the Google Analytics account for your website? Probably not.
The truth is social ROI always involves the marriage of social data with other kinds of data from other business systems. You’ll see a lot of numbers in your social dashboard, but they all have one thing in common: they don’t start with a dollar sign. In any formula, if you don’t have a dollar sign to the left of the equal sign, you won’t get a dollar sign to the right. Ergo, the need for other data: cost data or sales data. ROI needs to reflect the financial impact of social.
There are only three reasons any company invests in social media: to sell, to save or to satisfy. If your goals aren’t one or more of the above, you’re just not thinking ‘business’ enough. For example, you might think your goal is acquisition – to bring more prospective customers into the sales funnel. Well, really, you want them in the funnel to convert – your goal is really sales. You might think your goal is insight – to learn more about the wants and needs of customers and prospects. But to arrive at a dollar value from your investment, you either need to turn those insights into better products or experiences (which translates into sales) or you need to gather those insights in a way that is more efficient than alternative methods (which reduces or avoids costs). If you say loyalty is your goal, then ultimately your measure will be satisfaction or sales – or more likely, both.
Companies that succeed in measuring social ROI aren’t just measuring their social efforts well. They are measuring their business well. They know things like conversion rates by page and by traffic source. They know how much it costs to generate site traffic, leads or insights through other methods. They have good data on their customers and can marshal that data when they need it – it isn’t sitting in four different silos in formats that can’t be matched. Don’t get me wrong, you need great social data. But social data isn’t enough. For social ROI, you need to get down to business.
Joe Cothrel is chief community officer of Lithium Technologies in San Francisco, California, and co-author of Social Customer Experience. He is speaking at the fifth annual Swarm conference to be held in Sydney on 2-3 September, 2015.