Measuring ROI of social media

Calculating the return on investment when using social media can be tricky. The inability to measure its impact can be a huge barrier for companies wishing to employ social media. And for those who do use social media in their business, it’s difficult to see how well, or indeed, how badly, a campaign is going.

So why is it so difficult to measure ROI when it comes to social media? Firstly, it’s difficult to measure the quantitative nature of human interactions and conversation. It can also be problematic to measure the benefits of elements such as time with brand, brand positioning and the building of trust. The benefits of using social media are generally qualitative in nature – for example, social media campaigns can increase loyalty and influence – and as a result can be problematic to monitor. Social media has many different aspects and as such it’s impossible to measure ROI in just one way. Breaking down these qualitative attributes into understandable chunks that we can measure, understand and translate easily into a business context is an essential step in measuring social media ROI.

Traditional analytics measurements can be used, which may include the uptake of offers, the volume of people interacting with social media, and the engagement with a brand through social media. It is important to combine different metrics to gain a broad picture of what is happening. Currently, many people measure and combine standard analytics elements such as length of visit, duration, bounce rates etc, but these measurements all come along with controversy. Some also measure ROI in a more abstract way, by monitoring the amount of buzz or conversation in a community and the opinions of the public. However, these sorts of elements are tricky to measure, or to attribute to any one facet of a campaign.

There are important factors that need to be established before anything can be measured. The first thing to establish is, from a company’s perspective, what is the objective? And what would be classed as success – metrics need to take into account the specific goals of a company, the specific goals of the social media campaign, what social media is being implemented and how it is being used. Appropriate metrics can then be established across different areas of a site, and measured over time. Of course, choosing relevant success metrics is difficult, because there are many things that can be measured. A business needs to understand which metrics will translate efficiently into a business context. These can be both quantitative (sales, new leads etc) and qualitative (for example, satisfaction, loyalty). By defining success metrics, qualitative attributes can be broken down into smaller, measurable metrics.

With these factors in mind, the ROI of using social media can be calculated successfully. In terms of calculating qualitative returns, Starbucks did this during a campaign where they asked customers what would increase their satisfaction and engagement with the brand. The goal was to obtain a specific number of suggestions per month that they could implement. They measured the number of new, good suggestions, and the number that were implemented. It was also possible to carry out opinion polls on the brand before and after the campaign.

Dell was able to measure quantitative returns by setting up a Twitter account (@DellOutlet) to advertise discounts on refurbished products. It published promotions exclusively to over 600,000 followers. In June, Dell published sales worth over £1.8m from the Twitter campaign. Dell is also listening to feedback from customers regarding the products themselves. For example, customers were complaining on Twitter that the keys on a particular laptop model were too close together, resulting in the announcement from Dell that they would amend the design of the keyboard in future models.

These are two really positive examples of how ROI can be measured in social media, both quantitatively and qualitatively, and will hopefully pave the way for other businesses to do the same.

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