Social Media marketers first measured the number of fans and followers they had on Facebook and Twitter and yelled: “Yeah! We’re driving results through our social media efforts. Look at me, I’m wonderful”. Then the CEO asked: “How much money did that make us?”
Room goes silent.
So marketers, learning from this looked to metrics such as comments, shares and re-tweets. “Yes, that’s it! Look at all this engagement we’ve driven! There’s the ROI”. Until the executives asked: “Specifically, how much revenue and/or profit can be attributed to those conversations?”
Room goes silent.
Now, according to Courtney Kettmann in her Social Media Today post, it’s not fans OR comments we should focus on but the sentiment of those online shares, comments and tweets.
Go ahead. Ask. “What revenue or profit is attributed to those sentiments?”
In terms of measuring sentiment specifically, Kettmann shares the usual rationale including understanding your customers, learning from past mistakes and successes, benchmarking, yadda, yadda, yadda. She shares basic logic for why sentiment is important but stops short of demonstrating how measuring sentiment delivers the business with the only fuel it requires to survive and grow: profit.
We’re Chasing our Tails
Why do social media marketers continuously spin their wheels trying to justify their efforts based on metrics…any metric? Metrics are not the end goal of business measurement; they’re simply contributing factors…good to track, important to know, but in and of themselves meaningless in the reporting of Social Media ROI.
- The number of fans and followers you have provides an indication of the size of the audience you may be reaching.
- The number of comments, shares, etc. provides an indication of the number of active participants you have among that community or even an indication of the quality of the content you’re producing.
- Sentiment provides an indication of the current emotional impact your brand has on its audience.
Individually, these are important indicators but none of them deliver a true ROI measure. So why not call them what they are?
Ms. Kettmann titled her post: Top 5 Reasons Social Media Sentiment Should be Your Focus. I wholeheartedly disagree with this direction and challenge you to focus your efforts on driving measurable bottom line results. It’s not difficult to create a map of all the engagements you have with your audience – and that they have with each other – and measure how the indicators listed above move the prospect along the customer lifecycle: from awareness to purchase and then from purchase to advocacy; thereby refueling the sales funnel. Measure the impact each has on the lifetime value of a customer; do more of what increases it, less of what doesn’t.
Size of community, depth of reach, frequency of connections, context and sentiment of those conversations are important metrics but only when – individually or as a whole – they can be attributed to driving a customer from the customer acquisition funnel to a paying customer and from a paying customer to a loyal advocate.
Am I the only one sick of people reporting anything and everything but profit from social marketing efforts?!
Can I get an AMEN?
Editors note: Amen Sam!!!
Sam’s rant originally published on his uber fab blog Sensei Wisdom.
Are there free tools or solutions on how to measure the ROI from your social media sales?
The real question is, "How do measure ROI of ANY marketing platform?" Why is social media so different? What's the ROI of an ad in a trade magazine or on a billboard or on the radio? Have we ever come up with anything that accurately measures the people who are spending money BECAUSE they saw certain ads? If not, why the focus on social media?
douglaserice Answer: you don't measure the ROI of a platform. You measure the ROI of the strategy you deploy through the channel(s).It's always about the same thing: understand what messages, to what audiences, through which channel(s) drives the greatest bottom line impact to your business. Do more of that, less of the other stuff.
So....where is the answer to the implicit question in this post!?!?
How do you measure the ROI of social media relative to sales/profit? Are there tools out there that help to draw those conclusions and generate those metrics? Anything close?
Ruth - MarketingWise Th full answer is too long to post here. In general, I've done it for clients using a process that tracks and records social transactions to the customer's lifecycle profile. We're able to determine the impact of various combinations of social activity to the lifetime value, churn rate and advocacy (to name a few). The key is the lifecycle profile also contains costs associated with the original engagements so we're able to cross reference for profit measurement. Reach out if you need to hear more.
I measure the success of my presence in social media by the traffic that it drives to my website. Realistically, I don't see how social media can "close" any sale. Thus far, mine has been successful. For a one man shop, I've increased traffic from 0 to almost 30,000 per month in 9 months. This month is looking as though it will rise above 30,000. The website/weblog itself is not generating great sales (yet) but it appears to be "building my brand." With patience the sales will come. This is one thing that all marketers have to remember. The effect of all advertising and PR is cumulative.
JackDurish Congrats on the success. 0 to 30,000 Web site traffic in 9-months from social media engagement is a great accomplishment...if traffic to the site pays your bills. It's very possible (and likely) that that added traffic will result in new sales. But do you know how much?
There was a cost to generating that traffic. Does the revenue earned surpass the acquisition costs? And if so, is it a better return than customer acquisition through other channels?
Dismissing the importance of ROI measurement on social activity is irresponsible to your business in my opinion. One-man/small businesses might be able to get away with it provided that revenue is flowing but could there be more? Could it be more profitable?