Social media isn’t free; Shock – horror! Now, assuming you’ve established that managing your brand’s social media activity incurs a cost, the elephant in the room question is do you know how much that cost is? I guess a lot of people would respond: how long’s a piece of string?
When it comes to calculating the return on our investment, much focus is put on the return, but how can you precisely measure the return if you don’t know the investment? Go back two sentences and you will find that my answer was slightly misleading. Despite what people may try and argue, it just isn’t possible to put a monetary cost on what goes in and what comes out of social media. The truth is, you can work out how long that piece of string is; but not easily, and not at true monetary cost. But it’s measuring and evaluating the value to your brand through interactions and engagements that’s really difficult.
So, the most effective way to judge the success of your social media activity is best measured with KPIs (Key Performance Indicators)
- Customer/client recommendations
- Increased followers and fans
- A higher position in search engine rankings
- Greater number of page views and an increased number of visitors to your website
- More posts/mentions about your company
- Increased revenue from new and existing customers
You may not have needed it spelling out, but for those social media sceptics out there, hopefully this will go some way in convincing you that social media has a cost value.
Consider establishing cost equivalents in order to attach a dollar value
For those of you still seeking financial reassurance, you can begin to create cost equivalents. For instance, is a page view equivalent to a cost of a click in PPC? It is never going to be accurate, but if your company is driven by monetary value, use cost equivalents to determine the costs of KPIs. You can also use social media monitoring platforms like Hootsuite, Tweetdeck, Meltwater or Symosos to enable you to “track the path from social message to conversions, and attach a dollar value to individual social messages against KPIs”.
Use a strategic planning process
Like most marketing efforts, it is far easier to measure results if you know exactly what you’re wanting measured. Using such an approach is the first step in establishing a framework for measuring your ROI, and with very few marketers planning their goals before implementing their tactics, you have a big opportunity to build and successfully implement a social media strategy. The process should be to map the investments that will drive your social strategy and decide which KPIs will measure it. Below are steps to a successful strategic planning process:
Determine the scope
- Who will be using social media (departments/individuals etc.)?
Understand your business/departmental goals
- Make them SMART (Specific, Measurable, Accurate, Realistic, Timely)
- Focus on goals not tactics
Define the purpose/mission of social media
- Why is it needed?
Set social media goals
- Who needs accomplishing?
- Merge the relevant business goals with the mission to create social media goals
- How will goal success be measured? (For instance if an objective is to create awareness, you should be measuring online mentions for share of voice)
Determine how social media is contributing to your business growth
You can’t necessarily put an immediate price on qualitative measures such as; increased brand loyalty, increased trust, customer feedback, but it should be remembered that the consequence is profit. I’m sure your CEO or CMO is interested in financial profitability of social media, therefore it’s a great idea to look at the bigger picture, and understand how the result of using social media has benefited the company.