A fellow social media "junkie" and I were chatting yesterday about different ways to look at the ROI of Social Media. Traditionally companies have looked at ROI very differently - for example, how much is invested in a campaign, or the promotion of an event - and then how many resulting downloads were achieved or number of people that attended an event. It was pretty cut and dry - very simple and to the point. Given the advancement of technology over the past five years and the introduction of true social media platforms, the concept of ROI has drastically changed, mostly due to the new (and improved!) ways that companies can reach potential users, build new communities, and drive revenue to their products.
Social Media and Community also affect brand awareness, recognition, and publicity of your product/service. This is probably another blog entry as I just want to focus on concrete reporting for this discussion.
As someone involved in social media and interactive marketing, this is a challenge that I face every day. At the beginning of the year, I set the goals for my business - how many people will download X product, how much new revenue can we bring in across Y platform, or how many people will join Z community to help us build out our user base. And then of course there's usually some sort of percentage increase I need to hit along the lines of market penetration or share of a certain market. Just to make it fun. From there I need to build out my plan and sell it to executive management - showing them that I will pay for a number of different services or campaigns that will *ensure* we hit these numbers. And then? I can spend. It's a difficult process - so I wanted to break down some of the ways I look at ROI and the methods I use to reach customers - and hopefully this will help you.
Here are some tracking methods and best practices for social marketing that may be helpful when measuring your return-on-investment:
(A) Community Metrics:
It's never an easy task to create a series of metrics that deliver on what ROI is here, but some ways that I look at how to measure success are the following:
- To start: How many current users do you have? What is your goal for the year?
- Measuring month over month increase, including repeat users and new users (separate these into 2 buckets, it's the only way to clearly distinguish increased number of community members). You can break out quarterly results easily as well, and alter methods you are reaching people given success/failure with current methods.
- What does your traffic look like? How long do users stay on your site? What number of page visits are you looking at compared to number of pages looked at during each visit (you can tailor content based on this information as well).
- Users. How active are your current users? Do they reach out to other possible new users to bring them into the community? (Tracking community member's blogs is an easy way to do this, you can get estimates of this number). Also, offer community members incentives for bringing in new users: a discount on a certain product or a month free of a certain service if they bring in X amount of users is very helpful.
- The pull method. How are you bringing users to your site? Advertising? Facebook pages? Twitter? Emails from your field marketing team to potential users? Partner and Channel outreach programs? How much are you spending on this and (assuming you are tracking links) what is the increase you're looking at month over month for each method? How many dollars are you spending on each method? Recommend giving each outlet a different tracking link to see how successful each one is.
- Tracking & Reporting. Use something like WebTrends to track (this is the service that most companies use) but there are other services out there that track users as well - Mint is a good service, and there are quite a few others.
- SEO. Look at SEO as an indicator for success - have you optimized your site? When you do, is there an increase of visitors based on this that are coming from Google or Bing? Get rid of those 404 errors as well - they make users leave the sites immediately.
- Finally, downloads. How many product downloads did you get? Do you see an increase to these month over month as you focus on community? How about purchases? This will be critical to track.
These metrics obviously depend on if you have users officially sign up for your community or if you just track them via how much they use your community resources. Historically I'm not a fan of having people register until they sign up for a trial or a download. I usually estimate a 50% drop-off rate by forcing registration unless there is a clear offer or incentive for them if they register. Recognizing them as active users by an icon or something similar is a nice to have, but more and more this is not enough as other community sites are offering incentives for participation.
(B) Social Media Metrics
Twitter, Facebook, Linkedin, Digg? What do you use to reach out to users socially and how do you measure this?
- Running a Facebook campaign. There are a number of ways to do this. You can create a page on Facebook for your product/service. From there, you can track monthly users, how many people have liked your page, comments, and weekly visits. They'll even send you a nice report each week that summarizes your efforts here. Recommendation: Keep updating the content. No one likes a stale page. Provide incentives like discounts on products/services to keep folks coming back.
- Twitter. Period. Regardless of how people judge Twitter (many people think it's just an awareness engine) it can be used to boost your brand and your revenue. Look at Dell for example. Twitter drove over $3 million in revenue. And you can't beat those results. They provide special deals and coupons only through Twitter to their followers. You can track these results as well. Optify has a great set of tools that can help with this, as well as other social media tracking. comScore is also a good resource to consider.
- Integrating Facebook and Twitter into your web properties. This is relatively easy to do and you can track how well it works by most likely using the reporting you already have on your website. Integrate Facebook and Twitter buttons on the top of your site, but also integrate these directly into your site - have a relevant Twitter feed for anyone that tags (#) your product/service, or have people directly "like" your product on your site through Facebook. For examples check out Starbucks or Levis. These guys know how to do it right. They bring the user right to the site, and allow them to participate in the site through social media.
- Ad buys. Some companies use large campaign and advertising companies for this effort purely due to scale, and if you're a large enterprise, it may make sense. But if you're a SME, consider experimenting on your own. You can buy sponsored Trending Topics and Tweets on Twitter now. From the research I've done, you pay a lump sum for this, but you can easily track how successful you are. Facebook ads are extremely cheap compared to other ads as well, and you can always use Adsense or AdCenter to round out your campaigns. Note that all these efforts will give you direct results that you can report. I always recommend piloting first to see which engines you want to use. On average you're looking at approximately $5 per thousand views on Facebook, and about $15 or so for the same on Bing or Google.
- Blogs. You can't forget this. Use your internal channels, your community, and other loyalists to help with the outreach. Peer to peer recommendations are always more relevant and seem to be more honest than direct marketing from your company. Give folks different tracking links. See how internal blogs do versus external blogs.
- Social Tracking Tools. Other tools you can use to track success are Google Alerts (which I am a big fan of when looking at the products my team is managing and bringing to market) and HowSociable.com - which gives you a great idea of how well you are doing across several social media sites.
- Look global, but think local. Make sure your international sites are using these techniques. Create best practices for them to use, package them up and deliver a webcast on how you're implementing these. Know that the international teams may need to tweak these efforts due to cultural differences. Ask them to track and report back to you on a monthly basis so you're standardizing on one scorecard. Sometimes creating a contest or something like this can be helpful here - or mapping your efforts to the immediate sales goals each subsidiary needs to achieve for the year works as well.
- Direct Correlation. Over a period of time (I use month over month for executive level reporting) how many downloads or purchases did this lead to? Directly correlate dollars spent with the goal you want to achieve. If you're successful in technique and seeing an increase but didn't hit that goal, it doesn't mean failure necessarily - but it may mean you need to invest more dollars to get to that expected result - or you may be overestimating your market and need to tweak these efforts based on what is working the best.
All of these are trackable and provide direct results that you can show to your management - and will help you map to your ROI.
A few other things to consider as well - you will be looking for quantitative data much more than qualitative. When I've worked with executives across the numerous companies, we're not looking for fluff, we're looking for hard numbers that can really show success. Where estimates are nice to have, you need to look at the numbers. I always look at my dollar numbers invested and the results that I get from them. That's the bottom line.
Hopefully this is helpful as you look at how you measure the success of your business. Feedback and other ideas welcome, as this is an ever-evolving process.
*Note: this is my personal analysis and research of how I collect or would collect data, and is not a reflection on how Microsoft or IBM (companies that I work for or previously worked for) use data collection or analyze success.