How to build a smart social media measurement approach
Measuring the success of social media can be done in a variety of different ways. It could very well be the quantity and growth of friends, fans and followers. It could be the volume of online conversation about a specific product launch and it can also be measuring sales.
In today’s business environment, marketing teams don’t have the time to look at data insights to determine the success of a program or initiative. Companies need to adopt a measurement philosophy that is simple yet comprehensive and completely supported by internal stakeholders. The challenge is finding that measurement philosophy that provides business value to the company.
Social media measurement metrics can be grouped into two high-level categories, those that have a financial impact and those that do not. Measurement metrics that have a financial impact to the business are referred to as ROI (Return on Investment). It measures the amount of money invested on a program or initiative and the amount of money received from that same program or initiative. Creating a metrics model aligned with the purchase funnel will also have a financial impact, specifically at the sales phase.
Measurement metrics that do not have a financial impact include general engagement metrics such as fan/follower growth, retweets, total “likes”, shares, comments, conversation volume, etc. These metrics help the brand build a relationship with the consumer, which can ultimately lead to referrals and long term sustainability for the brand. In addition, web metrics like unique visitors, page views and time spent on a site are also important to track and monitor to understand the levels of engagement that users have with a company’s web properties
With so many possible data points to consider, companies need to avoid getting overloaded with too many metrics. Instead, classifying measurement metrics into meaningful groups will help streamline the measurement process. Additionally, when establishing a measurement strategy, it’s always important to answer the question “What business problem does this solve?” to ensure that the measurement practices line up with the overall business objectives. This makes it much easier to quantify the value of measurement in order to justify the cost by showing exactly what problems are being solved. The easiest example to illustrate this point is a company that wants to increase sales of a new product. The measurement philosophy associated with this initiative will clearly include sales or conversation related metrics.
The most sophisticated metrics modes are those that include some level of financial impact such as ROI.
According to a 2009 survey facilitated by social technology vendor Mzinga and Babson Executive Education , only 16 percent of the survey said they currently measured ROI (Return on investment) for their social media programs. In fact, more than 40 percent said they didn’t even know whether they could track ROI from the tools they were using. This survey indicates that while many companies are adopting and using social media and technologies within their organizations, they do not fully understand the true business value of their financial investments.
And while most social analysis have no financial impact on the bottom line, it’s important to discuss the ones that do, like ROI. As stated earlier, ROI is a business metric and measures the amount of money invested on a program or initiative and the amount of money received from that same program or initiative. The standard formula for ROI is basic:
ROI = (X – Y) / Y
For example, if a company invests $20,000 and receives $100,000 in revenues, the ROI is (100,000 – 20,000 / 20,000) = 5 times the initial investment. Other, more complicated formulas take into consideration costs savings, such as a decrease in calls to a call center due to launching a Twitter support channel. Understandable, ROI metrics are difficult to implement in the social landscape because community members do not want to be marketed and sold to; yet, from a business perspective there needs to be a mechanism that tracks an intent to purchase or an actual purchase itself.