Social media reminds me of the internet bubble of the late 90s and I believe Amara’s law best encapsulates the state of social media today:
we tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run
To me, this implies the following:
- The impact of social media in the long-run will be far higher than anyone can even begin to imagine today, just look at where we are 10 years after the internet bubble burst
- We are very early in the journey, and nobody has the answers although many people think they do
Having said that, and while social media is fundamentally different, it still is a means to end and not an end in itself. I see too many people trying to approach social media as something different for which we do not need to think about the ultimate business objectives we are trying to influence before we embark on an initiative.
So how do you measure success and ultimately ROI then? In my view, it starts with understanding what you are trying to accomplish and then driving your strategy and results based on those ultimate objectives. Are you trying to build awareness with an audience not necessarily familiar with your brand and offerings, or are you trying to generate demand running a social campaign? These are two very different things and the way you measure success needs to vary based on these objectives.
While I believe there is no one size fits all approach, the framework upon which to place all of these metrics boils down to these three categories:
- Reach – how big is the audience you have built? Depending on the channel, this can be followers on Twitter, fans on Facebook, or visits to your blog
- Engagement – how engaged is the audience you have? Again depending on the channel, this could be measured based on retweets, likes on your Facebook fan page posts, or comments to your blog posts
- Conversion – this is the holy grail, ultimately how does reach and engagement convert to hard $$ and repeat purchases? How many qualified leads have you generated, how many sales opportunities have you influenced or accelerated, what was the cost of these leads and opportunities, or how did you influence customer satisfaction and hence loyalty?
Of course, the key is to define the subset of metrics that corresponds to the goals you are trying to achieve and link success to those goals. Lastly, as you embark on the social media journey, keep these two reality checks in mind:
- Keep-it-simple: While eventually, everything will have to translate into business results your CFO cares about, it’s ok to draw inferences-don’t get infatuated trying to calculate meaningless metrics. I recently read an article that posited measuring ROI is easy, all you have to do is calculate customer lifetime value- hmm, I wonder how many companies can do that.
- Ensure metrics reflect your maturity level: Give yourselves room to experiment and learn early on, as this is key to the evolution. For example, if you are trying to build a community first, then measure reach and engagement and don’t feel compelled to deliver a certain number of qualified leads to sales – this will set the wrong expectations and reduce the flexibility you need to experiment early on.
What are your thoughts? I would love to continue the dialogue started under #GlobalSCRM.