How can an organisation relate success in social to return on investment?

Much of the perceived complexity regarding measuring social media ROI is caused by treating it as a distinct channel as opposed to a contributing factor in helping each business department meet its objectives.

Accordingly, social media ROI must be measured in the light of each business department’s objectives. That is to say, business departments need to work out how successful social media has been in contributing to the achievement of their overall business department objective(s) – alongside the measurement of other contributing factors.

Undoubtedly, econometric models can be built to do this in a thorough manner. However, when this is either logistically impossible or not cost effective, we can look at other, simpler, less exact indicators of return on investment.

In the case of marketing and customer service, one of these might be a good old-fashioned audience survey, where questions regarding social media’s effect on purchase decisions and customer activity can be posed. Social media platforms can make surveying greater numbers with greater frequency easier.

Numerous studies have been written showing how the level and sentiment of online conversation (or ‘buzz’) might also be correlated to sales. For certain industries, benchmarking an organisation against its competition may indicate who’s doing best, if not return on investment. We must remember, however, that many factors will result in changes to the level and sentiment of online conversation, and not just social media activity.

Other business departments can measure the ROI of social media in different ways. Customer service departments will increasingly be able to collate the necessary customer data that will show whether social media activity has helped improve an organisation’s customer lifetime value. R&D departments will be able to identify when customer feedback obtained in social spaces has resulted in profitable product improvements.

And we must remember why social media can work so well. Investing in one social activity can meet multiple objectives across an organisation  With this in mind, to really understand the value of a single social media activity, we may need to measure its ROI in numerous ways.

Photo courtesy of Andy Hay.

Matt Rebeiro

Matt helps our clients devise, develop and prototype ideas for social media activities, initiatives and programs.

His specialist subjects include understanding how social media has altered our traditional media consumption habits, as well as the luxury sector, retail and F&B. In addition, Matt also spends time working across the clothing, beauty, property and FMCG sectors.

Matt has been with RMM since 2007 and before that he ran a community radio station and studied Philosophy at the University of Warwick.

Matt mostly likes science fiction, skateboards and scotch eggs.

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