One of the questions that always comes up when talking to companies about Social Media is “how can you judge ROI?” To answer this question you really have to step back, and think about what you are using social media for, what it’s purpose is to the organization, and most importantly to your brand. If you are basing the success of your social media strategy on percent of increased revenue, you may be setting yourself up for failure and disappointment.
The other night I attended the Social Media Club PDX event and this exact question came up. Chris Heuer, the speaker for the evening gave this response, “What is the ROI for having a janitor in your organization.” It presented an interesting point. Do you hire a janitor to produce ROI? No, you hire a janitor to keep your building clean, and your staff happy. This cleanliness and happiness will translate into a more productive staff and hopefully more sales for your company. But you don’t go to the janitor and expect him or her to produce sales.
Many people think that social media should drive revenue, just like a direct marketing campaign. But the thing to remember is that it is not direct marketing campaign. Social media may be used for product innovation, customer service, community building, or just a way to listen to your customers. You truly have to re-think the nature of the medium and approach it as if you were trying to reach out to a friend.
What we have found, is that customers already expect brands to be active through social media. So if your company is not participating, you’re already letting your customers down.
People don’t like to feel like they are being “sold.” Customers are savvy and won’t put up with it. They want to feel like your brand is providing a service to them. The future of marketing will be all about matching up the right product with the right person and finding those opportunities is where social media can help.
Now, with all of that said, there are ways to track the success of your social media strategy. However, start to think of it more in terms of growth, chatter and understanding rather than click-throughs or conversions. Ultimately the goal is to drive sales — and happy, engaged, customers drive sales.
Those are just my quick thoughts on this topic… and I know there are lots of opinions out there. What do you think?
-Erin
I found your blog on google and read a few of your other posts. I just added you to my Google News Reader. Keep up the good work. Look forward to reading more from you in the future.
My company has recently ventured into social media with our own enthusiast forum,fantasy league and track finder. The network, http://www.motospace.com is powered by http://www.MotoSport.com but its a totally separate domain. We do heavily track demand generation from our network – but our goal for our “Social media” is to tap into our customers mind. As an enthusiast based business we can find out more from these forums than we ever could from a focus group. In the future we do plan on surfacing retail content but we’re still figuring out how to walk that fine line of retail/social. We’d never want to lose a member because of the retail element.
Companies ask ‘where is the ROI?’ … however through social technologies they are able to track and observe how consumers use information in manners traditional media couldn’t really do, beyond Nielsen surveys. I recently tried to get my company to revamp their dreadful Web site and to follow my suggestions as to a social media strategy. Course, it was a subtle attempt to promote myself – but I came face to face with conservative-minded blockheads and how difficult it is for PR folks to negotiate those troubled waters…
Fenbi, you may want to look and see if the Social Media Club has a chapter in your locale. Many chapters are tackling the subject of selling social media to company heads. http://www.socialmediaclub.org/