Social media measurement and ROI: don’t forget the unexpected

Long Range Binoculars at Westport, Washington
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Last week I attended an event on social media measurement and ROI as part of Social Media Week London. There were a lot of issues flying about such as ‘the meaning of ROI’, ‘campaign objectives or strategic objectives’. And some interesting perspectives from the panel on all of these topics and some discussions with the crowd. However one of the more important points discussed  was the use and relevance of objective setting. It was refreshing to take a step back and remember that with all this emphasis on objectives and direct results that we don’t forget that engaging in social media will usually help in ways that you never intended and objective setting can sometimes narrow your focus.

I have personally been working on evaluating some of our 2009 social media engagements, showing how this engagement met the initial objectives that were laid out as the foundations for undertaking the projects. After sifting through a lot of analytics, community data, and online buzz monitoring there were some really good results. The nicer part of this however was looking at some of the data and seeing the impact that a campaign had, that you would never have intended or expected it to.

A community that we have recently launched was set up with a view to strengthen the brand among a younger target audience, become an authority in its category and drive insight through the business. The campaign is doing very well in meeting these objectives, but we have also noticed that we have driven a lot of questions from people abroad and have been able to help international customers feel closer to the business and given them the ability to ask questions that they are restricted in asking due to the lack of stores in their country.

This is one of many examples that I have come across of social media adding value to a business that was never originally forecast or planned. I agree strongly that to make engagement a success and not open your company up to unwanted activity then you have to have clear objectives but make sure that your measurement is not as focussed as your objectives because you will miss out on value that you never intended.

The basics of social media ROI

Blocks
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The last post of our guide to Getting Started in Social Media looked at measurements and how brands should be ruthless about ROI. This presentation from Oliver Blanchard is a great introduction to social media ROI and how you should conceive of it and then measure it. It’s also quite amusing in parts and so is Required Reading this week at FreshNetworks

For me the most insightful part of the presentation is the distinction between a non-financial ROI and a financial one. Blanchard’s model is that you get the non-financial ROI before you get measurable financial return. They are part of a continuum - your investment leads to something that will have a non-financial impact first and then a financial one. This is a model that really rings true in our experience of building online communities. Financial ROI can take time to achieve, but good planning and strategy should start to give you non-financial ROI relatively quickly. Brands often need to have this trajectory reinforced - just because you don’t have any hard financial return yet does not mean it isn’t just round the corner. It probably is if you persist with your efforts.

Olivier Blanchard Basics Of Social Media Roi
View more presentations from Olivier Blanchard.

Getting started 4: Track and evaluate the success you are having

Curly measuring tape
Image by Marco D via Flickr

For any brand getting started in social media, the most important thing is to be able to show the impact you are having. To be able to evaluate and assess what is working and what isn’t having the results that you might expect. To show the return on investment that your efforts are having and how this compares to other methods.

There is a lot of talk about social media measurement and it is true that in isolation it is difficult to know where to start. But for businesses with a clear social media strategy, it is actually much easier than many people think. We stressed earlier in this guide to Getting Started in Social Media the importance of thinking about the reasons you are using social media before you jump in to use any tools or to engage people. We talked though a process to define clear and measurable business objectives and aims for your use of social media. It is important that you make these both clear and measurable. Typical objectives that a brand might consider include - acquisition of new customers, retention of existing ones, number of new insights or ideas into the business, or number of customer problems solved. These are just some of the objectives that brands may have for using online communities and social media, and all of them are measurable. At the simplest level they either save money for a brand or they generate revenue.

In the online communities that we manage at FreshNetworks a lot of time is spent defining the objectives and then working out first what metrics should be measured against these, and then monitoring and reporting on these to make sure we understand how the community is performing. It is important to establish a set of metrics that you can measure to assess how you are performing against your aims. In many cases you will want to measure a mix of things for each aim, but overall you should be able to show and prove what impact you are having.

Example: If you want to use social media as an efficient way of resolving customer queries, for example, you probably want to measure the number of unique customer problems you have on the site, the number of problems that are solved by other members of the community. You can then put an equivalent cost that it would have taken to service these queries through other channels and measure the actual reduction in, for example, call centre costs that you witness over time. This is what Dell did, and this is how Dell managed to work out that one member of its customer support community saved them $1m a year in support costs. That’s real ROI.

So the final stage to getting started in social media is to make sure you are ruthless about measuring what you are doing. It’s the only way you will know what works (and what doesn’t) and prove the impact you are having with social media. To do this you need to have clear objectives and these need to be measurable. Then you can measure the actual impact you are having on business aims. The actual benefit your social media strategy is bringing to your brand.

You can read the full guide here: Getting Started in Social Media

Getting started 2: What do you want to achieve?

Day 17/July 22 - Dartboard
Image by eliotreeves via Flickr

In the first part of our guide to getting started in social media, we looked at buzz tracking. Why brands benefit from understanding who is currently talking about them online, what they are saying, to whom and where. Once you have an understanding of what is currently being said about your brand in social media, you will be much better informed about the issues of interest to people, the opinions they have, who your influencers and advocates are and where you can start to engage with people in social media. The next step is to work out what you actually want to achieve.

For too many people, social media is seen first and foremost as a technological solution. People decide they want to ‘implement social media’ and then work out what they want to do with it. This kind of enthusiasm is great and people who want to harness and use social media for your brand should be embraced. However, for any business there is a critical question you need to answer first: “what are you trying to achieve”.

There is much talk about measurement and proving the ROI of social media. One way to ensure that you are able to show the impact that your use of social media has had is to make sure you have clear and measurable aims in the first place. Maybe you want to increase customer loyalty, reduce the cost of your current customer service channels, increase customer satisfaction, get new ideas into your business or reduce the cost of your customer insight spend. These are the kind of aims and objectives (at a very high level) that some of our current clients at FreshNetworks have. And all of them are measurable. You can show the impact you are having on a weekly, monthly and annual basis. And you can show either the revenue you are generating, or the costs your are saving, your brand.

A clear understanding of what you want to achieve should be the first step for any brand looking to get started in social media. This may be a detailed decision process or it may be simple, but no brand should try something without at least some aims. A simple three-step process for any brand is:

  1. Think about your current business strategy. Consider what would make the biggest difference to your business. Evaluate where you can contribute in the short-, medium- and long-terms.
  2. When you have thought through this you need to evaluate and refine your aims based on what is achievable using social media. Not everything is and not everything should be.
  3. Finally consider each of the aims and objectives you have left and how you can measure the impact you are having. Think about what you should expect from social media, what return you should see and what return you would expect for the investment you are putting into your activities.

This is a simple but effective process. The most important thing is to critically evaluate what you want to achieve as a brand and then work with people with experience of using social media to understand the full and diverse range of things you could do, tools you might use and engagement methods you might employ to contribute to these. This is often an iterative process and will help you to refine what you are looking to achieve and make sure it is realistic and achievable.

At FreshNetworks, we have worked with brands who have started working in social media. They are doing great things and it’s great to see them experimenting. But without having thought through what they are trying to achieve, why and how they will measure it their social media efforts will more likely than not fail. If you are not clear in your mind why you are doing it, you can be sure that your users will not understand what they are supposed to be doing in your social media site.

Of course, this is easier said than done, but it is a valuable and important step for any brand getting started in social media. And remember at this stage we’re still not really talking about technology. Not yet at least. That part comes next.

You can read the full guide here: Getting Started in Social Media

Social media ROI - a calculator for not for profit campaigns

Our post a few days ago on measurement and ROI in social media, Social Media ROI: Measuring the unmeasurable, prompted a fair amount of discussion. The main thrust of the post, and of the presentation it highlights, is that in order to measure ROI in social media, you need to have a clear and reasoned understanding of what it is you’re measuring and why.

When building ROI models for online communities at FreshNetworks, we follow an approach that includes the following four steps

  • Identify what success looks like in the online community
  • List the success metrics you can measure
  • Ignore things that might be a distraction
  • Track and measure your success metrics ruthlessly

It isn’t rocket science, and social media ROI really shouldn’t be. The tricky part of the process isn’t measuring and tracking the metrics, but identifying what they should be in the first place. This is the stage that needs time and focused effort. But in some cases a very clear success metric can be identified.

One such case is of social media activity as a fundraising tool for not-for-profits. Here the measure of success if usually the cost effectiveness of the fundraising - they want to raise as much money as possible using as little resource as possible. And they are in a great position to compare the cost and effectiveness of a number of different methods.

One great resource for those in this industry is frogloop‘s Social Network ROI Calculator. This is a fantastic resource that calculates in a degree of some accuracy the ROI that not-for-profits can get from social media campaigns. As frogloop say about the calculator:

You can use this tool to calculate an estimate of cost and return on investment for the recruitment and fundraising efforts of your staff in social networking sites like Facebook or MySpace. It works sort of like an online mortgage calculator. Just enter the starting assumptions in the yellow boxes below and the tool calculates results automatically.

The tool does require a lot of information but it is a comprehensive tool that delivers real and analysable ROI data for not-for-profit social media campaigns. Taking staff costs and a range of data on email acquisition rates, average donations and activities in social networks, it can calculate in quite some depth what the ROI story might be.

Go to the ROI calculator for social network campaigns

Of course, the problem with complicated models like this is that they are suited only to certain circumstances. This calculator would not be appropriate for all not-for-profit campaigns, but where it is it’s a great resource.

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