Getting beyond “ROI” to Measure the True Benefits of Social Media

According to a recent survey conducted by Decipher on behalf of the Word of Mouth Marketing Association and the American Marketing Association, 70% of the markets anticipate that in the year 2014, their companies will increase social media spending.

Social media is no more an option today. It solely is a matter of how effectively and creatively brands adapt this medium. Yes, it is very powerful and at the same time, it’s very tricky – I am saying tricky because social media marketing is becoming more and more complex. Everyone is talking social, every online website wants “social integration”, the number of social platforms is growing, social is within the reach of every smartphone holder, there is tons of data and there are hundreds of metrics to track. 

Brands have been spending on marketing since ages and understand the power of ‘being in front of’ the target audience and grabbing the eye balls. I believe what adds a little complexity in social media is the fact that there are certain aspects like clicks, visits to the websites, fans, followers etc., which can be very easily quantified and therefore there is always a temptation to link “RoI” with these quantifiable aspects and completely miss out on other qualitative aspects.

“What do you want to measure the “social” or the “media” --- says David Alston of Radian6. Doesn’t it make you think about the true definition of RoI when it comes to social media? It definitely should - because the “Media” aspect is quantitative and “Social” aspect is qualitative.

Let me try and explain what I mean by this. Quantitative RoI means anything which can be measured in numbers – such as Number of visits to your site, number of leads, Increase in sales/ revenue, number of fans, followers, RTs, shares etc. Qualitative RoI is something which has very high qualitative value associated with it but it is hard measure it in number – this could include things like Interactions, Feedback, Loyalty, Trust, Passion or Brand Awareness.

Here are some of the examples of brands deriving qualitative and quantitative RoI through social media.

QUANTITATIVE RoI:

• Southwest Airlines: Southwest Airlines attributes more than $1 million in additional ticket sales to its presence on Twitter
• Marriott: Marriott has made more than $5 million in bookings from people who clicked through to the reservation page from Marriott's blog.
• Dell: Dell Outlet made more than $6.5M sale through its Twitter presence.
• Lenovo: Lenovo attributed a 20% reduction in call center activity to use of a community website for answers
• Naked Pizza: 68.60% of total dollar sales came from customers who said they are “calling from Twitter”
• Blendtec: Increased sales 5x by running the humorous "Will it Blend" Videos on YouTube.
• AT&T Community: 21,000 customer queries were resolved through the community tremendous reduction in call volume
• IBM: The developerWorks community saves $100 million annually with people connecting on the community instead of contacting IBM support.
• Accenture:  Accenture is believed to have saved thousands of dollars per executive by using LinkedIn for recruitment instead of headhunters. 

QUALITATIVE RoI:

• Starbucks: Generated lot of new product ideas by asking users what want from Starbucks.
• Oracle: Trained 25,000 partners using social media which in turn not only reduced the costs but also boosted satisfaction and increased PR.
• TurboTax: The Twitter campaign to respond and answer questions during key tax season established the company as thought leader in the space and found that customers were 71% more likely to recommend TurboTax.
• Kogi Korean BBQ: Uses Twitter to let the customers know where the truck was and when it would be in their neighborhood which built a strong connect with the consumers.
• Home Depot: Appreciates technical support employees on Twitter through tagging (Moral boosting, unique appreciation)

To summarize, here are few things you can remember about social media ROI:

• Quantity is not always the only metric – 5 engaged followers are better than 500 non-active followers
• Quality of interactions is crucial - 1 RT from an influencer can have much better impact than impressions to 1000 inactive ‘accounts’
• Conversation is as important as conversion – Social media offers an opportunity for two-way communication and brands should definitely leverage it for building connections with the target audience
• Negative comments also deliver RoI – provided you act on them in a right fashion. For example: If a brand properly handles negative comments from an irate customer on social media, other connected users automatically have a positive impression about the brand in their mind.
• Advertising cannot tell you consumer sentiment but social media can –use social media for such things and that’s RoI for you!

This article was originally published in afaqs special report on social media. Download the complete report here.

Social Media ROI – Measuring the Quantitative and Qualitative Results

I was recently invited to speak on Social Media at the Startup Saturday Event in Pune.

During my interactions with various organizations and people, I realized that while many people do agree that social media is powerful and should be used for marketing; lot of them are concerned about the ROI and the measurement of the same. This made me choose “Social Media ROI – Why, What and How?” as the topic for the speaker session.

Here is an excerpt of what was covered in the session.



As a first step, we need to acknowledge that social media a combination of psychology, sociology and technology. So while defining the social media strategy for your company/ brand, you need to be extremely cautious about ALL these aspects.

The next thing is the approach which is taken while planning the social media campaigns. The ideal approach is: 

1. Define Goal
2. Identify Tools
3. Decide Approach
4. Execute

Many of the social media campaigns do not yield the desired results because many companies and brands directly jump to execution without going through the first three steps.

Companies need to first define as to what exactly they would like to achieve from their social media campaign – is it customer feedback, user engagement, leads or sales. Once the goal is defined, companies need to choose the right tools. For example: Although Twitter and Facebook are the popular social media platforms, there is no point in being on Facebook if your target audience hangs out on MySpace! Once the tools are identified, get a clear consensus on the approach and tone of your communication. And then the final step is execution.

Assuming that you followed all the steps and have started with your social media campaign, the next question comes to mind is – how do I calculate the Return on Investment (ROI). While considering the ROI, you need to decide what exactly you want to measure? Because social media has got “media” which has quantitative measurement matrices and “social” which has qualitative measurement matrices. By quantitative measurement matrices, I mean number of leads or increase in sales/ revenue. By qualitative measurement matrices, I mean interaction, feedback, loyalty, passion and brand awareness.

Here are some examples which describe how companies have got both, qualitative as well as quantitative ROI through social media.

ROI Examples - QUANTITATIVE

1. Southwest Airlines: Southwest Airlines attributes more than $1 million in additional ticket sales to its presence on Twitter.
2. Marriott: Marriott has made more than $5 million in bookings from people who clicked through to the reservation page from Marriott's blog.
3. Dell: Dell Outlet made more than $6.5M sale through its Twitter presence.
4. Lenevo: Lenovo attributed a 20% reduction in call center activity to use of a community website for answers.
5. Naked Pizza: 68.60% of total dollar sales for Naked Pizza came from customers who said they are “calling from twitter”. 
6. Blendtec: Increased sales 5x by running the humorous "Will it Blend" Videos on YouTube.

ROI Examples - QUALITATIVE

1. Starbucks: Generated lot of new product ideas by asking users what want from Starbucks.
2. TurboTax: TurboTax started a Twitter campaign to respond and answer questions during key tax season. This helped them in establishing themselves as experts in their field whom the users could trust for opinion.
3. Kogi Korean BBQ: Uses Twitter to let the customers know where the truck was and when it would be in their neighborhood. This made the customers happy and of course more number of customers for Kogi.
4. Comcast: Provides customer support on Twitter which has got it more satisfied customers who are happy to receive instant online support
5. Home Depot: Appreciates technical support employees on Twitter - Whoever provides the support through support tags the tweet with his/ her name. Customers love this because they exactly know who is supporting them and the employees’ moral is boosted with such public appreciation!

So, in a nutshell, for a successful social media campaign:

- DEFINE what you want to measure

- DEFINE your message and tone

- DECIDE your approach

- SELECT appropriate tools

- EXECUTE with diligence and consistency

If you have any more examples of successful social media campaigns, do share those as comments!

Social Media ROI – Measurement Metrics

There is lot of excitement, curiosity and confusion around social media marketing. On one hand, there are a lot of organizations which are joining the social media bandwagon just because everyone seems to be there. On the other hand, there are others who are looking for ways to measure the ROI before they get into social media marketing.

For those looking for ROI measurement, I think the first thing they need to do is to think a little differently. I believe that the ROI measurement needs to go beyond number of visits and clicks etc. Here, conversation is more important than conversion. I suggest, before you start with social media marketing, first clearly define your objectives: Are you looking for leads and sales, are you looking to build a community of engaged and involved prospects and customers, are you looking to create brand awareness, are you looking to gather new ideas or are you looking to create online brand?

Once the objectives are defined, I think measurements become easier because the measurement metrics change based on those. Just be careful to not get excited about worthless metrics like ‘number of followers or fans’. Remember to also focus on quality and not just quantity. Here, the measurement metrics could be ‘the kind of people following your blog’, ‘number of influencers who tweet about you’, ‘number of people who actually used your TwtQpon’, ‘kind of engagement around a discussion on your Facebook wall’, ‘Number of retweets you get and from whom’, ‘reduction in support investment because of support through online community’, ‘number of new features your product users suggested to you’ and so on.

Here are some of the successful social media campaigns. There are many such successful campaigns. I have just picked these few:

1. Starbucks: Starbucks started MyStarbucksidea. Here, Starbucks asked its customers as to what they want from Starbucks. The social media success metric in this case would be number of suggestions gathered, number of unique suggestions which the company might not have thought of and number of suggestions which the company actually implemented.
2. Dell: Dell announces offers and promotions on Twitter. Here, the ROI is clearly measurable in terms of sales coming from Twitter, the number of people who availed the ‘Twitter Exclusive’ offers.
3. Target: The retail chain Target donates 5% of its income to charity. Last year, it decided to donate the money to charities which are selected by Facebook users. It did ‘Bullseye Gives’ campaign which essentially was a voting application connected to Target’s existing Facebook page. On this, it allowed users to select which charities they would like to see the funds. Money was given based on percentages. Here, Target not only just did good through charity, but it also increased the fan following of the brand. It can now be able to communicate with these fans in future.

As we see, the ROI metrics go beyond click through and more towards audience engagement and involvement.

Do you have any thoughts on measuring social media ROI?