Social Media ROI – It’s all about $$$

How do you know if your organization’s social media participation is producing a good return on your investment (ROI)?

According to a panel of Cleveland social media experts, it’s all about converting your tweets, Facebook status updates, blog posts, etc. into dollars in the bank.

Panelists at The City Club of Cleveland on November 12 included (in picture below seated from left to right):

Cleveland Social Media Panel

The panelists, moderated by “Tech Czar” Michael DeAloia, LNE Group (at lectern in picture above), explored the definition of ROI as it applies to social media and provided tips to the audience of about 80 guests for getting the most out of their social media participation.

Michael kicked off the discussion by asking the panel why so many organizations are disappointed in social media the first time they try it.

According to Jason, organizations are often disappointed in the results because they didn’t set clear goals from the beginning. The key to measuring ROI for social media is determining ahead of time what you want to get out of your social media participation and how you’re going to measure it.

John says your goal should be to measure the financial gains that result from your social media participation. Whether you want to generate increased revenue from Twitter followers who buy your products, or decrease costs by managing customer service issues from your blog, the bottom line is that true social media ROI comes in the form of more money for your organization.

Sentiment also comes into play when talking about social media measurement, which can make determining total ROI a bit difficult, says George. Intangibles such as the tone of the comments about your organization posted online contribute to the success of your social media participation but are not as easily quantified.

Dominic advises organizations to monitor what is being said about them online and get involved in the conversations. Responding promptly to both positive and negative feedback can create more positive sentiment toward your organization, which could in turn result in more people willing to do business with you.  All of this social interaction is searchable, so how you engage with people online will affect interactions later on.

Monitoring what is said about your organization online can also give you an idea of where you should concentrate your social media efforts. The people who are talking about you will determine where you will need to be, added Dominic. It’s all about being in the right place at the right time so you can engage the people who are most interested in your organization.

That doesn’t mean you should bombard your social media audience with a sales pitch. The panelists each stressed that social media should be used for building relationships and creating positive sentiment toward your organization online.

“Social media includes the word social for a reason,” said John. It’s important to spend the time to create quality content that will draw people to you and want to engage in conversation with you. Sales pitches will likely turn people off.

George pointed out that you can start to identify “brand ambassadors” online who spread good news about your organization and draw more people in. Your brand ambassadors will soon become your best salespeople. As Jason described it, “social media is word of mouth published.”

Bottom line, before jumping into social media it’s important to set clear goals and to understand that it takes time to build up good relationships with your audience. When you choose to invest the time it takes to engage your audience and connect with them personally, your return on that investment will be significant.

Panelist John Heaney has made video of the entire session available, which you can watch via the embed below or visit http://www.viddler.com/explore/orangeenvelopes/videos/7/.

For more information about social media ROI, the panel recommends that you visit http://thebrandbuilder.wordpress.com.

4 Responses to Social Media ROI – It’s all about $$$

  1. It would be great to get a better understanding of HOW the ROI is measured, on say, Twitter or Facebook. Obviously, more dollars is the flag. But those new dollars could be the culmination of many marketing facets working together. Either way, great topic.
    Frypan

    • Measuring social media ROI is the million dollar question. Like so many other measurement tasks, it depends entirely on your goals. Surely income and increased sales are indicators of success, but like other PR/marketing outreach, sometimes it’s about creating the context in which sales can be made or getting a bead on the audience. Companies like Dell also use social media as an assist to product development, and that’s where tools like Facebook and Twitter can be very effective.

  2. Tiffany L. Ryan says:

    Social media, like the article says, is about cultivating relationships with potential customers, it’s not about selling directly to them. That’s the job of Sales, Marketing and Advertising. This means that in the grand scheme of things Social Media is more a tool of Branding than it is a tool of Sales. You wouldn’t expect a huge return on the investment of a new logo, would you?

    Definition of Branding: Entire process involved in creating a unique name and image for a product (good or service) in the consumers’ mind, through advertising campaigns with a consistent theme. Branding aims to establish a significant and differentiated presence in the market that attracts and retains loyal customers.

    Let me see if I can get the definition of social media straight here: Process of creating an authentic and positive image for a product (good or service) or brand in the consumer’s mind through the use of multiple communications platforms. The use of Social Media by a company is primarily to establish a significant and differentiated presence in the interactive universe that will attract and retain loyal customers.

    The cost of a Social Media campaign is a cost of cultivating your image. Which will inherently lead to sales if you cultivate a positive image. A positive image is something that takes time to measure the effects of and not something that can be measured each month based on how many Facebook Fans or Twitter Followers you have.

  3. Gamini says:

    Thanks for your knowledge sharing on Social media.

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