Now that most businesses “get” that social media is an integral part to their business, we have moved away from the novelty of Facebook and Twitter and into the era of social media ROI. In a recent study, Bazaarvoice and The CMO Club surveyed CMOs about social media ROI and found that in 2010, 81% of these CMOs said they planned to track ROI for social media efforts, but only 40% reported that they did so successfully.
So, why is social media ROI so hard to measure? Many people have tried to create formulas or methodologies for measuring success. Jeremiah Owyang even created a framework, The Social Media ROI Pyramid, which I think is one of the best out there so far.
However, I think the missing piece lies at the strategy phase, not the measurement phase. Many businesses setup social media programs without first aligning their social media objectives to their business objectives. Forgetting this integral step makes it hard to understand the effectiveness of social media, and can leave community managers scrambling for metrics.
So, how do you align your social media objectives to your business objectives? Here are 5 key steps:
1. Write down your business objectives.
This is an obvious, yet frequently skipped, step. Understand what your CEO thinks is the main objective for the business. Is it product sales? Is it becoming the most forward-thinking company in your industry? Don’t just make an assumption here. Ask key business leaders so you’re clear on what’s important.
2. Consider how social media can help achieve these business goals.
If your business objective is product sales, and you sell your products online, this is easy. You can simply track how many sales came from social media referrals via Google Analytics. Most of us aren’t that lucky. Let’s say you only sell your products in brick-and-mortar stores. Social media can help generate awareness about your product or educate consumers on the benefits of your product.
3. Determine how you will measure both your business and social media objectives.
I teach a marketing dashboard class through the American Marketing Association, and have heard a significant number of class attendees say “brand awareness” is a key marketing objective for them. Last time I taught this class, I asked how many of these attendees knew how to measure brand awareness. Only one person raised his hand. How can you measure success if you don’t even know how to measure key objectives?
Write down the KPIs (key performance indicators) that will help you track success against these objectives. In the case of brand awareness, you can track things such as online conversations about your brand or number of unique visits to your website. You can also pay research companies to run brand awareness studies.
4. Set benchmarks.
Before starting a social media program, know where your company stands on major business objectives. Get average sales numbers, do some research on brand awareness among your target, or understand consumer opinions about your brand. Having these benchmarks setup ahead of time will better help you understand what impact (if any) your social media program is having on the bottom line.
5. Use a dashboard to track KPIs over time.
The reality is, understanding the effectiveness of a social media program takes time. Create a dashboard with the KPIs you wrote down in Step 3 and start monitoring it frequently. Look for trends and potential correlations between your social media efforts and your overall business objectives. Do you notice that sales have gone up since you increased your Facebook community? Is consumer opinion starting to shift now that you’re active in Twitter?
In conclusion, consider this: there is no one-size-fits-all formula for calculating social media ROI. However, if you align your social media objectives to your business objectives in the strategy and planning phase, you are going to set yourself up to be more successful in determining the effectiveness of your campaign.