What’s your social media spend ROI?
Well, according to Richard Beattie of eConsultancy.com the question is not as much about ROI as ROE – Return on Engagement.
Let’s discuss the two.
Brands are overwhelmed by the building wave of social media marketing opportunities and industry champions exhorting them to ride it or drown. Executives are scrambling to understand how they should drive their social strategies effectively and in particular, what the upsides are for their efforts. Despite the guff, the truth is that it’s difficult to measure return on investment from social media. Difficult but not impossible.
The first obstacle for many business leaders is getting past the idea that social media doesn’t cost them anything. It takes time to find ways to engage followers and retain them, as well as generate great content (interesting ideas, articles, images, video, etc.) and promote it on your social networks. You are paying for that time, and more of it than you think (if you’re doing it properly). Work it out in numbers of hours and put a cost on it.
Now you know what your spend is. How do you measure return?
Firstly, understand the job that social media is doing for you. It is (or should be) creating loyal customers by engaging your audience on a basis that is credible, useful and relevant to them, and with which they identify. People ‘choose’ to engage with your brand using social media. If they stay engaged then you have built loyalty. Analytics tools allow you to track conversions and sales from these platforms, so you can determine the value of your loyal customers and get an idea of what they are worth to your bottom line against the cost of acquiring and retaining them.
Beattie is arguing that customer ‘engagement’ can be ‘a lot more valuable than a few sales’, supporting the notion that:
social media = loyal customer = higher long term sales revenues.
We’re talking about providing the tools and motivation for customers to build a relationship with your brand that engages them on a personal level – to create brand advocates of them in a social economy…as I like to say. This is the conversion of customers to brand ambassadors who share, like, pin and tweet about your brand among their friends, spreading the good word using the most credible and effective marketing channel there is – word of mouth. This social media based relationship building process between brand and consumer can be managed using metrics such as fan churn, demographics, referrals, impressions and active engagements. The tools that enable you to take these measurements are out there.
This debate is about the value of an ‘engaged customer’ versus that of a ‘sale’. Or if you will, it’s about long-term versus short-term strategy. The chances are that you need both. Like other marketing functions (eg. brand identity development, generic brand advertising, good public relations), social media is one of those brand development game plans that may be difficult to calculate the immediate value of, but you know you can’t compete without over the long term. Social media doesn’t typically generate immediate revenues in the same way as discount events or point-of-sale merchandising (although it can), but it does ensure that you have an attentive customer base when the time comes for tactical sales promotion activities such as these.
The take away here is that it is essential to measure your return on social media spend, whether it’s investment, engagement or both, but to do so with the understanding that you are making decisions about a brand building strategy whose objective is to develop customer relationships which will fuel growth over the long term.