Boosting ROI through social media measurement

The importance of marketing metrics is skyrocketing thanks to the challenges of the current economy – and the higher performance expectations brought with it.

But how do you turn data into dollars when you don’t have the right metrics to tell you why you’re getting your current results? How do you prevent future failure?

The key is actionable metrics: data that help you understand the ‘why’ behind a result, while supporting your efforts to reach higher performance targets. Such metrics are the little heroes of the data world, because they deliver actionable insights to help you make smart decisions that positively affect your bottom line.

Step 1

On Wednesday (2010-06-23), Coca-Cola became the second company to sponsor a trending topic on Twitter and the first to do so for the 2010 FIFA World Cup South Africa tournament.

Coke’s Twitter messages congratulated the England and US teams, linked to videos on YouTube and invited people to “share their celebration” of their teams’ successes.

In just 24 hours, Coca-Cola’s first Promoted Trend garnered 86 million impressions and an engagement rate of 6 percent, according to Global Interactive Marketing Vice President Carol Kruse.

However, pageviews and unique visitors are not necessarily best practice when it comes to useful Key Performance Indicator(s) (KPIs).

Unique visitors come in many guises and while these web analytics are interesting, exactly what decisions will be made based on these numbers? Most importantly, how could this affect the bottom line? While this might matter less for Coca-Cola or Starbucks, it makes a huge difference for a medium-sized business.

Tip 1

Metrics are in the eye of the beholder

=> ComMetrics – 6 steps for starting social media activity measurement

Step 2

Primarily using traffic or volume to measure potential success may not result in profits.

It is critical to understand the most important drivers or operating metrics when it comes to success or failure. Accordingly, you must address what contribution(s) for achieving the company’s operating metrics, such as higher customer retention, will come from social media efforts.

Tip 2

=> ComMetrics – social media: Metrics to know and metrics to skip FAQ #3
=> ComMetrics – KPI experts’ top 5 secrets

We illustrate the above using three examples:

Example 1 – restaurant: The restaurant’s Twitter followers may receive a daily code around 10:30. If the code is used before 11:30 or after 13:30 to order lunch, a 10 percent discount is given.

Here, the idea is to satisfy regulars while enticing them to come before or after the lunch rush in order not to have to wait to be seated. In turn, lunch hour walk-ins have a better chance of getting seated right away. Accordingly, the percentage of clients forced to wait before getting a table during lunch time – an important operating metric – is lowered.

Example 2 – business brochures: Most businesses need a brochure to explain their product(s) or the company’s mission and services. To reduce costs – an operating metric – a smaller number is printed.

In one case, we found that beyond the 1,000 print brochures, another 600 (fictitious number) were downloaded from the internet. Here social media not only helped save costs, but it also increased diffusion of the information.

Example 3 – advisory services: Many businesses start groups on social networks such as LinkedIn, Xing or Viadeo (some suggest that there are four types of social networks). Unfortunately, building a social networking group’s membership while supporting the company’s brand and reputation takes time – a few months to build a following and hard work each week to provide valuable content that keeps the group alive and kicking.

As a consultant, one needs contracts (an operating metric) and social media (e.g., visibility) can help increase opportunities. However, rarely does one get a call from a group member to bid for a job. Often, it starts with meeting a Social Media Monitoring group member at a conference or networking event, which facilitates building a better rapport that might ultimately result in the chance to bid for a job or another subscription for one of our services.

=> ComMetrics – why social networking groups fail
=> ComMetrics – Recipe for success: Facebook, LinkedIn and Xing metrics
=> ComMetrics – 3 golden rules for best practice: LinkedIn and Xing

Bottom line
Metrics may appear accurate, objective and simple. But rarely – if ever – is it that simple (see example 1) and often social media’s contribution comes in a more elusive or roundabout way (see example 3).

Whatever we decide to do, cost-benefit analysis is required to obtain more insight into whether the effort is justified.

Figure out the benefits of social media and how these help with key operators in the business. If stakeholders need convincing, ask for the same type of analysis for newspaper ads or attending an exhibition. It is hard to show a clear link between an advertising campaign and sales in most businesses, except possibly consumer products. Often advertising helps with operators, but not the bottom line – the same applies for social media.

More resources
=> Measuring ROI: Why it fails
=> Budgeting for SM: Cost-benefit analysis vs. ROI
=> Using the right blog metrics
=> Engaging comments: Where is the beef?
=> 3 metrics: Impact, influence and outcome

What is your take? How do you see these issues? Have you tried to apply any of these approaches to any company you manage? What operating metrics are supported best by social media activities?

Please let us know in the comments!

Article source: ComMetrics – Boosting ROI through social media measurement
Podcast: ComMetrics University – Coffee break webinar: Turning social media metrics into money – get slides and listen to podcast