Is social media's ROI too difficult to measure?
Many brands - some of them major businesses - are avoiding forming any kind of social media marketing strategy, simply because they feel they might not be able to measure social media's ROI (return on investment) in the traditional sense, according to Louise McGrath, director for UK-based Big Dot Media.
This reaction may be understandable but, at a time when social media is having such a huge impact on consumers' brand perceptions, it is also rather short-sighted. When we think about ROI, what comes to mind is a simple calculation of the financial investment we've put in, measured against how much the bottom line has grown as a result.
But social media does not work like that. The time, effort and financial outlay in either hiring a dedicated social media manager, using an advertising agency, or hiring a specialised social media company, throws all preconceptions about ROI to the wind because it is such a complex subject, and very few paths lead directly to the bottom line.
Social media has forced marketers to look at things differently. It is deeply embedded in our everyday lives in a way none of us really expected, and we are still learning how best to use its tremendous potential and the wealth of opportunities it seems to hold. But to think you can bypass social media and carry on regardless is to misunderstand the fundamental power of this channel - and also that of the consumer. Today, the consumer is taking charge of brand perceptions, and there is more "consumer power" now than ever before, with ordinary people embracing the ability to talk freely about their most loved or most loathed brands in front of a vast and global audience.
Brands therefore need to loosen up, adjust their strategies, and embrace the fact that social media has the potential to completely turn business around, thanks to the wealth of insights that social consumers can offer them. In other words, brands should not concern themselves only with how many sales social media can immediately bring in, but rather define some clear goals and dare to look beyond the bottom line.
For example, think carefully about what it is that you want to achieve from social media. Do you want to change brand perception? Do you want to get your marketing messages to the masses? Do you want to improve customer loyalty? Establish your baseline, then monitor how your social media engagement (be it Facebook, Twitter or another channel) is having an impact on these particular areas. For example:
- If, for some reason, you had a particularly poor brand perception beforehand, and you were suddenly giving great customer service via social media channels and consumers started engaging with you in a positive way and sharing your page with their friends and contacts, that alone represents a significant return on investment, even though it can't be directly measured in solid financial terms. It may not necessarily have an immediate impact on the bottom line, but you would be strengthening your brand's foundations and improving relations which stand a good chance of leading to increased sales in the medium to long term.
- Announcing a discount voucher code through social media is one way to gain a good understanding of how social media is working for you, and this can easily be tracked to the bottom line as well, because you'll be able to see how many times that code is used. More detailed reporting and analysis may involve studying what time of day brings the best results, or even which day of the week or month.
- Track how much engagement your tweets and wall posts receive, and analyse which type of post is the most popular and at what time of day/day of the week. This not only shows how well your brand is fairing socially, but also allows you to perfect your engagement by studying what works and when.
Brand marketers therefore need to understand that there is a great deal they can learn from social media, simply because you can't get much better feedback than a direct line to your customers. Is a particular product not selling? Why not use social media to ask consumers why they don't buy it? You may find that the problem is something so simple that, when changed, sales increase radically.
Social media offers a great opportunity to change your brand for the better. Listen carefully to what people are so willingly and constantly telling you, then do something about it. Address their problems directly, and your customers will start singing your praises to their friends, family and colleagues. This is a return on investment that is hard to measure in traditional terms, but it is absolutely priceless in terms of value to your business.