Good primer to get us thinking more about something other than "Yeah, social media - love it - costs nothing and gets us millions of users!" ;)

Were it me, since I pride myself on always being a "Bottom Line" kind of guy, (not to mention a psycho-quant! ;) ) I would probably take your plan a little further to at least actual visits as a result of the conversations / blog posts, and from there, to actual sales, etc., though with a _strong_ discount on conversion rates from the SM traffic, (since SM traffic has a much higher portion of the populous who's just looking to find out more about, but not in a buying mood).

SM takes a lot of time and effort, over a significant portion of time, which translates directly into marketing salary spend that thus can't be used for other revenue-producing activities, so if you're going to spend the time doing, as opposed to spending time on one of your other possible acquisition / conversion activities, for me, at least, that means that you have to be good with putting solid sales numbers against.

Definitely keep in mind, though, that SM is, indeed, a different channel(s), with different traits, and the first few times you put numbers against, you'll be wrong - know it, and be good with it. As you grow your SM efforts, just like with any other channel, you'll get better at estimating effects based on the actual activities you're undertaking at any given point in time.

But very well done on putting forth the most important part, which is, one way or another, turn that big mushy "have no idea" ball into numbers one way or another, and start! :)

I love that you are talking about specific plans and ways to execute those plans.

There's one caveat I would add (and was actually thinking about writing a post about this), but in order to effectively measure the ROI from social media efforts, especially for a blog, you need to know where you are PRIOR to launching the effort.

Like you need to know NOW what your website's traffic is. You need to know how many links your website has. You need to know how many mentions your company has online, and what the tone of those mentions are.

Then when you launch your blog, you can see how these variables change. You can track how much traffic is sent to your website from the blog, and if it leads to a purchase. You can see how total # of online mentions increases/decreases, and if the tone becomes more positive or negative.

I think this is where many people mess up with attempting to measure ROI of SM efforts, they don't know where they were BEFORE they launched their effort.

Good post Beth. Everything we marketers do should include an integrated plan, with an objective, measurable goals, strategies and tactics. I like the way you laid it out.

I might be a lone voice, but measuring ROI as it is meant to be measured, in revenues, is doable. That doesn't mean their aren't other returns, but clients, CEOs and CFOs demand and should receive ROI on everything we do.

As I said in an earlier post, we should not measure the ROI of tools. Instead, we determine ROI based on achieving the objective of the integrated plan, which features a variety of tools.

Hey there Beth. First I wanted to say thank you. Thank you for helping to isolate the measurements between the marketing ones and the sales ones. The measurement examples you've pointed out help to illustrate the "oranges to oranges" comparisons of the traditional media results to social "media" results. Often folks complain that social media doesn't have the same metrics available to it for campaigns but your points prove that wrong. Traditional media metrics then generally need to be customized to the company using them when they then get tied to actual sales results. No different for social media though in social media's case you can literally track the individual from the start to the finish - while with traditional media the "eyeballs" or "impressions" in the marketing metrics are very loosely tied to the end, sales metric, results.

Great post Beth. You've got me all fired up to dig into this further now for more specific ROI measurements at both the marketing and sales levels.

Great post Beth! All that came here before me have said what I initially wanted to say...measurement is as much about planning and metrics as it is about raw numbers. You can never measure true ROI without first understanding your objectives AND what happened prior to a differing strategy.

I do believe however that marketers must quickly take the next step and show the impact of social media (or any marketing) on lead generation and revenue building. It is only a few more steps to creating that data, but it is so powerful, particularly in this economic environment. We have created measurement plans for two things: Return on Investment (ROI) and Impact of Relationships (IOR)...which work well for marketing to prove their worth.

Hey Beth,

I like what you are doing in that it's a step in the right direction, but be careful not to make the marketing the objective.

Increasing reach is not really a valid objective. The outcomes have to go beyond simply generating attention.

Best,
Rich

I'm glad that somebody said it, and that someone is you. Everything we do as business people should be S.M.A.R.T. especially when there is no specific Return On Investment. In the case of Social Media its more of a Return On Influence. To think that a new form of media for a company would act like an old form of media is ludicrous. Different media warrants different usage just as different people necessitate different ways of interaction. Tailoring your message to specific people using specific media is an artform not a science. As soon as we realize that there is an ebb and flow to communicating with customers we will all be the better.

Hi Beth, Great Post
I still have a lot of contact with my old world, Corporate America and lunch or breakfast with the clan when I can.

The topic of Social Media always comes up, and is discounted. But I keep talking about it as I am pretty passion about the use of and effectiveness. They are listening though, and watching. As executives and business owners see the first signs of progress evidenced by higher revenues or lower costs they will allow Social Media to advance.

We have started keeping track of our progress in our small business too. The effects of retention are huge and were not well measured before. Mack’s point about understanding where you are starting is paramount.

Great article Bethe! One of the best on ROI for SM I've read!

I liked another comment about widening the sphere of influence.

Another measurement is the increase you can get in your database or "contacts" since those contacts can become recommenders of your product/service. That has $$ value, but is hard to measure.

you make some good points, but while conversations are nice, there's no 'ROI' without 'sales and revenues'

I'm about to be a pain in the butt again. :) I agree with your assessment, first of all. There are metrics that are absolutely quantifiable, like those you've illustrated.

But these are performance metrics, things that dictate how well you performed against a given objective. We wanted X, we did Y, we netted Z. All of that makes sense, and there are as many metrics for comments, subscriptions, clicks, calls, emails, mentions/posts, etc. as you can possibly dream up.

But the term we're trying to define is Return on Investment. That requires us asking "What are we getting out of this that builds the value of our business, qualitatively or quantitatively?"

I cannot stress enough that the goalsetting part of things HAS to be carefully laid out. If you're aiming for the wrong things in the first place, hitting the mark isn't going to matter one lick.

Do you know that getting mentioned in more blog posts contributes to more customer loyalty? How do you know that? Are you counting the mentions and stopping there, or are you spending time *talking to your customers* to find out whether or not these sorts of things move the needle for them?

We as marketers have a tendency to be a bit myopic when it comes to ROI, and we get sloppy with figuring out the difference between perceived ROI and *causality*. Until we're willing to roll up our sleeves and truly figure out what the "ROI" should be through our customer's eyes - since they're the ones that drive the bottom line - we're going to keep wondering if we're measuring the right things.

Nice post Beth. A very good platform for discussion (obviously).

I've found augmenting both the social and the media metrics with competitor totals in the same categories helps put frame of reference around the data for execs.

Having 25 brand mentions on Twitter is fine, but having 25 compared to your competitor's 8 is a lot better.

Thus, I always advise streaming competitor analysis data into social media ROI reporting.

Keep up the great stuff, and Happy T-Giving.
j

Hi Beth.

Good post. Nicely put. It aligns with our recent post on the ROI of Social Media. http://claremunn.com/2008/11/the-roi-of-social-media-get-the-biggest-bang-for-your-buck/

There is little use in engaging in social media if you do not have a plan/strategy and you do not measure to that plan.

As you say this is not about being rigid or pedantic, and it is not about killing the fluidity of social connections. It is about having a plan and understanding how your plan is shaping out.

Measurement is not about justifying your departments existence and it is not about $ value. It is about keeping your strategy informed.

Beth,

THANK YOU!
Your article is exactly what I was looking for!
And the comments add value to it, particularly the one saying that we should count the visits and Mack Collier's about the picture of the situation before measuring.
In the process of establishing a plan and having to convince the "boss" that it's worth spending time into Social Media, your article is perfect! It helps me splitting the figures, the objectives, the measurements, etc...
Great post.

beth, i'm so down with this post-you rocked it! and mack's point is crucial- there's roi in the knowledge that i can show you where you were when we started, and here is where you are now because of those efforts..can i put dollars to that?-no but what was better? the way it was then? or the way it is now? roi will come- hell all of those tools you mentioned are, in and of themselves, sales tools. they contribute to the sale or better yet, if marketing is indeed a function of sales, then they indeed did what they were supposed to do.

pardon the lack of punctuation, and caps, when i get on a roll, i let it all go for the sake of not losing my train of thought..

great job.

This is a great post, Beth, and a solid starting point for those seeking quantifiable metrics around social media. I think it's important to note that no social media engagement should be entered into without a plan, so what you've laid out offers a great baseline for coordinating efforts and evaluating *some* of the specific return on that investment.

But most of the greatest return on social media will never be measurable in the traditional sense, directly matching up a single conversation, for example, to sales/revenue or equating your use of a particular social media vehicle to a specific value. The results are dotted line at best, but if those lines are dotted with meaningful conversations and important connections that could have never been sparked otherwise, are they any less valuable? Or to take it one step further, are they any less critical to the overall success of a campaign?

Any good marketer knows that the most significant return comes not from one singular tactic, but from a fully integrated marketing mix, all working in tandem toward a clear strategic objective. So, while it may seem easier to quantify other forms of marketing, you can't separate social media from that equation as to the impact that it had in bolstering the other vehicles' effectiveness.

In fact, I contend that if social media is an element of your overall campaign, you can no longer so heavily weight the 'results' of other media vehicles as it is more than likely that relationships generated and exposure garnered through substantive interactions via social media are a high contributing factor.

The bottom line is that you cannot ignore social media, and if you have a product or service that is utilized by human beings, you need to engage them as such. And while these interactions may not associate with a specific variable, I can guarantee that you can easily attribute them to the numbers that DON'T appear on your sales grid.

Great post, Beth! As one of the ones trying to push both my agency and clients into the SM realm, I've read a lot of posts on social media and ROI. This was by far the best. You can bet I'll be forwarding this on to a lot of people around here.

Beth, this is a really interesting article, and right on the money.

One other thing to consider is that social media is social, so it tends to work best in tandem. So while you may have luck using, say, Twitter or Facebook, you might have much better luck using Twitter in conjunction with Facebook, and up your results accordingly.

/Fern Reiss
International Association of Writers
http://www.AssociationofWriters.com

Is the questions really about ROI or lead generation? I think through efforts such as social media we can lead a prospect to the web site or door of a business but that's when it turns into potential sales and then to ROI. So we can help increase volume of leads to increase eventual sales.And that's where it gets tricky. You could generate a heck of a lot of leads and have the organization muck it up internally.

Beth, this is excellent and everyone really needs to be thinking this way! As our markets evolve, more and more analytical depth is going to be needed to develop ROI and leverage the full potential of the opportunity.
Steve
www.sysomos.com

Great piece, Beth.

1. I hope that most pf your clients aren't using social media to pitch bloggers. I think we can all agree that this tactic isn't super effective or kosher. :D

2. You can actually connect the dots between engagement metrics and actual sales $ over time. There is a direct correlation between frequency (how often customers interface with your brand) and reach (how many customers/people you reach through various channels) and sales $. You can measure net new customers, customer retention, increases in purchasing behaviors (frequency and/or yield), etc.

When selling the value of social media to prospective clients, being able to connect those dots is pretty important.

In a perfect world, companies should want to have a deep engagement strategy that employs social media channels for the sake of having a great relationship with their fan base... but in a less perfect world (ours) you have to attach specific objectives and business-focused metrics to social media, or it won't stick.

Your point about defining goals with the client upfront is brilliant. This is probably the single-most important element of any first-touch social media conversation.

Great post.

Hi Beth,

Fantastic post - during these testing economic times the truly forward thinking companies that we engage have a keen interest Social Media and certainly in identifying ways to leverage its effectiveness. Really useful.

Thanks!

@DylanHunter, thanks for the great insights and deeper dive here. My post was more about getting marketers to consider a plan for social media. I hear over and over that marketers need to justify ROI before getting involved in social media and yet they don't have a plan for traditional marketing. My concept here was intentionally basic because if people don't (or aren't used to) have a plan that they can measure against (and esp. if they don't have a closed-loop system in place) they can't get to the next level, which you described so wonderfully.

@MackCollier, excellent point! Even if someone doesn't have a blog or isn't engaged in social networks, etc. they should have a baseline to measure against. The other thing that you mention that is very important is tone. And tone is hard to judge with traditional marketing (except perhaps with a survey or focus group). when moving forward with two-way conversations, tone is something that we all need to consider.

@LewisGreen, "we determine ROI based on achieving the objective of the integrated plan, which features a variety of tools." Exactly! And what's interesting is that I learned that from a PR perspective, not from marketing one. And since it seems that social media aligns better with PR, I used a PR planning mechanism (SMART).

@DavidAlston, "you can literally track the individual from the start to the finish - while with traditional media the "eyeballs" or "impressions" in the marketing metrics are very loosely tied to the end, sales metric, results...." I would agree that is the case for traditional marketing, because they aren't conversing with you until they talk to a sales person, a company might have a hard time knowing what marketing piece they saw or which one made them pick up the phone or contact the company (unless, of course, it was something that used a PURL). With Web 2.0 tools it is a bit easier to track an individual because they might use the same name on socnets, Twitter, their blog, etc. so you can see where they are & who they are talking to, etc. It will be interesting to see where this ROI discussion heads.

@KyleFlaherty, A great edition. I did read you piece over at Feeds, excellent work on the ROI discussion! I like Impact of Relationship as another measure. As KD Paine says you need to know what the "R" and "I" represent. It could be Return on Influence, Involvement, Impact, etc. It's a shame in this day and technological age that marketers still need to prove their worth.

@RichBecker, Understood. To clarify, my point with the increased comments and blogger outreach was conversation, but I suppose someone new to social media wouldn't get that. In this case, of comments to a certain output (YouTube, a blog, etc.) could be considered a positive outcome. And the blogger mentions example is an output. Outputs, outtakes and outcomes are all viable for measurement...depending on what the original goal was.

@DamienBasile, "Different media warrants different usage just as different people necessitate different ways of interaction." Very true! The measurement of social media, my prediction anyway, is going to fall along the same lines as PR measurement (which, by the way, is still trying to be figured out all of these many moons later). I think marketers are going to struggle with this and it's one reason why I used a SMART plan (typical in PR planning) vs. a marketing plan. I hope that it just kick-started some initial thoughts towards the need to plan.

@EricBrown, very interesting. Why do you think they dismiss the notion of social media? Is it the same mindset that makes people shy away from media relations? The fact that you can't control the outcome? I wonder...

@Webconomist, thank you sir! There are many things that can be measured. The "R" the "I" the influence, the results...it all depends on a company's goal(s). Recommenders/evangelists are always capable of influencing more of your product/service to be spent, of course. In traditional marketing they would be WOM folks, affiliates or lead referrers. I think it would be the same in social media...the champions/evangelists that use Web 2.0 tools.

@ChrisSelland, ultimately it depends on what you want to measure...ROI could be return on influence, which could be an indirect way to sales/revenues.

@AmberNaslund, no pains here, this is a conversation about an important topic. "If you're aiming for the wrong things in the first place, hitting the mark isn't going to matter one lick." Agreed. I think the most important thing that you bring up is talking to your customers. There are, as Mack pointed out in a recent blog post, so many assumptions being made on either side (internally, the company and externally, the customers) that neither side knows what is being said. And that's a moving target. Thanks Amber for bringing another major and important point to the discussion.

@JasonBaer, yet another great angle! How does a company compare to their competition and why it should be measured as well. I would venture a guess that if you are having conversations with customers/prospects that your competition isn't...your ROI (indirect or direct) will improve. :) Happy Thanksgiving to you also!

@AlasdairMunn, valid points. I think the PR folks would totally agree with you. The marketers, well those that even have a plan, might see if differently. Unfortunately, we have been trained to think that our work = leads = sales = job justification. If marketers are going to move into the social media realm, they need to change their mindset and learn that it's about the relationships that ultimately come out of their work (conversations). Those are my thoughts...what do you think?

@ClaudiaBenassi-Faltys, you are quite welcome! Mack is a smart guy and he is correct, a benchmark must be captured prior to kicking off a new plan. Here's a link for you: http://www.learnmarketing.net/smart.htm. Best of luck!

@MarcMeyer, thanks! One thing, marketing is not a function of sales...it's the other way around. (Sorry, had a CEO tell me that once and it hits a nerve. BTW, he's no longer a CEO). This will lead me down a different tangent, but since we are here... Sales isn't standalone, it's a function of marketing (P as in promotion), so why aren't more marketers comfortable with that promotional aspect and the conversations that go with marketing? By conversation, I mean external conversations with the customer. Might need to blog about that. :)

@GenneferSnowfield, "Any good marketer knows that the most significant return comes not from one singular tactic, but from a fully integrated marketing mix, all working in tandem toward a clear strategic objective." Agreed, and I tried to make that point in my post. It's multiple interactions and conversations that move the needle from prospect to customer. The other important point that you make is the difficulty in measuring a single conversation (or even multiple conversations or marketing 'touches') to a sale. Even if a CRM system can capture all of that campaign information, it's still subjected to human error. Great points here, thanks Gennefer!

@MikeMcClure, thank you, I appreciate that! :) Be sure to share the awesome comments too!

@FernReiss, you are spot on...and your comment reiterates Gennefer's comment on integration. Integration has always worked, even in traditional marketing.

@LisaCruz, I think with social media and conversations had, people might not like being objectified as a "lead." Because that's what we are talking about here....people. Companies might call them that, but I think it's more about the relationship. Business development people have understood that for years. And traditionally where leads get "mucked up" is when they hit the sales department or aren't vetted by marketing for quality (and the quality is lacking because a conversation was never truly had with that person). By utilizing social media and Web 2.0 tools, the conversations are outside of the company and the people you are talking with (or, more importantly, might be talking to other people about your company) might never interact with a sales person or marketing person, and yet, still buy from a company. I hope that makes sense...

@SteveDodd, thank you! I mentioned this a few comments back, but this planning is by way of PR planning (SMART planning/objectives) and it's really simple to do...a company just needs to roll up its sleeves and do some strategic thinking. And as Amber suggested, talk to customers.

@OlivierBlanchard, Point #1, ah, no. The PR professional in me wouldn't let that happen. But you are correct in pointing out that it could be misunderstood that way. Pitching bloggers is like pitching the traditional media...you need to have a relationship with both and with that comes understanding who they are, reading their posts/articles, and picking up the phone or sending an email (whatever the blogger's/journalist's preference is). I hope that eases your mind. :) Point #2, you are correct, there are deeper and more meaningful measurements...I just didn't get into them. I am always amazed that companies don't know what their goals and objectives are, but that's why we are here, right?! To help clarify that and make it look simple. Thanks for providing the second half of where this discussion should go...

@Yiuwin, the one thing I will say is that companies see social media as "free" or inexpensive, but that's not the case. There is time involved and that could mean an employee's time (i.e. salary)...just as a minor example. Thanks for the kind words!

Awesome post Beth... love how you laid out a plan, helps get us started in the right direction.

Great conversations happening surrounding this post.

Hi Beth.

I started a reply but it became too long and involved. I have added it to my blog. Here is the link

http://claremunn.com/2008/11/the-roi-of-social-media-yes-or-no/ RE: Your message above.

@AlasdairMunn, your post was a great addition to the conversation. It's great to read someone else's take on it. Your readers had a lot of wonderful insights!

@JessicaHunter, thanks! It's just a start and there are a lot great resources available for kick-starting a plan. The comments are always smarter than the post. :)

Overall tone of post and comments seems to be making thing harder than they really are.

Zappos has pretty much gotten it right with their "Experience Syndication" and Zappos Insights. ROI on Social Media is a matter of companies customizing Zappos' approach to their own bsiness rules/budgets

http://www.zapposinsights.com

Note to PR and Marketing people, be careful what you wish for - Being able to measure ROI means your customers have quantifiable proof you are not providing value for their money/

...but why should "social" be so much different?
We have written pricelists for adviews, big businesses are built on the fact that we consider it as valuable that people are watching TV-commercials. We don’t even know if they are watching the commercials or if they are ironing, eating or sleeping - what TV advertisers are actually paying for, is the mere fact that a TV is running somewhere.

On the other hand: why should we?

Great site.

The Social Media Academy developed a way to calculate ROI on social media. http://www.socialmediatoday.com/SMC/77179
We are now all interested in a broad response and feedback. Let us know what you think. Thanks a lot.

Beth - I had read this when it was first published. What is more interesting is that the fuzziness in social media ROI is still unresolved. So, when I again landed on your post, I thought of adding my note.

One aspect that we often ignore while calculating the ROI is the impact of SM on brand equity. In case of SM, the influencers have immense role to play in lifting the face of your brand. And this should be attributed to while calculating the ROI. One more thing - the "T" in SMART gets very important here. As, the impact of Social Media is instant, but because of the inherent viral nature of SM, the wave continues to bring results for your company. Interesting topic --- many thoughts. There is still no right or wrong aspect and we are not yet close. It calls for brainstorming sessions ...

To think that a new form of media for a company would act like an old form of media is ludicrous. Different media warrants different usage just as different people necessitate different ways of interaction. Tailoring your message to specific people using specific media is an artform not a science. As soon as we realize that there is an ebb and flow to communicating with customers we will all be the better.

the "T" in SMART gets very important here. As, the impact of Social Media is instant, but because of the inherent viral nature of SM, the wave continues to bring results for your company. Interesting topic --- many thoughts. There is still no right or wrong aspect and we are not yet close. It calls for brainstorming sessions
Physical Condition

thanks for this.
for the better of the communication.