Years ago, I heard David Meerman Scott say, “When someone asks me the ROI of social media, I respond with, ‘What’s the ROI of putting on your pants?’”
That got a laugh, but it didn’t actually stop business owners and the proverbial denizens of the legendary C-suite from asking marketers to justify the time and effort they sought to devote to social media (nor do I know if any marketers every had the chutzpah to respond to Meerman Scott’s bon mot).
Businesses have finite resources, and it’s not unreasonable for people to ask how the use of these resources will benefit (or harm) the company. Businesses also have traditional ways of demonstrating the return on the investments they make in employees, equipment, advertising, and a lot of other stuff that companies have been doing for a long time.
So, what is the key to showing the value of social media efforts in terms that business deciders will understand? According to Nichole Kelly, head of Full Frontal ROI and guest on this week’s episode of Marketing Smarts, the key is translating social media metrics into “core metrics your company is already measuring.”
This means, to put it simply, don’t talk about @mentions, retweets, and likes. Talk about cost-per-click, cost-per-lead, customer retention, lifetime customer value, and so on. In other words, talk about metrics that people already understand.
The challenge is that, while strides in this direction have certainly been made, it is not always easy to connect the dots between social media activity and business results. This doesn’t mean that you just give up and start talking about pants! It means instead that you make an effort to tie your social activities into your CRM, and you measure.
Of course, you don’t measure in isolation.
“If you just measure cost per lead for social media, it doesn’t really tell a story,” Nichole cautions. “But if you start to measure cost per lead [in social] against online advertising, traditional advertising, PR, etc., then you start to see a really interesting story. Costs tend to be lower.”
One other challenge that Nichole mentions arises when you take into account that, especially in the B2B space, a good deal of the sales process takes place in the untrackable offline world. For this reason, she insists, you need to “talk to sales” (as well as putting specific questions in your CRM) and find out what impact the content your creating is having. If you want to establish how, if it isn’t exactly making the sale, your content is at least enabling, you have to ask, “How did this help?”
In the end, measuring social ROI isn’t just about freeing budget or justifying your salary, Nichole says. It’s also about making sure that the value of social as a channel gets due respect within the organization. If we aren’t proving our value in this regard, she suggests, “We start to become servants to other departments, rather than our customers.”
You can listen to my entire conversation with Nichole, in which we also spend some time talking about monetization of content and the possibility of getting people “to pay us to talk about ourselves,” here:
You can also subscribe to Marketing Smarts on iTunes and, if you like what you hear (and even if you don’t), leave a review there!
Transcript: Marketing Smarts – Episode 10 – Nichole Kelly