Growing the Magic Bean of Social Media Metrics

To gain competitive edge in the online social realm, companies adopt social media as part of their marketing mix. Social media analytics is available to assist companies learn from what consumers are saying online about their brand, products and competitors. Thus they can take proper actions to grow customer relationships and improve bottom line. Companies want to integrate social media data across the organization in business areas such as marketing and brand management, customer service, market research, and corporate communications. Thus they want to be able to measure the return on investment (ROI) of social media.

Today, there are ongoing debates about the ROI of social media, not only on how to measure ROI of social media, but also on whether ROI can be measured in the first place. Here are the two sides of the argument:

• Some people feel that it is impossible to measure ROI because social media represents the value of consumer conversations and relationship building on the web (which is intangible). Because we cannot measure the impact of a conversation or relationship between two people, it would be difficult to measure social media.

• Other people feel that social media insights are only valuable if they can be converted to data. This way, management can base their marketing strategy and decision on concrete statistic-based metrics.

To effectively measure the ROI of social media, a company must first define its business goals, and assign the right attributes for measurement. There are new attributes for social media such as authority, interaction, velocity, attention, sentiment, and actions. The company will have to benchmark its programs according to established goals and assigned attributes. Measurements of ROI can be both qualitative and qualitative in nature.

Qualitative data includes information such as corporation reputation, conversations or customer relationships. In order to measure how well a company is performing in these areas, it needs to:

• Determine specific area(s) it wants to measure (e.g. corporate reputation)

• Come up with the right benchmark (ask questions such as what consumers are saying about the quality of our product and service?)

• Take appropriate actions to achieve success (ask questions such as are we getting higher marks on how consumers rank our product and service?)

Quantitative data includes metrics such as network traffic, amount of sales, or SEO ranking. To measure the performance in these areas, a company needs to:

• Determine which metrics it wants to collect

• Use the right tools to capture the data (there are free tools available like AidRSS, Google Analytics, Feedburner, and Xinu)

• Analyze the data and make changes for improvement

According to Jason Fall, it is a waste of time to try to measure ROI in social media because we can never quantify human interactions and conversations. Katie Delahaye Paine claimed that the only way to measure is ROI is to assess whether we are getting what we want from the conversation.

The real question is: Is building customer relationship really that different between online and the traditional setting? It seems like traditional marketing measures success in terms of how many leads, proposals, presentations, and contracts are generated over a set period of time. Won't it be the same for online marketing as well?

Sources:

Falls, Jason. "What Is The ROI For Social Media?" Social Media Explorer. 28 Oct. 2008. Web. 17 Apr. 2010.

"Social Media FAQ #3: How Do I Measure ROI? « Web Strategy by Jeremiah Owyang | Social Media, Web Marketing." Web Strategy By Jeremiah Owyang: Web Marketing, Social Media. 26 Feb. 2008. Web. 17 Apr. 2010.

Spataro, Mike. "Understanding Social Media ROI." VisInsights. 29 Oct. 2008. Web. 17 Apr. 2010.

Uhrmacher, Aaron. "How to Measure Social Media ROI for Business." Social Media News and Web Tips – Mashable – The Social Media Guide. 31 July 2008. Web. 17 Apr. 2010.