Social Media Marketers (something that I resolutely deny existing) collect fees based on a social media ROI (return on investment) or if they don’t they base it on some arbitrary method that, if measurable (big IF), is only semi-related to ROI. So the question that many people ask about social media when I meet with them is how is it going to make them money. The response from me is "it won’t". This almost always causes a little panic and incredulity. I get blank stares and occasionally an angry glare. After I let that sink in for a couple of seconds I start my real response. If you enter social media with an eye toward ROI you will get none. Social media is first and foremost social and only after you have achieved a legitimate level of social can you begin to see the underlying ROI.
What are you investing?
Inherent with the acronym ROI is investment. So when you start talking about Social Media ROI what are you talking about exactly? You may be investing in a marketing company (shame on you), or an employee on staff, to post social media content. In this case your investment is money. You might also be using some third party social media software (for cross posting etc) in which case you are still investing money. However, if you are using the tools offered by the various platforms and doing the posts yourself you are investing time (hopefully not too much or you’ll be investing money as well). With the knowledge of what you’re investing it’s easier to determine the return on that investment…or maybe you’ve just determined the only calculable element.
What is the return?
The return in ROI is always the hardest to determine. In order to identify ROI for social media a long view approach is typically required for most small businesses. This means that when you approach social media properly your efforts should be on community building and that doesn’t lend well to identifying specific actions with monetary returns. Adobe Social is a new product for larger businesses that allows you to track every action, every interaction, every mention, every possible connection to your brand through social media and identify specific revenue trends. This is an incredibly powerful tool…if you’re a medium to large business. If you’re a one to ten man shop on the other hand this may not be a good solution. This means that the long view is the only way to identify the effects of social media. Being able to see growth trends and track new customers based on specific actions on your social networks will be important. Identifying your revenue trends and comparing them to previous years and seeing the gains (if any) over time will be more important. The real return in social media, however, is the community that is created. Acquiring a new customer is costly, keeping a customer for life is less expensive and easier to do with good social media efforts.
Real social media ROI
ROI will come with social media by being consistent, and effective with your posts and engagement. However, if your every action and effort is to generate ROI you will never see a penny from social media. Remember that being social is first and business is second, as you do this you’ll be rewarded with better customer relationships. Over time those relationships will lead to better revenue generation. Attacking social media from a marketing perspective will hamper your ability to be human first and a business second.