Measuring ROI in Social Media

Businessweek.com reported that as of 2009, 84% of companies do not do ROI for their social media endeavors. That’s huge! People are paying “experts” and “gurus” insane amounts of cash with out a way to judge if the campaign is working or not. I think that the universe of social media has gotten so huge, so fast, that people simply do not know where to start measuring what they are getting out of a 2.0 campaign, if anything. With billions of tweets, updates, and posts put out every day, how do we keep up with all of it and make it something we can understand? How do we look at when and if people are talking about us, and is all this chatter converting into sales?

• Where do you want to be? It is the most important first step to clearly define your goals. What is it that you hope to achieve from marketing through social channels? Take this time to create your social media policy. Stay realistic about your expectations. Once you have your goals, set your baseline. You will never know how far you have come if you don’t know where you started.
• Tools, tools, tools. Metrics, metrics, metrics. Traffic numbers, comments, followers, fans. All of this is the beginning of what we want to look at. Then it gets a little more intense. How will we know if the Twitter account is sending people to our site? Are the clicks to our website coming from the posts or the Twitter home page? I like using bit.ly for links. They have a real time analysis of clicks per link shortened using their service. After that I find Google Analytics and Hootsuite to be top tools for judging traffic and both are free. Remember, one of the biggest draws to marketing in this environment, is that it can require comparatively little investment on the cash side.  You do however spend much in the time you put into it.
• Sentimental Journey. Knowing how many times you have been tweeted about is completely worthless if you don’t know if they are positive or negative tweets. In comes sentiment analysis. Viralheat is a cheap service (cost wise) that will give you a good breakdown of what is being said about you. Twends, though basic, shows real time tweets about you or the keyword you choose, plus a quick breakdown of it. TweetFeel is also real time but you will only find real value here if you are being talked about a lot.
• What does All This Mean? Collect all the metrics you want. Unless you convert that into something you can use, you’ve wasted your time. Look at sales trends during different pushes, look at your customer retention, at how many coupons were taken and how many were redeemed, or however you have decided to judge your progress based on your goals and baseline.

This is a basic look at some of the things you can do to track progress in the social media area, but for me, I’d rather be part of that 16% that are looking at what I am getting out of my investment than be one of those who are using a very big hammer on a very small nail (Thanks Mark). When it comes to knowing the difference between time wasted and great uses of my time, I’ll take any edge I can get.