How to See Around the Corner: Positioning Your Company for Market Shifts
From the economy to customer behavior, many variables could impact your business’ viability in the future. Learn how to look around the corner to what’s ahead.
Kinesis clients are asking the big questions:
"What is the ROI of Social Media?
and
"How do I measure the ROI of social media?"
And these are great questions that companies should be asking.
Unfortunately, there is no one answer. While we can certainly obtain some metrics through tools like Twitter Search and Google Analytics, some of social media is simply about building goodwill and nurturing relationships. Like the good old-fashioned golf game and the "Let's Do Lunch" strategy, people like connecting with people.
That said, to start determining your ROI on social media, you must know your baseline and define your goals. (from Mashable): "As a standard formula, ROI is pretty basic, ROI = (X – Y) / Y, where X is your final value and Y is your starting value. In other words, if you invest $5 and get back $20, your ROI is (20 – 5) / 5 = 3 times your initial investment. In the financial sense, ROI is measured purely in the context of dollars and cents, however, the principles can really apply to any type of investment — monetary or not."
"Having concrete goals and concrete baselines is crucial to calculating your return on investment. So before you set out to measure and monitor your social media returns, you need to have a clear idea of what it is you want to accomplish."
"Once you have your goals defined, you need to gauge the baseline for your levels before starting or changing your social media strategy. For example, if your goal is to increase social media mentions of your company, in order to measure the ROI of any actions taken toward that goal, you need to know where you stand now. You can’t evaluate the ROI accurately without a baseline."
"Although ROI ≠ metrics, traditional web metrics like traffic counts, number of comments, Twitter followers, Facebook fans, etc. are an important component when calculating your ROI."
"The trick is to not rely solely on the numbers, but on what the numbers end up leading to. For instance, does your increase in website visitors correlate with higher sales? Are people that find your website from Twitter or Facebook then clicking on your product pages or going to the e-Commerce section of your site? That’s the sort of data you want to be able to look for."
Erik Qualman of Socialnomics has put together another fabulous video that breaks down the staggering numbers of social media into an absorbent format. (See our post, The Social Media Revolution, for his first video.)
Erik writes,
"While the video uses familiar nomenclature like ROI, many pieces of social media behave so differently than anything we have ever seen, that I prefer to use “What does or will success look like?” rather than “What’s the ROI?” After all, why are we trying to measure social media like a traditional channel? Social media touches every facet of business and it should be viewed more as an extension of good business ethics. Which, if done properly, will harvest sales down the line."
Here are some key statistics pulled from the ROI of Social Media Video:
Supporting articles:
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