One of the biggest issues corporate social media faces is the problem of explaining how much these channels are actually worth, in dollars. There are a lot of great resources when it comes to answering that question- this article from Mashable provides an excellent primer on how to get started with “the metric to end all metrics.” While much of ROI calculation is just straightforward math, it also requires a little creativity. Here are 5 steps to think about when you’re considering how to quantify your actual fiscal contribution.
- Make a list of which social media activities you regularly engage in. Do you answer product questions? Support requests? Recommend your product/service? Drop links to viral campaigns that drive visitors to your site? There are endless numbers of things you could be doing. You just need to catalog them.
- Think about how each of those items on the list impact the business. Do they result in sales? Positive press mentions? Lower churn? Make sure you have a positive business outcome for each action you take. If you can’t come up with a positive business result for some of your actions, consider not engaging in that activity.
- Take your activities and divide them into two categories- those that create new revenue, and those that create cost savings. For example, answering product questions instead of sending it to the sales team is a cost savings for the company, whereas driving traffic to a signup page via a blog article results in new revenue (hopefully).
- Figure out how to attach a dollar amount to each activity. When it comes to determining revenue generation, it’s fairly simple. First, use tracking links wherever possible (custom tracking links in conjunction with link shorteners, etc.). Second, keep a detailed timeline of your social media activities, so that you can measure increases in sales against the baseline. Coinciding increases can be connected with your campaigns (albeit somewhat circumstantially). When it comes to cost savings, things are a little bit more difficult. To better explain, I’ll demonstrate through my own experience. One of the activities I spend a lot of time doing is solving support issues via Twitter. To calculate the dollar savings of that activity, I talked to our support people and found out how long the average support call takes. Then I determined the median wage for a support tech. This gave me an approximate cost per call (a lot support managers will already know this number, you just have to ask). With that number, I could now demonstrate a cost savings for every request I took off of supports’ hands.
- Think outside the box. After examining the obvious ways that your activities generate revenue and cost-savings, look at other side benefits your activities generate. For example, if you’ve created some evangelists along the way and you observe one of them taking on support questions proactively, you could count each incident as additional cost savings (as per the last example). After all, if you hadn’t contacted that evangelist, odds are good that the customer would be talking to your support people instead. The same thing goes for purchase recommendations from evangelists.
So that’s my $.02 on the process that I go through when considering the financial impact of my corporate social media activities. What’s the process you use to determine the ROI for your your social media activities?