1. 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.
2. 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.
3. 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).
4. 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.
5. 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?

Account For Your Audience

You see, each one of these social media sites has a slightly different value proposition for its users, and a one-size-fits-all strategy is ineffective. What’s good for Twitter is not necessarily great for Facebook. Facebook users are looking for something different than Twitter users, and YouTube users are definitely looking for something that can’t be found on Twitter. Basically, I’m just saying you have to account for your audience.

Create Unique Value

Another issue with the one-size-fits-all strategy is that if you’re providing the same stuff on all your channels, what’s the incentive for a user to follow you on Twitter, fan you on Facebook, and subcribe to your YouTube stream? None. It’s all the same. So what if, instead, you provide each platform with its very own tailor-made value proposition? What if you have videos that are exclusive to youTube, insider information that can only be gotten as a Facebook fan, and coupon codes that can only be found on Twitter? All of a sudden, you’ve created a very real value for each of your channels that will encourage customers to connect with your brand on each of them.

Signal, Not Noise

This may seem obvious, but I have to say it anyways. Make sure that the value you’re trying to provide really is valuable. Hopefully you know your business and your market well enough to know what your users would consider valuable. This could be as simple as understanding the humor of the group you’re trying to reach so you can make YouTube videos they would enjoy, or as complex as researching your target userbase in-depth and developing an app that ties into your product and addresses a major need your target userbase has.

So anyways, for future reference, unless you live in the Midwest, have a close friendship with James Earl Jones and you’re building a baseball website, the “If you build it” approach might not be for you. Trust me on this one.