Let’s Figure out the Value / ROI (Return-on-Investment) of Social Media
Social media is all about branding, relationships, and engagement… until you have to justify your use of it.
Let’s get one thing straight: social media is not free.
Even if you’re not spending any money on it, it is costing you your most precious resource: time.
If you’ve got a boss, chances are at some point she’s going to ask you how much time you’re spending on Facebook, Twitter, and blogging, and what you’re producing with that time. If you are the boss, you ought to be asking yourself…
With all the millions of things I could be doing right now, is social media the best use of my time?
When it comes to social media return on investment, or ROI, there are two schools of thought.
Relators. Relators say you can’t put a dollar value on relationships. You can’t put a dollar value on a happy customer who tweets good things about your organization worth. You can’t put a dollar value on a relationship with someone in a complimentary field that could lead to a partnership.
The problem with the relator’s perspective, though, is somebody has to pay the bills. Somebody has to decide how much time and money is going to be invested in social media. How are they to make that decision?
Bottom-liners. Bottom-liners say you can and must determine the dollar value of social media. They figure if you track the source of all sales and determine the dollar value of sales from people who came from social media, you’ve got a hard number you can use for making decisions.
There are lots of problems with the bottom-liner’s perspective though, including:
- It’s nearly impossible to accurately track the source of all sales
- A person often experiences multiple “touch points” (places where they experiences your brand) on the way to the sale. How do you track them all and determine the relative weight of each?
- Social media and blogging affect search rankings. For those customers who find your organization through search, it’s hard to know how much of your search rankings to attribute to blogging and social media.
- For churches and non-profits, it can be even more difficult since your bottom line may not be the bottom line.
The million dollar question
The best approach is probably some sort of hybrid approach, where you do your best to calculate the dollar value of social media and then recognize that there is some additional non-monetary value above that. How much, though is hard to say.
That’s where I am, and where I think a lot of both for-profit and non-profit organizations are. We know there is value to social media, but we’re having the darnedest time figuring out how much.
POLL: Take a moment to answer the poll question about social media ROI in the right sidebar. –>
- Where are you in determining the ROI of your social media efforts? Just experimenting with social media and not worried about ROI? Working to determine ROI? Convinced social media is necessary regardless of ROI?
- Do you have any insights or good resources on social media ROI?