Recently I was talking conspiring with my friend Chad Rothschild and he brought up the fact that every CMO or Marketing Director he talks to about social media wants an ROI they can take back to their boss in order to justify the investment.
He asked me how I respond to these requests.
Several months ago Tim Walker tweeted from a summit he was attending and I remember seeing this tweet and replying to him in agreement.
He then wrote wrote Social Media and the acid-bath of ROI and I could not help but comment.
Hi Tim,
Trying to measure ROI of social media is stupid. It’s like measuring the ROI of sending emails or talking on the phone.
These are communication tools.
They only provide value if you use the same fundamentals that make people successful in business and in life.
Connect.
Build relationships.
Provide value.
Be yourself.
Listen.
HEAR.
Respond.
Your Tweet from the Summit was dead-on.
Stephanie
David Skillern commented as well and said, “As a former Controller I am surprisingly not a fan of ROI. My observation is that if someone wants to do something they can always find numbers to make the return work. That can be a huge waste of time.”
[Isn't that the truth.]
“I follow Rule #1 – First understand the problem.
When I first implemented email it was just HPDesk and it allowed me to move spreadsheets back and forth across the world (from Tokyo) which was much easier for non-technical people who needed the reports at HQ. At the time – 1987 who would have thought where email would go.
In defining the problem you can find the win. If you can make the cost work then redefine the problem. Einstein and Edison were notorious problem redefiners. They defined problems differently then everyone else and that’s what lead to their success. The same will hold true with social media.”
Jason Falls did an excellent job of expressing this point (*ahem* just slightly more eloquently than I did, I might add) in his recent blog post What is the ROI for Social Media?
“The problem with trying to determine ROI for social media is you are trying to put numeric quantities around human interactions and conversations, which are not quantifiable.”
Bingo.
IT IS A COMMUNICATION TOOL.
Are these companies measuring the ROI of their employees’ telephone conversations? Emails? Faxes?
Russ Somers offered an excellent counterpoint. “Love the passionately divergent opinions on this one. I think a lot depends on the interpretation of a deceptively simple question.
Stephanie’s point is right on target – for social media as an infrastructure element. It does have a lot in common with having telephones deployed throughout the office. We manage costs and performance for infrastructure but we don’t demand that they show ROI. We measure things like uptime or MOS, jitter and latency (in a VoIP installation) to ensure that we’re meeting the infrastructure goal of supporting the business.
If I’m setting up telephones in a call center, though, you bet I’m going to measure ROI. I’ll track metrics like average call time, hold time, dropped calls, close rate, average order size, etc. In that very common business scenario, yes, you do measure ROI on telephones.
So instead of asking “do we measure ROI on social media” as though it were a moral or philosophical question, ask: “What are we trying to achieve here? How do we manage to make sure we achieve that? And what is the appropriate type of measurement?”
Todd Schnick was also eager to weigh in.
“It is foolish to attempt to measure the ROI of social media; especially if you haven’t already been measuring and quantifying other data in your business. Instead, track where your leads are coming from, number of customer complaints, conversion rates, etc., so you can see how integrating social media into your business impacts those numbers.”
What I don’t hear anyone asking about is the cost of not participating in social media.
The conversation is taking place now and it will continue with or without your participation. If companies choose to ignore rather than participate the vacuum created by their absence will be filled and they may or may not like the result. For an example of this read my recent post about my horrific experience with Sears. And we’ve all heard witnessed the social media horror stories experienced by Dell, Starbucks, and Domino’s.
Rather, by engaging in a positive way companies have the opportunity to guide the discussion about their brand rather than allow others to do it for them.
Cartoon by Hugh
Sharon Allen, Chairman of the Board, Deloitte LLP, says, “While the decision to post videos, pictures, thoughts, experiences, and observations to social networking sites is personal, a single act can create far-reaching ethical consequences for individuals as well as organizations. Therefore it is important for executives to be mindful of the implications and to elevate the discussion around the risks associated with it to the highest levels of leadership.”
What are your thoughts on measuring the ROI for social media?
Revelant?
Necessary?
Moot?
Comments please. 
