This week, I was invited to participate in a unique event put on by VIA Rail and the Fairmont Royal York on the opening day of Social Media Week: Toronto 2012. The event spanned the entire first day of the conference and was focused on discussing the business case for social media: in other words, the “social media return on investment” (ROI). Social media bloggers from Quebec City, Montreal, Ottawa, Toronto, and Kingston gathered on VIA’s recently restored Glen Fraser Lounge car to debate topics centred around social media, community management, client relationship management, mobile marketing, customer service, and of course ROI.
The “pre-conference” aboard @VIA_Rail ended with a great 2-hour speaker panel and Q&A session at the @FairmontRYH. The speakers included academics, entrepreneurs, C-level executives that were seasoned media, PR, and marketing leaders from both the public and private sectors (learn more about the speakers). Some tried to explain ROI with mathematical formulas, some took the “trust me it works” approach (then asked for the ROI on a toilet), but all of them provided examples of where they saw ROI for their particular brand(s).
After 8 hours of constant talking about social media ROI, I came to a few conclusions (for now) about calculating social media return on investment:
1. Social media ROI is difficult to do properly, but it’s completely doable. There’s no magic formula, or straight-forward way, to calculate social media ROI that applies to each case. The first thing you really need to understand is how social media is used in your industry, then figure out what you want social media to do for you. If your goal is to have a Facebook page for your business, you have already failed. If you plan to use a Facebook awareness and acquisition campaign to drive traffic to the eCommerce section of your website because you know that customers referred from Facebook are more likely to make a purchase than those referred from Twitter, you’re off to a great start. Those are the outcomes you are looking for.
2. You don’t need to measure EVERYTHING. Once you know what you want to do, you now have to measure your efforts to see if you are working towards achieving those goals. It’s important to find the “right metrics” to demonstrate the effectiveness of your tactics, and, as importantly, to help you make decisions. If you measure everything, and draw no insight, then you wasted time measuring for the sake of measuring.
3. Measuring social media ROI requires a tailored solution. After reading my first two points, you’re probably thinking, “OK, what do I do now?” Well, it’s time for the hard work, so start thinking about your goals. Start answering some of the tough questions. What do I want to achieve? How can social media help me deliver on my business plan? What business function can social media assist with? What are the costs if I don’t engage? What are the costs if I do engage? Do I work for a social organization? What are my competitors doing? If we implemented social media, what would it look like? What is our content creation strategy? How far do we go with content curation vs. creation? How can social media be tied into the DNA of your organization and to your existing business practices? Etc. etc. etc.
The good news is that there are people out there to help us do this. Academics, business leaders, strategists, and entrepreneurs lose sleep about this each night, and many of them are for hire to help organizations thrive using social media. And don’t be shy, most organizations need some level of specialized help with this. One thing that is certain, measuring YOUR social media ROI is not easy, and there isn’t a one-size-fits-all solution.
4. It’s all about influence. At the end of the day, we as social media participants (including brands) want to be influential. We want to be able to drive consumer behaviour, influence legislation, promote our personal brand, make connections, etc. You can’t do them all, so you need to pick what your want to have influence over, and tailor your social media strategy to achieve that.
The video clip below is just one of the presentations at the Social Media ROI: Myth or Reality evening event at the Royal York. This clip features Dr. James Norrie, who presents his quadratic equation for measuring ROI that revolves around leveraging the power of your “captive community.”
Social Media week is where social media becomes even more social. It is a 5-day conference that takes place in 21 cities around the globe. Each year, Social Media Week attracts more than 60,000 attendees across thousands of individually organized, and mostly free, events. It’s a great collection of minds, from the casual social media user looking for more information on their newly forming passion, to business and academic leaders who share their latest insights on the future of communication and ROI for business. And, of course, there are a lot of us nerdy bloggers.