(photo courtesy: thinkpanama)
I was giving some input over the weekend to a book I'm co-writing with my friend Stefan. In one of the sections, I mused about an article I had posted previously about social networking ROI (Return On Investment). You don't have to go far to see that the debate continues.
"Social media measurement is one of those topics about which everyone has an opinion, but nobody agrees on the solution."
~Aaron Uhrmacher, Mashable
And, while the ROI question may sound new to some because of its association with the "social media phenomenon," the thing is, it isn't a new question. Quantifying--let alone forecasting--the economic returns (in monetary terms) of what is essentially the value of a relationship, is a tough nut to crack. Mainly because the multitude of things that can affect "bottom line" performance is so broad; if sales improve after your company's implementation of a social network, who's to say that it wasn't really because of broader improvements in the overall economy?
Trainers Have Grappled With the ROI Question For Years
Having professional roots among those in the Learning industry, I can confidently say that long before social media and social networks were en vogue, Training professionals have long grappled with the ROI question.When evaluating the performance value of training programs many trainers invariably reference a four-level framework pioneered by Donald Kirkpatrick. The framework measures varying degrees of "ROI", if you will, with an increasingly involved set of analytical tools/processes at each level.
And therein lies a hypothesis: I think that one reason for the difficulty in answering the ROI question, as it relates social media, is because many of us who ask the question are searching for an answer that's at a different level than the tools we give ourselves to answer it.
In a previous post, I drew comparisons to Kirkpatrick's four-level framework to similar levels of "ROI" when looking at social networks and social media. You can read the details here, but the gist is this: the "ROI question" social medians ask, has conventionally focused on describing the economic returns. Well, Trainers will tell you that, from their perspective of training program evaluations, economic ROI is essentially the holy grail.
It's the type of evaluation that's at the pinnacle of a spectrum. That spectrum spans from concepts like, "What'd you think of the training program?" (Level 1), and "Did you learn anything?" (Level 2) to "How'd that work out for you? Can you apply what you learned on the job?" (Level 3), and the top dog, "How much did that training program earn for your company?" (Level 4).
The thing is, that top dog (Level 4) is a tough one. Professionals in the Learning industry would say there's definitely some prep-work needed before rolling out the program if you're going to do a Level 4 evaluation downstream. There's a lot of thinking that has to go into mapping business objectives, key performance indicators and performance objectives to the levers that ultimately influence profitability, revenue, costs and so on. (And, oh by the way, when using the metaphor of levers to relate things you can affect with a training program to financial metrics, they're rarely of the direct action-reaction type relationships. It's really more like pulling a length of rope, that runs through a pulley, to drag a concrete block across the floor, that flips a switch.)
Analytics Don't Go Far Enough
I think there's a similar dynamic going on with the social media ROI question. We can't just simply ask "What's the return on social media?", and then turn to automated analytic engines--sophisticated though they may be--for a direct answer about the dollars we can expect over time.We have to first ask, what level are we talking about?
- At Level 1, "ROI" can be measured using surveys and polls.
- Level 2? Well, then "ROI" is limited to metrics about easiest to measure with changes in: subscriber counts, unique visits, page views, length of visit, stuff like that. (Update: Online analytic services do well here. Not surprisingly, this is where we typically end up when trying to quantify the value of our social media investments since there are a lot of tools available to us at this level.)
- Level 3? Yeah, analytics can help, but you also have to start including some additional observations about how well you accomplished the business and behavioral goals you set out to accomplish with social media.
- Oh! You mean Level 4?! Well, in that case, I'm assuming you've already mapped the behaviors you thought you'd change with social media. And, you also thought about how those behaviors map to organizational levers that drive revenue in your company... you did that, right...?
Do you see the devil that's in the details? The problem is, many managers are unwilling, or unable, to do that degree of prep-work. It's a lot! (By the way, in my view, all the guys and gals who call themselves "social media consultants" should be able to walk their clients through precisely the kinds of activities I describe above. But that's just me.)
So, you see, when it comes to an answer for the question about the (economic) ROI of social media, we have to prepare first before we can expect to get that answer. Unless we make that investment of effort in mapping business objectives to the financial levers of our organization, Level 2 (or at best, Level 3) is gonna be the best we can get with the tools we've got.
Do you have any thoughts or linkable references that'll help me further explore this subject? Please share them in the comments section below. Thanks!
If you liked this, or any of the articles on this site, please subscribe!
Are you a fellow "Tweep"? Follow me on Twitter (@melaclaro)
Or, connect with me on LinkedIn: LinkedIn.com/in/melaclaro.
Got friends? Forward this post or save it to any of the bookmarking sites below.
