Related posts:
- The problem with the social media ROI question
- A four-level framework for evaluating social media ROI
- Return On Investment - other articles
Social Media ROI Is Tough To Pin Down - But Not Incalculable
As I've alluded in previous articles, ROI is a little nebulous to pin down not because it's incalculable, but rather because it’s calculation is rooted in the setup. You almost have to be thinking about it right from the get-go. The answers resulting form that process of thinking will dictate what metrics you pay attention to, what social media and marketing activities you engage in and so on.
Anybody presenting their services to you as a social media consultant should be able to speak reasonably on the point about helping you define success criteria for the social media strategy they help you with.
The other thing about the elusive nature of ROI is that it depends on how you define it.
Borrowing from the Kirkpatrick four-level framework that training professionals in the workplace learning and performance industry have known for decades, I believe the social media equivalent of an answer to ROI will similarly span four levels of definition.
The Four Levels of Social Media ROI
At Level 1, being the simplest, will include most organizations who want to track metrics that help them address the reaction of your visitors to your social media strategy. Did they like it? How many stars would they give it? Thumbs up or thumbs down? Those would be some examples of that.
Meanwhile, Level 2 might include those organizations that are satisfied to understand metrics around the retention of visitors, customers, prospects and so on. Stickiness, return rates, time on site might be a few of the metrics.
Level 3 gets a little more involved through organizations that want to devise specific measurement criteria around the real-world influence of your social media activities. You’ll probably have to go for a customized development of metrics here. In short, this answers a question about how many people can you compel to take some kind of action or perhaps even change their behavior in some way through your social media strategy.
And then, finally, a Level 4 definition of ROI would begin to address the debates we typically hear about today of those wanting to know if it’s possible to measure the economic or financial impact of an investment in social media. Again, you’ll probably have to go with a customized metrics collection method here rather than relying on automated analytics engines—at least as they stand today. Level 4 means how much money did my social media strategy earn?
There are a lot of approaches to helping you determine an answer to the ROI question at a Level 4 assessment. Some are a little misguided, others very robust.
In part 2 tomorrow, I'll layout another approach hoping to add to the collective dialog that’s already out there in the wild on this topic. It certainly won't be the definitive one-size fits all approach—because I don’t think any solution at a Level 4 ROI assessment can be a one-size fits all approach—but it is another of several approaches that I think CAN fit very well in some very common scenarios and can, at the very least, add to the collective wisdom that’s already out there on this topic.
So, stay tuned for Part 2 of this blog post tomorrow about this topic. In part 2, I’ll try to lay out a step-wise approach to determining a breakeven analysis to your social media strategy and them using that breakeven point to help you get a handle on the return on investment of just such an investment.
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