Social media is the cool, modern way of doing business. There are many success stories where companies managed to gain exposure and enjoy a lucrative amount of leads generated through blogs, Facebook, Twitter and YouTube to name just a few. However, business leaders, CEOs and CFOs need reassurance about investing in this new way of communicating with customers.

Measuring social media return on investment (ROI) is debatable. The lack of ROI standards tends to scare many executives, preventing any form of engagement with social media until their concerns are addressed. As per conventional marketing, business leaders want to calculate profits and loss, and real world business performance metrics. However, one must not get sidetracked from the primary objective of building relationships and enhancing dialogue.

Businesses can reduce costs through social media by gathering business intelligence and doing market research online. It can generate revenue by attracting new transactions, more customers and client loyalty. In order to measure these quantitative and qualitative outcomes, the business must invest in resources, mainly people, time and technology. This therefore explains why business leaders want to see a return on what they are investing on.

For a social media plan to be effective, businesses and brands need to evaluate its outcome. Measuring social media ROI is not impossible if there are solid goals and concrete baselines. Define your business goals for your social media campaign – such as increase website traffic, reach a new market segment, customer surveys and open a new sales channel. You need to know what you are going to measure at the end of the campaign and what is it that you want to accomplish. Moreover, you cannot evaluate the ROI if you do not have a baseline, thus keep records of where you stand before using social media and where you stand afterwards.

Measure results (depending on your goals). You may want to analyse the number of traffic from social media to your site, number of views and/or unique visitors vs. returning visitors. How many likes and comments on your business fan page, and how many blog replies you got. Measure your branding effectiveness and your call-to-action impact by studying conversions and the number of active users. Monitor your customer satisfaction by examining any recurring sales and users’ feedback.

Even though such statistics may prove interesting, they will not mean much on their own. It is important to tie metrics to business performance. Create activity timelines and overlay everything together – compare your social media to other activities, web data, transactions, sales and loyalty metrics. Look for trends and correlate your available information. The key to measure social media ROI hence lies in identifying patterns, and tracking them back to their point of origin.

Ms Grech is a PR, content and SEO specialist at local web-solutions company ICON.

www.icon.com.mt

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