How are you measuring the ROI of social media?

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Permalink Reply by Brian Jardin on November 3, 2011 at 2:19pm

I would love to hear how you are measuring the success of your social media marketing.

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Permalink Reply by Bob Massie on November 22, 2011 at 11:09am

Thanks for your reply, Brian.  I'm working on a calculation called "Return on Engagement."  It combines elements of two assessments, like financial reporting.  In that, you have an income statement (profit and loss) and a balance sheet (how your assets are working for you).  with ROE, one assessment would be like the profit and loss statement, easily tied to direct marketing and other traditional media but including expenditures and income directly attributable to social.  Then, there would be a definition of marketing assets for the "balance sheet" that are quantifiable, such as new email club members, Facebook likes and Twitter followers.  Between simple ratios established for the marketing "balance sheet" and the hard facts from the "profit and loss" statement, this approach should give as broad and solid a view of marketing as the respective financial reports do for the overall business.  Any thoughts?

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Permalink Reply by Brian (Restaurant Engine) on November 30, 2011 at 10:44am

My opinion is social media — while powerful and beneficial — can't be tracked and accurately valued like you can other marketing channels.

 

Social media, when done the right way, is much simpler than that.  It should be real, authentic engagement (hate using that buzzword, but it applies) around what you're passionate about, and what your business is all about.

 

Think about it like this:  When the head chef walks into the dining room to greet customers and add a personal touch to the experience, that benefits your business.  It creates brand loyalty, and so on.  But can you track the ROI of these chef-customer interactions with an equation?  No.  Social media works the same way. 

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Permalink Reply by Bob Massie on November 30, 2011 at 11:15am

Brian:

 

I think you're exactly right in that you can't yet track that direct ROI.  My thinking is centering around the value of that asset that's developed.  For example, one actual asset that is worth money in the sale of a business is called "good will."  There is no direct measurement of it, but deals always include the assignment of a value to it.  A brand where chefs are engaging guests has an asset that doesn't exist in other brands, but there's not an ROI.  I'm working on defining the asset like one would define good will.  Make sense?

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Permalink Reply by Brian (Restaurant Engine) on November 30, 2011 at 4:11pm

That makes sense.  In terms of defining a numeric value from web/social media, some might look at the obvious metrics like website traffic numbers, number of twitter followers, number of facebook fans, etc.  When selling an established website, these figures matter.

But I'd be careful about looking at those numbers alone.  In social media, it's more about quality (relationships, engagement, sales conversions) than quantity.

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Permalink Reply by Bob Massie on December 1, 2011 at 5:47am

I completely agree. As I get things firmed up, I'll post here for more feedback, and maybe my worksheets will be helpful

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Permalink Reply by Bob Massie on December 1, 2011 at 5:47am

To you guys, I mean

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Permalink Reply by Mary Beall Adler on January 17, 2012 at 12:13pm

Thanks for getting this discussion started -- sorry for my tardy follow up. At the Georgetown Bagelry, our community is very involved with social media. While we use our Facebook pageto post fun and relevant posts about our bagels, we have seen great success with our twitter feed. Our ROI isn't tracked spreadsheets, but rather through experiences. On Twitter we announce many specials or discounts that require users to mention a phrase or word to receive a discount. If you're not follow GTownBagel on Twitter you may miss out on some great deals -- likewise we can always track our popularity by how many customers know the "secret phrase". It's been a great success. It's just one of the ways we use social media to drive traffic online and in the store. 

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Permalink Reply by Joe Welsh on November 30, 2011 at 2:08pm

Bob,

I have several restaurant customers who can put a number on Social Media. Is it a precise science....no, but they have recognized what it has done for their business by promoting special events or special nights etc.

Our calculation involves, number of guest purchasing with the "marketing asset" x the average ticket. 

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Permalink Reply by Bob Massie on December 1, 2011 at 5:39am

Joe:

Do they id those guests via a coupon or offer code or by lift over a projected baseline?

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Permalink Reply by Joe Welsh on December 1, 2011 at 5:52am

They use various means to drive customers in. At the end of the day, they evalute the money in the register and compare it to prior year numbers when they did not utilize social to drive traffic.

 

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Permalink Reply by Steven Groves on December 1, 2011 at 12:07pm

Bob - great questions and one I can recommend a good book on the topic 'ROI of Social Media: How to improve the return on your social marketing investment'.  Full Disclaimer - I'm one of the authors and since joining up with ProfitStreams here a year ago, have been applying models and tactics to restaurant / foodservice social marketing. 

With that as a background, I can talk ROI in social all day long Amigo and happy to do so if you wish (maybe a G+ Hangout?), but I'll discourage creating an 'ROEngagement' - Brian Solis (and I) wrote over a year ago that that kind of work is not useful to the client. Stick to metrics and measures they are familiar with and you can deliver on.

If you are looking for formulas that you have to explain, but point at highly relevant interpretations of data, check out John Lovetts book 'Social Media Metrics Secrets', for which I was the Technical Editor.

ROI in social media-based marketing?  You bet... let me know when you can connect!

BTW, I've attached a PDF that covers the first chapter of ROI of Social Media for you and the other FohBoh'rs to check out - enjoy!

Attachments:

• ROI of Social Media Primer.pdf, 2.5 MB

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