Given the rise of smart phone and tablet use, the argument for whether your customers are on social is for the most part pretty irrelevant. There are plenty of stats about the growth of Twitter, not to forget the fact that if the number of Facebook subscribers equated to a country's population it would make Mark Zuckerberg the leader of the third biggest country on earth!
But what should you - as a small business - look at if you are trying to measure the ROI from social?
THE COST OF SOCIAL
It’s obvious that ROI is based on cost and return. Fortunately working out the costs of social, for the most part is fairly straight forward. Setting up Facebook, Twitter, Instagram, YouTube and LinkedIn accounts won’t cost you a penny unless of course you advertise. Then working out costs is similarly pretty straight forward. The other cost, of course, is your time spent ‘doing social’. Working that out based on your hourly rate. There is of course one cost that is impossible to calculate – the opportunity cost. For the time spent on the tweet, post, like, reshare, what else could you and those in your business have done? Irrespective of how you add all of that up, it’s an easy number to calculate when compared to the return.
THE 'VANITY' OF SOCIAL
You may well have come across the term ‘vanity’ metrics namely where measurements from social such as followers, likes, friends, +1s and favorites are meaningless when compared to the number of calls to an enquiry line or number of demos requested. The argument goes that value of those numbers is for your ego alone and bears no relation at all to the wellbeing of the business.
But taking the vanity side out of the argument you have to start the entire social discussion with the following question: what is the purpose of doing social? Why bother?
THE VALUE OF SOCIAL
This depends on context, are you looking to sell products? Spread the word? Recruit great staff? Secure funding to help the business grow? Attract resellers or partners? There are probably a whole host of questions I have missed but for each question look at each social platform and work backwards. For Twitter, a follower is a person this could be a customer a competitor or a prospect. Similarly a ‘like’ is a person who has endorsed the company. A reshare or +1 of a blog means that a person has read the article written (compare that to ABC circulation numbers) so when you then look at what you are trying to achieve it does not take long before you can move towards some meaningful numbers.
THE PROLIFERATION OF SOCIAL
Count to three and another ‘must follow’ social platform has been launched – Twitter, Facebook, LinkedIn, Google+, WhatsApp, Snapchat and there are probably plenty more I missed. Where do you place your bets? Think about your audience and what they use and that should define where you should focus your time and energy. Targeting consumers' Twitter and Facebook is a good place to start, while for business people LinkedIn and Meetups will work better. Do your homework first before you start.
THE ROI EQUATION
Last year I worked with a social media platform provider called Sentiment and its approach to ROI is simple. Social should either increase revenue or reduce costs in servicing customers compared to other channels e.g. voice, email, web chat. Granted its focus tends to be for larger brands but a small business does think in the same way. If I spend 20 minutes on the phone with a customer when a quick five minute post on my Facebook page removes the question I have saved 15 minutes. 40 new followers to my blog means I don’t have to purchase a new list of names for the next marketing campaign.
THE ROI SOCIAL LOOP
Given that technology moves at such a fast pace, the only thing a small business can do is constantly evaluate its social progress (provided this exercise does not take too long either) against its business objective. Chances are you do this instinctively given that you track the bottom line closely to do this for social could in the long term pay big dividends.
Marc Duke is a consultant, with over fifteen years marketing experience, specialising in business-to-business marketing primarily with emerging technology companies. Marc is a member of the Connect London PBA team, Tech London Advocates, on the Board of Founders4Schools and blogs regularly about startup marketing and social media. Follow him on Twitter @marcduke.