In a post for the OnlineSpin blog, Jason Heller takes a look at this "Return on Investment" issue.
He starts with stating that there are four basic objectives for social media efforts - building relationships with customers, creating awareness and acquiring new customers, providing customer service, and monitoring customer input for better insights and research they can act on. In the absence of industry-adopted specific metrics designed for social media arrive, Heller suggests that a combination of more generally accepted measures of impact and effectiveness can provide indications of effectiveness of at least those broad goals and objectives. Specifically, he suggests looking at Reach & Growth, Engagement, and Traffic & Commerce. Tracking Reach, particularly over time, reflects the ability to generate at least minimal interest and growth in reach reflects a growing potential customer base. Engagement, or looking at repeat or regular use, or interactions with social media audiences, reflect the development of stronger relationships. Traffic & Commerce metrics can be used to look at the impact of specific campaigns or efforts. You can track the insights and research efforts generated. While these aren't likely to confirm that social media efforts paid for themselves (what traditional business ROI looks for), they can provide at least some objective indicator of the effectiveness and impact of both general social media efforts, and the impacts of specific strategies and campaigns. As Heller concludes -
Focus on modeling the economic impact of engagement, scale and insights over time. Continue to demonstrate an increase in actively engaged consumers over time, and you will continue to gain executive support, which is a vital component of social media success. Just remember that eventually you will need to be able to support the economic argument.Source - A Push Toward Social Media ROI, OnlineSpin, a MediaPost blog