Whenever any conversation arises about social media marketing, companies always involve the ROI of social media and try to define ways to measure it. Businesses using social media view it as any other marketing tool and expect it to provide similar returns, not realizing that this is not a simple marketing tool. Before asking how to measure ROI of social media marketing, it is important understand why you need to measure it and whether such reasons really warrant an in-depth analysis of ROI of social media.
Traditionally, businesses used TV advertisements to promote their companies’ products or services. The impact of such marketing strategies was very easy to measure by measuring the change in sales during and after the advertisement period. Businesses feel that social media marketing works in a similar way and want to measure the ROI of social media in the same manner. Moreover, companies feel that as they have appointed a special person to look after social media marketing, there should be noticeable returns.
The problem with most businesses is with this basic assumption and comparison of social media marketing to traditional marketing. Social media marketing is a tool that is and should be used for effective communication with the community at large. When compared to a marketing tool, it can at the most be called a pre-sales strategy that involves chatting with the prospective customer with the hope of enticing the person to buy the product. It has been often associated with idle conversations and building relationships. Social media marketing is akin to the free trials of products that are given as part of traditional marketing, and also all types of technical support that is given before final sale. When defined in such terms, ROI of social media becomes very difficult to measure as it is very tricky to measure the ROI of conversations and relationships.
Secondly, it is important to note that social media marketing is most useful in post-sale customer service, where companies use these tools to maintain and develop their customer base. If there is a customer who does not like a product, then companies employ such methods to ensure that the problem is solved. By helping such customers, you are building a loyal base, which in turn will virally ensure future growth in sales. This again proves how difficult it is to measure ROI of social media in actual terms. While customer service and pre-sales strategies definitely cost something and are a necessary investment, it is important to understand whether such measures can be calculated and whether such measures actually reflect their impact on businesses.
Finally, proponents of measuring ROI of social media feel that people only oppose it because they do not know how to measure it and hence feel that it is hard to calculate. This is not true as it has been proved that while ROI of social media is difficult to measure, it is not impossible. It is pertinent to note that some people feel that this method of measuring ROI of social media is short sighted and completely wrong and that there are other ways of measuring than in monetary terms. According to such people, while value of a conversation and relationship cannot be measured in monetary terms, it definitely has some importance, which may or may not be directly visible.
In a nutshell, you will need to measure ROI of social media to keep a tab on the results that it’s delivering, and fine-tune your strategy, as and when needed, to reap the optimum benefits.