I am honored to be a part today’s WomenWhoTech online summit. I’m doing a panel titled “Social Media ROI” with Lauren Vargas from Radian 6 and moderated by Roz Lemieux from Fission Strategy. Here’s the description:
Do you know what kind of an impact social media is having on your brand, mission, or bottom line? How do you put a monetary value on branding? This panel will discuss realistic metrics and benchmarks any organization can use in their campaigns and ensure that your using the right strategies and tools to listen and engage your audiences on different social networks.
Notes and Resources
Return on Investment
The Return on Investment financial process was created by DuPont and used by Alfred Sloan to help make General Motors manageable in the 1920s. ROI had it origins as an accounting term and was originally a measure of return on the total investment in the entire business. It is a flow chart that calculates business performance taking into account not only whether the company had a profit, but whether that profit was good enough relative to the assets it took to generate it. Over those 80 years, the chart has been polished, refined and so deeply embedded in business thinking.. Wall Street views it as the only legitimate means of measuring business performance. But ROI was not really intended to measure a technology project, program, or tool or any other isolated aspect of an organization.
Return on Investment is what many executive directors may be thinking when social media strategy comes up. They want to know:
- How much will it cost?
- How much time will it take?
- What are the results?
- Is it worth it?
And we wonder how do we calculate that? But I urge you not to think of ROI in this limited, narrow way … ROI has a much broader definition than “Show me the money!” At least in the nonprofit sector.
An analysis that looks at the benefits, costs, and value of a technology project over time. It uses metrics to measure your results and help you improve your strategy over time. Helps us move away from tool driven decisions to results.
The Four I’s of ROI
If we look at a broader definition of ROI – I see four different “I” words …
Return on Insight
This is using key metrics to harvest insights about what works and what doesn’t and the process of iteration. David Armano describes this process as “Listen, Learn, and Adapt” In my book, The Networked Nonprofit, we describe this process as “Learning Loops.” This process isn’t always valued, but it the only way to get to more tangible results. It helps you:
- Find your secret sauce of social media success
- It may require internal culture change – actionable listening and experiments
- May initially feel like “extra work” but should be embedded in your implementation process
- Requires longer-term thinking which is difficult given financial pressures
- Requires a mind-shift to incorporate reflection at the end of the process
Return on Interaction (Engagement and Relationships)
This the process of designing deep engagement and relationship building with your network and measuring it. For example, you are constantly putting conversation starters to your audience – asking their opinion, testing their knowledge, pairing with promotions w/content, and saying thank you. Engaging conversations revolve around getting people to look and discuss your cause or program and getting them to ready to become donors, members, or volunteers. But tactics are only half of the equation, you need to track and measure and there is no better expert to follow and learn from than KD Paine.
Return on Investment (Dollars)
An analysis that looks at the benefits, costs, and value of a social media strategy over time. We are looking at business results or for nonprofits the more tangible financial results that boil down to fundraising, recruiting volunteers, getting names on list, or ways that a social media strategy can save time or be more efficient. The latter, for example, could be reduction of support or administrative costs because your fan base is helping you answer questions or spread the word. Here are a few more.
Return on Impact (Social Change)
Affecting social change is, of course, the ultimate goal for nonprofits. Connecting with people and depending engagement are important building blocks for getting a tangible dollar results — more donors, more volunteers, etc. But this involves looking at the role that social media plays in the total equation of social change — where there is on the ground systemic change.
ROI Analysis Must Begin With SMART Objectives
For measurement to be effective, it has to align directly with the measurable objectives you’ve set. Those measurable objectives should be specific, measurable, actionable, realistic, and timed (following the SMART methodology), and directly correlate to your organization’s big-picture goals for this program (i.e., we want to increase brand awareness).
Having a hypothesis to start from is important. For instance, “We think that an increase in blog subscribers over six months will correlate with an increase in sales,” or, “Post activity on our help forum will decrease call center costs,” are strong hypotheses to get started measuring and benchmarking. Build your goals based on these hypotheses, and measure against them to see if you’re on the right track.
8 Principles of ROI
The rest of the presentation we go through some principles of an ROI process:
- Identify Benefits: Tangible/Intangible
- Link metrics to objectives
- Mix Traditional and New Metrics
- Track the Entire Funnel
- Spreadsheet Aerobics
- Track Your Time: Don’t Waste It
- Use Financial Formulas to Make Your Case
- Communicating Results
Oliver Blanchard “Social Media ROI for Associations and Nonprofits”
KD Paine’s Twitter Measurement List
Will Hull “Measuring ROI with Outcomes In Mind”
Additional links are here.