“We know we’ve got to be on social media, but we’re not really sure it has any material impact on our business.” This is one of the most frequent comments I hear from business leaders when they want to talk about digital marketing. And, it’s one of the most challenging mindsets to change—especially if you’re measuring social media by the number of new customers you acquire through it.
In almost every conversation I have with business leaders on the topic of social media, the concept of “ROI” is rooted in customer acquisition or new revenue generated. Unfortunately, revenue generation is NOT the best use of social media.
The Best Place to Focus Your Social Media ROI Attention
Social media is better utilized as a customer service and brand equity platform. It’s about building stronger relationships with customers through constant interaction and real-time connection. Consequently, your ROI analysis needs to focus on social media’s ability to turn customers into fans.
How do you measure social media’s ability to deepen relationships with customers and improve brand equity? Here are a few metrics to evaluate:
- Lifetime Value. Take time to measure the average order frequency and annualized total purchases of a customer before and after you launch an intentional social media strategy. This will help you set a baseline for the impact social media makes on the overall lifetime value of your customers.
- Churn. Does social media improve or hurt the overall loyalty of your customers? How many customers quit or changed providers? Did that volume diminish after you started in social media?
- Overall Operational Costs. A dollar saved is a dollar earned. One of the biggest benefits of social media is that it gives you real-time access to respond to customer questions and challenges. For some organizations, it has completely replaced their expensive inbound customer service call program.
Measuring the ROI of social media might be more difficult than other channels, especially if you’re only trying to measure new business. However, when you take a step back and measure social media’s impact on your overall brand equity, you’re able to get a complete picture of how it’s benefiting your bottom line.