Skip to content


ROII: the new mantra for measuring Social Media?

roi

We discussed some engagement metrics in my previous post: level of exuberance or bonding or conversations with the customers. While engagement metrics are very important for measuring Social Media, NO marketing campaign can be sustained or successful without getting an adequate return on the dollar. We need to look at other quantitative metrics in addition to the ones we discussed earlier to measure the Return on “Investment”. To calculate return, we need to see:

  • Increase in repeat business from existing more satisfied customers
  • Revenue generated through new customer acquisition
  • Revenue generated through customer referrals
  • Decrease in support costs as problems get identified earlier
  • Decrease in sales and marketing costs due to reduced customer turnover

But are quantitative and qualitative metrics alone sufficient to measure the success of your Social Media strategy?

I was at a social media event earlier today hosted by Acxiom and got introduced to a new definition of ROI: Return on Insight. Webster defines “insight” as the act or result of apprehending the inner nature of things or of seeing intuitively.

Metrics measure past events. We have all heard from financial advisors that past stock market behavior is no indicator for future performance. By focusing solely on metrics, you may miss out some customer conversation that will lead to the next big innovation for your company. You can gain valuable insights and feedback on product features and design (or service components) that will bring you closer to consumers and ultimately lead to a bigger market share.

So, I am proposing a new mantra for measuring Social Media: Return on Investments and Insights (ROII). And the first “I” should be Investments, to keep the focus on MONEY. But let us not lose sight of INSIGHTS.

What are your thoughts? I would love to hear what monetary and non-monetary metrics you currently use…

Blog Traffic Exchange Related Posts
  • OMMA GlobalOMMA Global NY: A Social Media Conference with No Social Media tools? I am planning to be at the OMMA Global Event in NY next week. The theme for this year is The New Socialism: welcome to a world where social networks, social media applications and microblogging services become our central means of engaging online. Many industry watchers believe the answer......
  • Social Media NetworkSocialism is the New World Order - How Will Marketers Survive? The New World Order is Socialism: I mean the digital world! Successful brands of tomorrow will be the ones that are comfortable letting go of so called "control" and work with the customers in creating the brand image. According to Dunkin' Donuts Brand Marketing Officer Frances Allen: “Customers will......

Posted in Social networks, attribution, measurement, monetization, social media.

Tagged with , , , , , , .

This website uses IntenseDebate comments, but they are not currently loaded because either your browser doesn't support JavaScript, or they didn't load fast enough.


6 Responses

Stay in touch with the conversation, subscribe to the RSS feed for comments on this post.

  1. Mark W Schaefer says

    I think this is a wise approach but find that too many people are quick to confuse measurement terms. ROI is a financial measure, as you say Nitin. Everything else is an NFI or non-financial indictaor. Depending on the business, this may actually be more important than money (did I just say that???) … but the reality is, sometimes it is very complex tying social media behavior to direct sales. That doesn't mean we stop measuring so I agree with you.

    • guptanitin says

      Mark,

      Thanks for your comment. In the long term though, I do believe that all (or most) INSIGHTS have to translate to revenue growth or reduced costs or some financial measure. That is the only way any marketing program can be sustained over the long term. But in the short to medium term (when we may not be seeing the insights resulting in any dollars), it is important to monitor the NFIs

  2. srishti Gupta says

    Great post, Nitin. Insights are extremely valuable and often overlooked. The challenge is how to balance these – what is the balance between return on investment and return on insights? This is especially challenging for companies during the budget allocation process. If budget is allocated based on return, what role does insights play? One way to manage this could be to set aside a ‘testing’ budget (10% of budget, maybe?) and let social media investments fall into that bracket.

    • Nitin Gupta says

      Srishti,

      Welcome to the DMT community. Most Social Media engagements start small and then grow as the firms see more returns. Keeping that in mind, a “testing” budget and setting aside 5-10% for social media investments is a great idea.

Continuing the Discussion

  1. Tweets that mention ROII: the new mantra for measuring Social Media? | Digital Marketing -- Topsy.com linked to this post on September 11, 2009

    [...] This post was mentioned on Twitter by KC Associates. KC Associates said: RT ROII: the new mantra for measuring Social Media? | Digital Marketing http://rt.nu/cf6x [...]

  2. Welcome :: OlyKit: Software Reseller linked to this post on December 1, 2009

    Welcome :: OlyKit: Software Reseller…

    Very high levels of leverage are available to the average trader in the forex market, making leverage of the most important (as well as potentially dangerous) tools in the forex traders arsenal. The ability to trade at high leverage (in other words to …



Some HTML is OK

or, reply to this post via trackback.



Tag cloud widget powered by nktagcloud