Gareth Trufitt

It is amazing the amount of people that believe social media is a magic bullet. It is even more amazing when the same people come to the conclusion that social media isn’t worth their time because they can’t see any direct return on their investment and end up pulling the plug on their SM campaigns.

It can be pretty hard to measure direct ROI on social media efforts and just as hard to persuade companies that social media is good for them. Just like SEO, social media takes time, effort and iterations of ideas for real benefits to begin to show because the real value of social media is the community that it builds around your product or service. Communities have to be netured to survive and grow and finding quality, loyal followers can be a real struggle. The best way to grow a community is to create something of value and something that your followers will want to come back to again and again. Then give it to them for nothing. That could be the content that you write on a blog or it could be the community itself in the form of a forum or chat rooms.

Jason Falls states that “The problem with trying to determine ROI for social media is you are trying to put numeric quantities around human interactions and conversations, which are not quantifiable.” While I agree it is difficult to measure the return on investment  of social media there are a number of metrics that can be used to build data and evidence to prove the effectiveness and need for social media.

What are the metrics?

So how do you measure the ROI of social media? Not by seeing how many direct sales you can get from your spammy tweets, that’s for sure. There are several different metrics we can use to measure our social media efforts:

• Paths of your visitors – What consecutive pages are your visitors going to on your site? This shows us what content people are interested in, what content is encouraging vistor engagement and what series of pages lead to sales.
• Traffic - Measure your pageviews, unique visitors, click through rates and the time a user spends on specific pages to also see what content creates the most interest and engagement.
• Referrers – Analyse what sites are sending you traffic – Twitter, Facebook, blogs etc to see which are the most effective at referring visitors to your site.
• Sign ups – Getting sign ups is important as it shows you that those visitors are putting their trust in you as a valuable content or service provider. This could include RSS subscibers, email subscribers, forum members,Twitter or Facebook users etc. Getting sign ups is difficult but is the key to creating engaged users that can’t forget you. There are a number of ways to encourage sign ups such as a Twitter competition or Email only content.
• Sharing – How shareable is your content? How often is your content shared on social bookmarking sites such as digg, stumbleupon, reddit etc and how often do people refer to your content on blogs (trackbacks) or retweet it on Twitter?
• Visitor or user engagement – This is the most important metric as an engaged user is the most likely user to buy your product or service. Engaged users can be measured by blog comments (and length of those comments), forum use (and how often users return to the forum), Facebook page comments or Twitter replies.

Mix all these together and you can analyse and use the data to build up an idea of what people want to hear, what keeps them loyal and what builds discussion therefore creating a strong metric, data based argument for the use of social media. From there you can build a great product or service that you already know your users and community will want.

A loyal user that trusts you to bring quality content and a strong community will be far more likely to buy from you then someone who doesnt know who you are. The key is to provide value, build a community and then sell that community something you already know they will be interested in. It does not matter how many eyes you have on your content if you cannot turn them into paying customers but you have a much greater chance of turning those visitors and loyal content consumers into paying customers if you know what they want.

What’s your ROI of social media?

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