Measuring Social Media ROI: Does size matter?

Do you use (or want to use) social media to promote your business but wonder how in the heck you measure its effectiveness to bring in more customers and make more sales?

Social Media ROI...Mysterious!

Here’s the thing: For both large and small businesses, effective social media measurement starts with well-defined goals and ends with analyzing the impact of your efforts. That’s it, that’s the trick!

Whether you are a small, medium or large business, size does not matter when it comes to measuring social media return on investment.

In fact, if you’re a ‘mom & pop’ shop or on the Fortune 500, if you’re using social media to improve your business then you are really not that different at all.

The scale might change and one might require more staff to undertake the necessary work, but at its most basic, measuring social media ROI for a large corporation is not much different than a small business.

The Buzz

Currently, the web sphere is abuzz about the use and subsequent power of social media for helping to promote businesses.

But, for some reason, there seems to be more mystery and intrigue surrounding how to measure the results of a social media campaign than there was when Geraldo Rivera was going to open Al Capone’s vault.

Many people understand the inherent value of social media, however, they get stuck on how to measure its effectiveness for business growth and increasing sales.

The easiest way to know if your efforts are being effective, or not, is to ask yourself (and be honest) these simple questions, “Are there more customers now than before I started using SM? Is the business selling more product or services?”

Unfortunately, for those who have a boss that they need to answer to, this measurement technique is probably as helpful for your social media career as telling your superior that you saw the Loch Ness Monster on your ride to work.

The truth is, social media has to bring measurable results, and I don’t think that quantifying what’s working needs to be all that complicated.

5 Step Social Media ROI Method

Today I want to explain the method that I use to measure SM usefulness.

For me, I think the most successful technique for doing this is to break down the benefits, goals, and desired outcomes that YOU hope to obtain down to their least complicated components.

While it might not be technically elaborate, the SM (effectiveness) measurement method that I use is simple, reproducible, and it works. Here is what I do:

Step 1: Goals – what do you want social media to do for your business?

Please note: there should be no skimping here! I know most creative entrepreneurs like to just get on with it…however, in order for measurement to work, you MUST clearly define your goals.

I sometimes get the feeling that people think social media will magically – - produce instant results and be easy. So they decide they don’t really have to come up with concrete goals (do they?).

Some common answers to the ‘goals’ question include; increased brand awareness, sell more product, gain new customers, make the front page of Goolge, etc.

When I got started with social media my business had not been marketed at all, nothing. And had NO online presence. Some of my social media goals were:

  • Customers must be able to find us.
  • Fill the rooms of our B&B.
  • Make enough to pay the mortgage.
  • Learn from others and pass on what knowledge I have.
  • Rank well in search engines.
  • Promote the island in general as a tourist destination.

Step 2: The Plan – How will the goals be achieved?

The social media plan is built upon your goals above. Your plan will be tailored to your business, either large or small, and might include a blog, YouTube video, forum participation and interaction on Twitter and FaceBook.

For more on my specific social media plan have a look at the post How I Use Social Media to Promote My Business or have a look at John’s plan.

Step 3: Implementation & Execution – It is now time to put that plan into action.

Seems ignorant to mention this, but strategy wise you can’t overlook this step. Consistency is the key! And try not to fall into the trap of thinking, heck I created a Twitter account, Facebook page, and even a blog with one whole entry NOW where’s my g-damn customers.

For small to medium businesses, I like to think that it takes a good three to six months of hard work before any benefits are witnessed. If you are in a heavily competitive market you might be looking a one-year before you notice any results. Also, if you work for a large company (i.e. where you have a boss to report to), social media has to be part of the overall business plan and strategy and it must have buy in at all levels. Or else, you are setting yourself up to fail.

Step 4: Measuring results – you have put in the required time and effort, now what?

All right, you have been going gangbusters for months, being helpful on forums and writing killer blog content. When I reached this stage, I’ll admit, I was stuck scratching my head. But then I really thought about the question, “What are the measurable results that I can glean from my goals?”

If you are a small biz owner, large corporation, or consultant then you need to spend some time thinking about that question. The answers that I came up with:

  • How are people hearing about my business?
  • Which of my efforts are bringing the most traffic (blog, forums, etc)?
  • Am I attracting the right people, e.g. when they get here are they happy?
  • Based on my social media efforts, are we selling more rooms?
  • What are the hard sales numbers?

You need to ask: Why are they coming to you? How are they getting there, through which social media avenues? Are you closing a sale?

To find out the majority of the answers to the questions above, I do what I think every business small or large who uses social media should do, I ASK my customers how they heard about us and then I track if they actually make a booking. (I would do the same thing if I was selling a product or service.)

Here is a sample of the spreadsheet that I use to track my social media ROI (please note: the real numbers have been changed to protect the innocent):

You will notice that across the top I have the months listed out and down the side I have my various social media outposts. To come up with the numbers I simply ask my customers how they happened to hear about us. It is not glamorous or sexy work.

But I think this is the KEY!! Whether you are DELL computers or a gourmet bistro, you have to ask your customers how they heard about you.

The typical responses I hear are:

  • I found your blog and that led me to your website.
  • We typed x,y,z into Google and you popped up.
  • You answered my question on XYZ forum and since you were helpful I decided to check you out.
  • I read your reviews on TripAdvisor.

Well, you get the point. I think, even larger businesses can do this; it’s only six words “How did you hear about us?” And you can add some additional columns for sale or no sale.

How else can you actually measure your effectiveness against your goals? Certainly you can look at Google analytics for traffic measurement, but if you are only doing that, you’re only measuring one variable.

Step 4: Revisit/Refine/Redeploy – you’ve gathered information now it’s time to look at what’s working and what isn’t.

Every couple of months you should review your measured results and determine what you might be doing well, where the majority of your customers are coming from, and where you need to improve.

You need to keep in mind that some elements of social media are just not going to be measurable or that results might take twenty years.

For example, Hugh MacLeod, announced on his blog the other day that he had gotten a book deal. Obvious talent aside, Hugh has been at it for a long time and his success would seem to be measured in sheer tenacity, will, and truly believing in his art and message.

And maybe that’s the real trick, belief in what you are doing…?

Final TIP! – My business generally succeeds or fails based on customer service. I (we actually) have made the conscious decision to be the best host and customer service person I can be. Don’t believe me? (Read this.) Social media or not, if I suck, chances are I would go out of business. The same probably goes for your business.

Do you use social media? What is your method for measuring effectiveness?

image source: idg

39 Responses to Measuring Social Media ROI: Does size matter?

  1. Dan Waldron says:

    A friend of mine just emailed me one of your articles from a while back. I read that one a few more. Really enjoy your blog. Thanks

  2. Stefan says:

    “It is not glamorous or sexy work.”

    I totally agree with you, Mark. It does take “a good three to six months of hard work” – or even more in social media development areas such as Germany – before you may reap any benefits. And “consistency” is a major contributor to that. Takes me [@susuh] about 4 h per day – but I am still thrilled. :)

  3. nudgeme says:

    Just saw Problogger’s tweet about this post and glad I took a look. Totally agree that size is irrelevant when it comes to measuring effectiveness of social media. Thanks for sharing how you measure your return in your business so clearly – as you say, it’s not rocket science and your post serves as a useful reminder that the simple traditional marketing question of ‘how did you hear of us’ can reveal useful info (despite the more complicated methods often spouted by IM gurus …!?) It’s also been really helpful to see how you’re applying social media to a ‘non internet marketing/guru type of business’ as that’s much more relevant for me in terms of the clients I work with who often need persuading of the benefits of SMM in the first place! I look forward to reading future posts.

    Tamsin/nudgeme

  4. Rob says:

    Thanks I found this really helpful. I’mm currently trying to develop a social media measurement package for my agency and it is proving very difficult! It seems very difficult to do a one package suits all as different brands are discussed on different social media platforms (eg Trip advisor for holiday companies).

    Please leave a comment on my blog if you have any suggestions or ideas on this. I’d really appreciate it.

  5. Are Morch says:

    For me this was an awesome and really informative article!

    Here I was looking for an article that would give me some hints of a better strategy for my own online approach.

    You got my attention.

    This article will be bookmarked, and I will do a retweet of Darren Rowse’s tweet.

    Cheers…

  6. Eleanor says:

    Great post, found it through pro bloggers tweet! A lot to get my head around.

  7. Toby says:

    May I add one more thought to your excellent post? In order for social media marketing to be perceived as a credible strategy it must be give the same ‘respect’ as any other marketing initiative .. and that starts with a plan, goals/objectives and as success measure. Thanks for the easy to understand road map on how to make that happen.

  8. Social media does work like the man said use several measuring methods and try to be personable and you’ll see some results for your efforts byw check my Squidoo.site http://squidoo.com/solarpower5 they track where your readers are counted for you .

  9. Kathy says:

    Thanks for sharing this. So helpful. As a retailer (B&M as well as on-line) I agree that service is king and queen. My SM efforts are paying off – measurement can be challenging but the buzz and the results have to have a correlation. Like any adv/mkting it’s not always a one for one.

    Thanks for keeping it real and practical.

  10. [...] media ROI? By Andrei Chirica Mark Hayward scrie pe blogul sau despre cum samasori ROI in social [...]

  11. Jane says:

    Thank you for a fabulous, absolutely correct article! Social media can make or break almost any business, whether it be large or small. Savvy businesses are blogging, commenting, and tweeting little bits of information, or big bits, several times daily.

    Twitter: Absolutely necessary! However, try to intersperse the business tweets with conversational tweets; otherwise, you’ll turn the Twitterers off!

  12. Joannah says:

    I recently came across your blog and have been reading along. I thought I would leave my first comment. I don’t know what to say except that I have enjoyed reading. Nice blog. I will keep visiting this blog very often.

    Joannah

  13. [...] Existen todo tipo de posturas respecto a este tema, desde los que opinan que es imposible medir las interacciones humanas hasta quienes proponen métodos de medida que parecidos a  la alquimia medieval. [...]

  14. [...] the information in different formats and explanations. In Mark Hayward’s article, “Measuring Social Media ROI – Does size matter ?” he explains how the size of your company does not determine the success of your social media [...]

  15. [...] shared this tip in Measuring Social Media ROI: Does size matter? My business generally succeeds or fails based on customer service. I (we actually) have made the [...]

  16. [...] – Find out which blog posts and social media sites provide the best return for your time and effort. (When you first get started this is mostly done through trial and error.) [...]

  17. [...] – Find out which blog posts and social media sites provide the best return for your time and effort. (When you first get started this is mostly done through trial and error.) [...]

  18. [...] – Find out which blog posts and social media sites provide the best return for your time and effort. (When you first get started this is mostly done through trial and error.) [...]

  19. [...] – Find out which blog posts and social media sites provide the best return for your time and effort. (When you first get started this is mostly done through trial and error.) [...]

  20. [...] the information in different formats and explanations. In Mark Hayward’s article, “Measuring Social Media ROI – Does size matter ?” he explains how the size of your company does not determine the success of your social media [...]

  21. [...] Measuring Social Media ROI: Does Size Matter? (Mark Hayward): Mark Hayward shows the ROI of social media. With a plan, you can measure effectiveness of SM. [...]

  22. [...] Measuring Social Media ROI: Does Size Matter? (Mark Hayward): Mark Hayward shows the ROI of social media. With a plan, you can measure effectiveness of SM. [...]

  23. [...] Measuring Social Media ROI: Does Size Matter? (Mark Hayward): Mark Hayward shows the ROI of social media. With a plan, you can measure effectiveness of SM. [...]

  24. [...] Please note: The social media suggestions below are meant to be a guide that you can tweak and improve upon based on your particular small business situation, and as determined by where you receive the greatest social media ROI. [...]

  25. [...] – Find out which blog posts and social media sites provide the best return for your time and effort. (When you first get started this is mostly done through trial and error.) [...]

  26. Social comments and analytics for this post…

    This post was mentioned on Twitter by bangwinissimo: Measuring Social Media ROI: Does size matter?: http://bit.ly/19PGaT

  27. [...] One of the easiest ways for small business owners to measure social media ROI is to ask every customer how they heard about your [...]

  28. [...] Überprüfen Sie aber auch, was Ihre Bemühungen Ihnen konkret bringen. Ihr persönlicher ROI ist also wichtig (Return of Investment) Hier dazu ein guter Artikel … [...]

  29. [...] about the time they will have to dedicate to producing content while still gaining a valuable return on their investment. After I launched my small business blog, one of the best ways I discovered to discern how my [...]

  30. [...] about the time they will have to dedicate to producing content while still gaining a valuable return on their investment. After I launched my small business blog, one of the best ways I discovered to discern how my [...]

  31. [...] Social Media Business “Use Social Media Business” image from: http://mark-hayward.com/2009/03/03/measuring-social-media-return-on-investment/ “Use Social Media Business” on TwitterRT @seowhatdotcom: Reminder! SEOwhat presents "Why use [...]

  32. [...] know if your social media is getting any attention.  You can measure your traffic by finding your search ranking and seeing how many times your links are clicked [...]

  33. [...] they will not “like” your page on Facebook.  To find out ways to better reach your customers, ask them how they found out about your social media.  Whether a Google search led them to your blog, or they found your website link on your Facebook [...]

  34. [...] One of the easiest ways for small business owners to measure social media ROI is to ask every customer how they heard about your [...]

  35. [...] of Social Media? 100 Ways to Measure Social Media Social Media Metrics: What We Need to Track Sales Measuring Social Media ROI: Does Size Matter?   Social Media: Who Can Show Us the Real [...]

  36. [...] Measuring Social Media ROI: Does Size Matter? [...]

  37. [...] Bilitski Clarke Another great perspective on social media measurement is offered by Mark Hayward at http://mark-hayward.com/2009/03/03/measuring-social-media-return-on-investment/ 18 hours ago [...]