Social media marketers can - and must - prove ROI

This post is a warning for folks that they need to end their debating before they are fired, or as we like to call it during these times "downsized."
Written by Jennifer Leggio, Contributor

Guest editorial by Kyle Flaherty

You can - and must - prove ROI
"In today's uncertain economic times..." those five words seemingly lead off many of the emails I've received over the past several weeks, mainly from PR folks pitching me different products and services. I can't really blame them; of course the economy is on everyone's mind and will be for the foreseeable future. I've also seen these words attached to many blog posts from social media type bloggers either worried that this will be the death of social media or simply the dawning of a new era of transparency and community engagement (the dramatic effect is all mine). This post is a warning for folks that they need to end their debating before they are fired, or as we like to call it during these times "downsized." A better way to say it is how my CEO put it recently during a company meeting: now is not the time to turtle, now is the time to stick your neck out and move forward.

The question is not whether you should or shouldn't deploy social media strategy during a recession, this simply isn't smart thinking. Instead, everyone needs to be creating and tracking proof that any and all of their job functions are leading to business and determining how much business they must win in 2009 to succeed. That includes social media. There is no better way to lose a job than to spend all your time telling your boss the company needs a Twitter account versus showing your boss how you directly helped bring in revenue last quarter.

Let's assume you are in a marketing, PR or product-marketing role for an emerging-growth or start-up company, because that is what I know the most about, here is my advice:

Do NOT ask “How will the economy affect social media?” DO ask “How can I prove and then improve how social media affects my business?”

Yes, Virginia there is Social Media ROI Now here is where you say something along the lines of "BUT everyone tells me you can't measure social media ROI" and I tell you “you need to find a way ASAP”. The social media ROI debate that seems to be raging throughout the interwebs seems to conclude that proving social media ROI is at worst an affront to the "Cluetrain Manifesto" or at best something that can not be done. If you believe in either I'm afraid you are already turtling; come out of that shell and let’s chat. Not only can you measure social media against business benchmarks, more importantly you MUST in this economic environment. Let’s use a pretty picture next:

Next: How do you determine your social media ROI? -->

You can - and must - prove ROI

This is for work done at BreakingPoint (my day job), a technology startup in the network equipment testing space. Social media has become one of the top traffic generators for the website and community site and using various tools we can prove the business impact of social media. I can also determine the overall cost of the social media activities (including time, i.e. salary) and direct business that was gained from these activities and presto folks...social media ROI. It does take us a lot of work and a bit of mashing-up of tools (GetClicky, BUDurl, Google Reader, Google Analytics, HubSpot, Blip.tv, Eloqua and more) but ultimately we have an ROI for our social media investment.

For example, we are running an upcoming webinar and I've used all of our social media outlets to let the community know and interact. Using BUDurl I can tell how many folks have signed up for the webinar through Twitter, I use GetClicky to see the folks who went to the webinar page from our LinkedIn Group and I'll even be able to view the folks who watch the webinar live on USTREAM the day of the event. We can see how many participants then sign up for a product demo, choose to do a product evaluation and ultimately buy the product. I'm obviously simplifying this process, but it is just that, a process of measurement based on certain triggers that can show me the business impact of social media.

Die, ROI, Die Now, before you yell at me that you can't measure the impact of a relationship in pure dollars and cents, we need to separate the need of social media ROI to defend your job and the reality that much of this extends far beyond the often abstract and relatively insignificant concept of ROI. ROI was created by someone who wanted to defend their activities in the scope of the bottom line of their company; they found direct linkage between what they were doing and revenue being brought in and if that number was larger than their salary plus additional costs they were in for a bonus (or at least steady employment). Determining your social media ROI is a means to an end. It allows us to prove a programs worth to our business, which enables you to continue your work with the community, which coincidentally lets you dismantle the importance of ROI internally and start to focus on IOR...Impact of Relationships.

IOR allows me to detail how a relationship develops with our company, whether they are a customer or not, and how that relationship has impacted the totality of our business. Using many of the same techniques above I also measure the amount of interaction we have with our community. Not to measure against revenue, but to determine what product feature requests this person suggested that made our product better, how many comments they leave on our blog, the number of times they reference us on their Twitter feed and more. We've been able to formulate IOR for members of our community, many of them non-customers, based on what they have given back to our company.

Are each of these elements a pure statistical entity or a dollar value? No. But it is a great additional barometer we have to show the gains made through our social media activities. This IOR data becomes just as valuable to the senior staff of your company, but only because they have already seen some level of ROI data. It is only when we prove the ROI that we can reach towards IOR...IMHO of course!

Kyle Flaherty writes a blog using insight, lessons learned and horror stories from his nearly 12 years in high-tech public relations, communications and marketing. He is currently Director of Marketing and Social Media at BreakingPoint Systems and of course you can find him on Twitter.

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