That’s what I hear from far too many experts these days and I was especially disappointed when I saw yet another notable authority tweet the following today:
“Asking “ROI of social media” is the lazy way to look smart re: social media. Pls educate them on the nuance!”
Why, my friends, would we not want to understand the investment we are about to make? Even with my light weight 2010 Social Media Plan you will need to hire a new employee, invest in tools and time, probably spending upwards of 200,000 in year one. Is this so little money that your executive team should not care about ROI?
I do realize, as Scott Allen noted while we were discussing this topic, that “similarly you must ask about the CONI of competing initiatives too”. In other words, there is a cost/risk/benefit to implementing a social strategy and there is also a cost/risk/benefit to not implementing a social strategy. Companies must be able to make judgements, even if they are not 100% accurate, to assist them in deciding if they should start a social media strategy and should be able to use the insights from this analysis to determine if they are on the right track. Yes, in my 2010 Social Media Plan I am telling you the cost of not doing anything outweighs the cost of doing something but that will only get you started, it doesn’t help guide you in your decision-making as your efforts get underway.
While some may disagree, here are a few of my thoughts on factors you should put into your ROI analysis. It’s not a complete list but it should assist you in thinking about the factors that apply to your business:
- Reduced expenses on customer support. As Forrester has clearly demonstrated, Social Support Communities deliver a measurable ROI, reducing support costs, increasing customer satisfaction.
- Dell has been reporting multi-million dollar revenue gains based solely upon their use of social media. You should be able to determine if leads are coming from social channels, shouldn’t you?
- Customer churn, especially in the customer base that participates in your social activities. If you are engaging with them through formal social channels, is it paying off?
- Even travelling food vendors, moving throughout a city at lunchtime, tweeting their location ahead of their arrival, are on the band-wagon. They seem able to determine, roughly, the return on that investment, can’t you?
What do you think? Can you come up with a rough ROI and CONI for social media for your company or government agency?