Return on investment comes in many forms. There are financial returns, new opportunities, brand awareness, and ways a business and an individual can save something, like their reputations.
There are other benefits, but we’ll get to those later. Some returns can be calculated, but not all. That doesn’t lessen their value; their impacts on the bottom line may not be enough to justify them.
Measuring Social Media Returns
First, let’s focus on the most quantifiable social media returns. The author of the blog 10 Examples of Social Media ROI provides examples of companies that use Twitter, Facebook, Foursquare, blogs, and other means to reach customers, with results showing distinct and significant increases in sales and market share.
These returns aren’t coincidental. The timing of campaigns, special promotions, coupon redemption, and traffic to specific web pages all show that customer response is directly related to social media investment.
Secondary reactions to these social media campaigns include customers retweeting offers, sharing them on blogs or Facebook, and visiting websites to discover more products. The original sales increases can be quantified, but it’s much more difficult to gauge the residual benefits, however likely they are.
Next, are the new opportunities. It has become de rigueur for companies to announce the publication of business whitepapers, press releases, and events by social media. Typically, sales aren’t the first result, but the benefits are increased awareness, community building, and buzz.
When successful, these efforts will generate sales, but it may be difficult to track cause to eventual sale. However, when compared to pre-social media awareness activities (e.g. direct mail, cold calls, email marketing), social media can be more directly targeted to interested audiences. As more agile and less expensive social media campaigns replace old school techniques, companies benefit from increased interest and lower costs.
Social Media is a Double-Edged Sword
If something goes wrong with your company’s social media activities, the damage to your business can be immeasurable. The longer you wait to respond and put your reputation back on track, the more damage can be done. Worse, if you don’t see the problem when it starts, it may be too late to control it. Bad news travels fast on social media, and the difficulty and cost of damage control can increase at the same rate.
The bottom line: You need to monitor your company’s image all the time so you can protect it effectively. The cost of doing so is dwarfed by the risks of not doing so. Social media is a new way of marketing, and therefore a classic paradigm shift with its own great strengths and weaknesses. It’s a volatile time, and social media practices will continue to be refined and improved.
The reality is that the biggest risk of all is to avoid social media and fail to compete on even terms with your competitors who are using it.
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