Social Media Measurement, Social Media ROI

Not Tracking Social Media ROI is Your Fault

Jay Baer Blog PostLast week, Susan Etlinger from Altimeter Group published the Social Media ROI Cookbook. It contains significant quantities of solid thinking, and provides a useful framework of six primary ways to measure social media effectiveness. (click here to view and download the Social Media ROI Cookbook on Slideshare)

Social Media ROI 6 ways to calculate

There’s no question that the social media ROI question continues to befuddle business – 41% of respondents to an eConsultancy survey of 1,000 companies and agencies in late 2011 had absolutely no idea of social media’s financial impact.

But that inability isn’t the fault of social media as a channel, or the fault of social media software, or the fault of Facebook, or the fault of any other outside force. It’s the fault of businesspeople. If you’re looking to place blame for why you can’t measure social media ROI in your company, grab a mirror.

Track Social Media ROI by Giving Customers Trackable Assignments

Is social media ROI attainable? Of course, but you have to set up your social programs from the outset in such a way that the data is available and unblemished. The best way to do that is to define and measure specific customer behaviors.

The optimal place to measure the effectiveness of social media is in an e-commerce environment, because you can track behavior all the way through sale. But even if you’re not e-commerce enabled, could you provide coupons, or even an offer redeemable offline? If you want to neatly measure social media ROI, give your customers and fans a clear assignment with tracked clicks and post-click landing pages and forms.

Instead of creating these traceable opportunities, companies too often are falling into the vortex of “engagement” and measure fans, “reach” and similar metrics with dubious ties to revenue, and then attempt to make mathematical sense of this touchy-feelism by breathlessly downloading the latest, inapplicable “how much is a Facebook fan worth?” white paper.

Social Media ROI California TortillaThis is one of my favorite examples of self-contained social media ROI, from the fast casual chain California Tortilla. Here, they have a Facebook-only special offer, redeemable at all store locations in the form of a secret password. California Tortilla informs store managers (who then inform pimply-faced teenagers working the register) that the secret password is “Fresh”. When a Facebook fan shows up and says “Fresh” the special offer (free chips and queso with any burrito purchase) is keyed into the register, and reported through the centralized POS system. They can then determine ROI based on redemption rates and over customary store sales and average ticket.

Doable? Yes. Responsible party for setting it up right? You.

Drive Social Media ROI with Content Marketing

B2B companies in particular should have multiple lead-generation opportunities on their website, including contact forms, content downloads, email subscriptions, Webinar registrations, etc. Social media’s impact on this lead generation is relatively easy to ascertain, especially using social CRM software that ties to web analytics, such as Argyle Social (a Convince & Convert sponsor and what we use), Awareness, or Expion. These software packages “tag” the lead by link and source, and enable your sales and marketing teams to ascertain total booked revenue that came from particular social initiatives. The accuracy of this reporting is improved with multi-channel attribution that shows when customers use multiple means (for example: google search, twitter, linkedin, blog post, webinar) before purchase.

The software does the math, but it’s only as good as the set up. Remember, social media success is about the wizard, not the wand.

Doable? Yes. Responsible party for setting it up right? You.

Turn Social Media ROI Upside Down

A third area where we’re to blame for not measuring social media ROI effectively is in thinking about social effectiveness purely through through prism of new revenue generation.

Here’s my prediction: We’re going to look back at the early days of social media and say “why did we think this was about customer acquisition, when it’s clearly about loyalty and retention?”

The people that are fans of your company on Facebook? Current or former customers (84% says research from DDB). The people that read your company tweets? Current or former customers. The people that read your company blog and watch your videos and look at your pins? Current or former customers.

Social interaction is a trailing indicator of purchase, not a leading one. And in that way, it’s more like email – keeping your brand top-of-mind among people who have requested it – than it’s like banner ads and TV and Google Adwords, yet we keep banging our head against the wall trying to unlock social media ROI from the perspective of net new revenue. Even The Social Media ROI Cookbook includes little discussion into social’s critical role in loyalty and retention.

Why aren’t you using social CRM and database software (or at least random sample customer surveys) to isolate social media’s impact on purchase frequency, total size of purchase, lifetime customer value, and customer advocacy? We do this via survey for tourism clients, investigating the role of social interaction and content consumption on travel intent, length of stay, likelihood to return, etc.
Social Media ROI Positive ImpactsBroadening the social media ROI conversation to include current customers also spotlights the extraordinarily important (and monetizable) benefits of socially-enabled customer service, product development, and market research.

The Social Media ROI Cookbook surveyed corporations and found that 84% said that customer insights were a primary benefit of social media measurement. Yet, how much time do we spend calculating the value of those insights? Not enough. Instead, we want to know how to justify the cost of Facebook ads and Twitter contests.

Doable? Yes. Responsible party for setting it up right? You.

“Proving” Social Media ROI with Correlation

One of the parts of  cookbook I especially liked was the emphasis on correlation as a sound measuring stick. I believe that it’s mathematically possible for every company to figure out social media ROI. But there’s no question that it’s more complex and daunting for some companies than for others. At some point you have to ask “what’s the ROI of precisely calculating ROI?”

In those situations, I prefer using correlation studies to try to demonstrate social media’s value to the organization. The best way to measure correlation is to track a lot of data points (including social metrics, revenue, sales, churn rate) over a lengthy period of time, and try to isolate simultaneous or conflicting moves in the data. You can’t absolutely prove impacts using correlation, but you can determine where something appears to have an impact, and sometimes that’s all you really need.

It requires some discipline and time to see patterns emerge, but it doesn’t inherently require separate software or other magic.

Doable? Yes. Responsible party for setting it up right? You.


Here’s the deal. If you want to measure social media ROI, stop wasting your time doing software demos and attending webinars. Just figure out what you want to track, where you can track it, think about both current customers and new customers, and go do it.


Facebook Comments


  1. says

    Totally agree with you Jay. There’s a lot of misconception when it comes to tracking social media ROI. However, it’s completely doable if you’re taking the necessary steps to do it. Unless and until you are ready to invest in the right kind of content and rigorously work on bettering the results, your “return on investment” will continue to elude you.In the end, like any other marketing tactic, even social media marketing requires you to go beyond others. It requires you to regularly push boundaries. And by taking up the responsibility of consistently understanding and tweaking your ROI, you do just that.

    • says

      Mustafa Khundmiri Thanks Mustafa. I think the real key is getting companies to understand that if you want to track, do something trackable. Sounds pointlessly simple, but it’s a notion that is not well understood. 

  2. JasonMillerCA says

    Hi Jay,Fantastic post! You absolutely nailed it with content marketing and ROI. I think this is the most straightforward approach to determining the ROI of social. It’s all about having a no frills approach to tracking original source through the top of the funnel and watching what converts and how quickly it does so based on the type of content you offer. Keep it dynamic and always try new things. Trial and error is a terribly underrated strategy in the content marketing world.In regards to the folks that are engaging with your company through social channels, I think it really depends on how far you can push the relevance of your messaging. For example, even though I work for a marketing automation company, I tend to write a lot about marketing in a much more general sense, with an emphasis on social and content. Then I tie everything back to marketing automation in one way or another. This broad approach I think greatly extends our reach across all of our social channels, especially our blog, way beyond just current or former customers and to our core target audience of marketers looking to be better marketers.I also agree with you that correlation is vital for “proving” ROI. If you begin your social strategy without any baseline metrics in place to compare it to overtime, you are missing a huge part of your success story.Jason Miller – Marketo

    • says

      JasonMillerCA Thanks Jason. Excellent point about having baseline metrics. That’s a really critical step that too often isn’t done. The reality is that a lot of companies (most, even) are not tracking with sufficient rigor, and they use “let’s measure social media” as the fulcrum for a more comprehensive shift toward marketing accountability. That’s great, but does make it tough to do before/after comparisons, as “before” is often an unknown commodity. 

  3. says

    California Tortilla’s system for social media tracking is simple and fool-proof. Small and mid-sized businesses don’t need to invest so heavily in social media tracking as long as they come up with feasible ideas like this one.

    • says

      MicroSourcing Exactly. We’re trying to get some magic bullet software to take our pain away, but more often it’s about strategic thinking, not technology.

  4. margieclayman says

    Thank you Jay. The argument about Social Media ROI never fails to put one quote into my head. It’s from the movie Zoolander, and Will Ferrell says it.”Doesn’t anybody see this? I feel like I’m taking crazy pills!”The argument, or rather obfuscation, that social media is more about unmeasurable things like loyalty can be a nice sound byte, but in the end, if you aren’t tracking your investments against what you’re making, no matter what you’re doing, you’re gonna find yourself in a real pickle.

  5. says

    Great examples and thanks for sharing the Altimeter deck. Good reading and insights in how different types of businesses measure outcomes via social media programs.  I don’t really care for people who avoid the ROI discussion entirely or people who obsess about it so much, they lose sight of the humanity of social media. I think your final point is solid and can be best said like this, “do the work.”

    • justinlevy says

      @jaybaer Now, if you keep up your social cyborg ways, I will blame my inability to track ROI on you. Heh. :)

  6. jaybaer says

    @thebrandbuilder Thx. Not sure that’s ALL you need, because you need the mindset first, which seems to be the hardest nut to crack.

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