Measuring the RoI of social media

Here’s a scenario that most of us working in communications can identify with: the other day a prospective client asked me about the return they should expect from their investment in social media and how it should be calculated.

It’s a fair question. The return on investment (RoI) of social media isn’t a new issue by any means, but it’s importance is increasing as social becomes more integrated into digital strategy and the expectation for rigorous measurement grows.

I believe – and I’ve found from experience – that the RoI of social media is perfectly measurable, but there is no universal formula and the calculation is unique to each organisation. Fundamentally, RoI is an assessment of value and how value is defined for the organisation in question; so it must  be based on the organisation’s particular situation, product or service proposition, objectives and audiences.

Research last year by MITSloan in partnership with CapGemini Consulting found that  many companies struggle to gain transformational effects from new digital technologies. However, only a minority of companies have developed the management and technology skills to realise the potential those technologies have to offer. Without the organisation, skills and processes, how can any organisation identify and quantify the value of an investment in any technology – social or otherwise?

The starting point is to look beyond the evaluation of social media based purely on outputs like Follows, Fans or Views and focus on the strategic business objectives the organisation wants to achieve. For social media – or any digital activity for that matter – to deliver value, it must be based upon specific objectives that deliver measurable communications outputs and also clear outcomes relevant to those business goals.

By doing this it’s possible to answer the most fundamental question of all: is participation in social media right and relevant for my organisation at all? Social Media is now so ubiquitous that I think there are few organisations for which the answer to that question is an unequivocal “no”; especially given the pervasiveness of mobile technology and the close relationship between the two. However, where, when, how and to what extent it is integrated into business strategy do need to be explored.

To answer these questions, the starting point is to focus back on strategic business objectives. I posted about this last time, but there are clear areas where social has the potential to deliver value, including, but not limited to:

  • Generating more sales
  • Increasing the value of existing customers
  • Accelerating the R&D cycle
  • Increasing the volume of new product/service initiatives
  • Increasing customer retention
  • Enhancing customer service efficiency
  • Reducing employee churn rates
  • Recruiting quality talent in competitive disciplines
  • Addressing specific reputational issues

With business goals as the foundation, I think there is a simple six-stage framework to follow:

Business-Comms objectives


In a business-to-business context I think this framework becomes particularly interesting because in my experience b2b companies typically have very specific modes of engagement with their customers and often a very tightly defined customer set.

There’s plenty more nuance that could be added to this model – both in general and to make it specific to individual organisations. But nevertheless, I hope the essential point remains; for investment in social media to deliver true, measurable value its use must be guided by clear business objectives, a sound understanding of the people you want to reach and a measurement model that enables every aspect of the engagement to be tracked.

So perhaps not the simplest answer to my client’s question, but I believe the right one.

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