A rant on “ROI and social media” – check out the comments too

Stop explaining math to me like I’m in high school.

I get it. ROI = money earned – money spent / money spent. Thanks for clearing that up.

How do I prove how much money social media earned (or saved) for my business?
That’s the real question here.

Every time I see someone try to figure this question out it has something to do with measuring referral traffic to the Web site and that leading in some way to online sales that can be attributed to the link you shared on Twitter. Sure, in a perfect world that’s the way it works. But we don’t live in a perfect world. And guess what – your fans? They’re real people. They live and breathe and walk and talk and they do things offline sometimes. So what about that? What about when a customer writes on your fan page: “I don’t like widgets when they don’t have this function.” and you write back and say, “Well actually we have a whole line of widgets that have that function, they’re just more expensive and so less popular. What are you using it for? Let me help you find the right widget.” Then the fan takes that info and visits your store to check out the other widgets. I realize that’s also a “perfect world scenario” but my point is that providing a level of relationship building and support can lead to repeat, or higher value, customers and that isn’t going to show up in your Google Analytics.

The next most popular model is where someone graphs out monthly sales, then they lay social metrics (like fan count) over that graph and say “Look, a spike in fans! and it’s right next to a spike in sales!” And that’s great, because if you have that graph and you can trick someone into thinking that correlation is causation – go for it. If you do no other marketing besides social, or you were very careful not to change any of your other marketing during your test period, it may even be true – though you could still argue that it’s the opposite way, the sales actually led to customers who wanted to become fans in order to get information on the product and maybe future offers. Suffice it to say that overall this method is shaky at best because it fails so massively to take into account all the other variables at play.

So how do you capture the real value – the actual money earned – from social media?

I don’t have answers. I have questions. I have ideas. And I have a desire to talk about this on a higher level where we can start addressing the actual core issue here and stop reviewing basic math equations like it’s a revolutionary concept.

Who’s with me?

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