It comes up time and again. What is the ROI of conversation within social media? I think that is too broad of a category to derive a business worthy answer, and this is one of the main reasons why we have an Understanding ROI tab on our home page.
A better question would be: Out of the conversations that we are actively monitoring, are we increasing resolution rate for customer service? Are we moving “buying intent” conversations into our pipeline? What is the sales conversion rate for these types of conversations vs. paid media vs. cold calling?
You get the point here. You must tie this very broad subject to a very specific business goal or key performance indicator. Saying “What is the ROI of social media conversations?” is not enough.
So let’s take you through an example for monitoring conversations on Twitter for buying intent.
Step 1: Set up Twitter search for the phrase “need new shoes” OR “need new sneakers”
Step 2: Browse the stream for Tweets that are appropriate to engage with
Step 3: Shoot the person a Tweet with info about your online store and a coupon (if you are local retailer, go back to step 1 and attach a geo-location to the search)
Step 4: If the person is interested, input them into your CRM
Step 5: Measure whether they end up buying, how many days it took to close, what other actions they took prior to buying (like visiting certain pages of your website).
Step 6: Measure the percentage of time it takes on average to engage in these types of conversations and divide by average hourly rate of paying someone to do this type of activity. Let’s say it cost you $10 to get this person into the sales pipeline, and they bought $50 worth of shoes.
Step 7: (Revenue-Cost)/Cost = ROI,
($50 – $10) / $10 = 400% ROI, not too shabby.
Let’s stop being so general about this whole social media measurement thing, and start tying to specifics. That is all, and by the way, love this video! (by Scott Stratten of UnMarketing)