Return-on-Investment (ROI) is a simple and straight-forward equation: the gain from investment minus cost of investment divided by the cost of investment. It is important to clarify that there is no one-size-fits-all equation to calculate the social media ROI because
- Money invested and gained in the ROI equation is different for each company
- Social media is not centered around financial numbers
In a recent interview with Rishi Dave, the executive director of online marketing for Dell’s Public and Large Enterprise Business Unit, he describes how Dell goes about quantifying its social media efforts. Dave says that social media leads people to the purchase process on Dell’s website, and social content on its website increases the number of people who convert to revenue. Additionally, by offering online customer support and communities online, Dell reduces the number of calls at the call centers, which saves money for the company.
Dave recognizes that social media efforts must support fundamental business goals. Dell looks at the links between customer behavior in social media and revenue both off and online. Furthermore, they observe the impact on costs in customer support and in product innovation by incorporating social feedback in product roadmaps to gain quantifiable insight. Dell also uses the Net Promoter Score (NPS), a metric measuring the loyalty of its customer base, which allows it to identify opportunities for increasing its overall brand health.
Dave’s advice for succeeding in social media ROI is to
- Frequently provide and update content
- Identify company objectives and align them with tactical efforts with measurable indicators to determine the ROI calculation
Companies can calculate their social media ROI by understanding social media metrics and how they correlate to their current financial statistics and business objectives, as demonstrated best in this interview with Rishi Dave.