What's the most effective measure of ROI in social media?

Last week I attended a webinar on social media strategy from Radian6. The webinar was hosted by Christopher Barger who is well qualified to present a topic like this with his background in social media consulting and gave an excellent presentation.  

During the webinar Christopher asked the group to give their answer to the question, "What is the most effective measure of social media success or ROI and why?" I was anxious to answer the question because  I don't always agree with the opinions I hear on ROI and because the 10 best answers would receive a free copy of Christopher's new book.

So here's my answer, noncommittal as it may be:

"There’s no one answer, it totally depends on the business and their goals. If your goal is to drive traffic to your blog then the measure is traffic from social referrals and SERP rankings. If your goal is customer service then it’s # of questions or disputes resolved. If your goal is to drive sales then it’s revenue from social contacts. You have to base your measurement on your goals in social media."

In the world of social media strategy we're getting past the idea that value is measured in the number of followers or likes and account has, and that's a good thing. However, there are still a lot of people that are too quick to tell others how to measure their ROI. They'll say that you can measure based on the revenue generated or the number of interactions on a particular social network. Those answers aren't necessarily wrong but they are short-sighted. The point of my answer to the question above is that you can't tell someone how to measure their ROI without looking at their goals for social. 

ROI is important, even (or maybe especially) in social media. There are dozens of reasons to be present and active on various social networks and there are just as many ways to measure ROI. Whether you're there to monitor and steer conversations or drive leads to your ecommerce site the important thing is to start with clear goals and then determine how you'll measure success along the way.

And in case you're wondering, yes, my answer was featured on their blog and I did win a free book. Thanks Christopher. 

Okay, everyone hates Klout, what's the alternative?

There's been a ton of discussion lately about Klout and in particular their new algorithms. Klout and other similar tools can be useful in measuring your online success but what do we do when those tools fall short (as we've seen lately with Klout)? I want to talk about other ways to gauge your effectiveness at least on Twitter.

Most of these measurement tools seem to focus on influence. Depending on your goals, influence can be important. However, we should focus on engagement more than influence. Social media is all about engagement and although a lot of people will talk about engagement and authenticity, those same people often really seem to be focusing on number of retweets, follower counts and other measure of influence. But I would argue that engagement grows your influence but does it in a much more meaningful way than just getting followers that pass along your content.

Let's apply that to Twitter since it's my favorite of the social networks. It takes a minimal amount of effort to click that retweet button. Sometimes we'll add a comment but even that really isn't much of a commitment. However, when someone actually replies to a tweet then you know you've really grabbed someone's attention. I'd rather have one person that finds my content so interesting that they're compelled to respond than have 10 people retweet me. Sure the 10 retweeters would be out there spreading my name to the world, but who cares? What does that get me? A couple of followers? A little boost in Klout? But that one person that was truly interested in my content will be much more likely to remember me and be part of an online relationship that is actually meaningful.

When you want to gauge how you're doing on Twitter take a look at how many people are responding to your tweets. Also look back at your timeline and see how many of your tweets are parts of conversations with other users. This a great way of determining how effective you are on Twitter. And best of all it's not based on the whims of an algorithm you have no control over.

Yep, followers and retweets are great but next time you want to see how you're doing on Twitter just take a look at your actual engagement. No third party tools required.

Full disclosure: I love checking my Klout score. Even though it generally appears random and meaningless I still can't help but check it a couple of times a week. And yes, I saw a significant drop in my score with the new algorithm.