>What is Your REAL ROI of Social Media? Part 3: The Four-Point Perspective

27 08 2010

>In the last post we briefly mentioned the four-point perspective every business that uses Social Media: Financial, Brand, Risk Management, and Digital. It’s these four views that will allow you to gauge the REAL ROI of Social Media.


When measuring your financial results in conjunction with social media promotion, you’ll gain the most accurate results when you’re using direct response marketing or the enhancement of e-commerce sites that have a social aspect. By using social media in this fashion, you’re able to garner other financial benefits.

  • First is the ability to measure the rate of response when you interject a “storefront” into a social outlet. An example would be communicating a new product or promotion on the news page of a website like Facebook.
  • Second, you can measure the savings you incur from a decreased number of returns. If you sell a product, allow consumers to give feedback on items. This allows you to improve a product, which will then decrease your rate of returned merchandise.
  • Third, you can measure the decrease of other business costs. To use a company example, Intel launched the Intel Channel Voice community, using a community platform by Jive, and saved their company $500,000 for each conference they didn’t have to hold at an actual location.
  • And last, you can use additional web communities to measure your brand’s impact on consumers. Unfortunately, this technique could cost your business money to implement. However in some instances, such as creating a live community (or forum), to coincide with a brand can be more effective at driving sales than standard TV, web, or print ads.


Fortunately, you can use the same kind of consumer surveying on your social media profiles as you would on more conventional media. What you need to do is define your long-term brand health objectives and plan appropriate surveying to measure customer perception of your brand. Surveying can come in the form of sales, discounts, promotional or limited edition products or services, etc. The results you can gain from measures such as these will allow you to work on product/service development, price-pointing, and customer care among other brand building tools..

Risk Management

The Risk Management perspective, unfortunately, cannot give you definitive ROI results but can give you a good estimate. It’s not so much about creating positive company feedback as it is about reducing the potential for any future negative feedback. You can use this measurement in a few ways.

  • One, by estimating the cost of any potential negative PR issues.

  • Two, by predicting the possibility of these issues.

  • And three, using these two estimates to figure out how to reduce costs that could be spent on repairing bad PR.

How might costs be reduced as a result of listening to the community of fans and advocates that are available to you? Figuring this out can give you a good estimate of a value for the Risk Management perspective.


The Digital perspective is meant to complement the others. There are a couple of ways to measure productivity in outlets such as blogs, websites, forums, and social networking sites. One is to focus on making sure your website, Facebook and/or Twitter page, and blog are optimized for the web (SEO). Another is to track traffic to the outlets mentioned in the beginning of this section. Consumers are connecting with brands on a number of levels and the number of outlets they’re using is increasing every day. Measuring traffic with all of your online profiles will allow you to see which avenue is drawing the most attention. Even though it’s difficult to connect business value to non-financial measures such as visitors, clicks, retweets, and fans, they are among the most effective ways to estimate your financial ROI. By itself, digital metrics are an unsuccessful way at measuring company value but when used with the other three perspectives they can become very relevant and useful.

In the end, it’s important to know you can’t rely on just one or two perspectives to measure your ROI. All four go hand-in-hand to give you a more accurate understanding of what strategies are working for your business and which ones aren’t.

Stay tuned for the final part of “What is Your REAL ROI of Social Media?”




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