1920s businessman Jon Wannamaker once famously quipped: “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.” Fast forward almost a hundred years and many businesses are still saying basically the same thing: “I’m investing in social media, but is it paying off?”
There’s a lot of conflicting information about the value of social media and whether it can provide a positive return on investment (ROI), but social media has become so entrenched in the way that your customers interact with each other and your brand that you have no choice but to embrace the phenomenon.
Will you get more out of social media than you put into it? Will you ever see a return on your social media investment? If you want to stay in business, you’ll have to recognize that the answer is yes. But if you still have doubts, consider the following five myths concerning the ROI of social media.
Myth 1: Social Media ROI Is About Direct Sales
It’s easy to think of the standard return on investment model: Invest “X” amount of dollars in marketing to generate a return of “X + some acceptable margin” in sales.
This is a good model, but a good investment is not always measured in terms of the sales it directly generates. For example, what about market research? You need to know about your customers and what’s important to them in order to offer the products and services that they will buy. And what about your competitors? It’s a good investment to know what they’re up to so that you can tailor your products and services with a competitive edge.
For example, Facebook — with its members’ willingness to tell everyone about the brands they “Like” — is a plethora of market research and competitive intelligence. It’s free for a business to set up a Facebook Page and to start collecting data from its customers and prospects. If your investment costs $0 and generates any actionable information (like market research or business intelligence), then by definition, this investment has a positive ROI.
Customer and competitor research may cost money or time, yet the best and most successful businesses are conducting these activities all the time. The businesses that are getting the best return on investment are those that have ported these activities into the realm of social media.
Myth 2: Social Media ROI Can’t Be Measured
Yes, it can. We’ve already busted the first myth that social media ROI has to be all about direct sales. Try taking a step back to measure what actually led to those sales in the first place. Is a given sale the result of an online referral? Has someone arrived at your sales page from a social media platform like Twitter or Facebook?
Those type of metrics are actually very easy to measure. For example, you can use a social media management tool to measure how many times your business is mentioned on a variety of social media platforms. You can even search for phrases like “I’d recommend brand X” to measure how many times your brand has been recommended to other people on Twitter or Facebook. Capture your customers’ social media information when they make purchases and correlate that data with mentions of your brand online.
You can also use very powerful analytics tools, like Google Analytics, to measure how many people arrive at your website or sales page through social media. Once you get a good idea of where your target audience is coming from, you can increase your social media efforts on the platforms that bring you the most traffic.
Myth 3: Social Media Customer Service Has a Negative ROI
Many businesses are fearful of opening up their customer service and support functions to social media. The common misconceptions are that you’ll have too much negative feedback on display for all to see, or that your staff will be overwhelmed by customer service tweets and incoming Facebook updates.
The fact is, your customers are already talking about you on social media. If you are not there to address customer complaints (or compliments), these incoming missives can take on a life of their own — beyond your control. Using social media as a customer service tool, you can address both positive and negative comments from your entire customer base. Not only does this model of customer service produce a positive ROI in terms of staffing, it can also introduce your brand to new customers — especially when your existing customers broadcast their positive experiences to their social networks.
Myth 4: Everyone Is Doing a Better Job Than You
We’ve all heard the expression “the grass is always greener on the other side of the fence,” and of course we know it’s not true. If your business is new to social media, you may think you’re already behind other businesses when it comes to realizing a positive return on your investment.
The fact is, many businesses area still trying to figure out the best way to effectively utilize social media. For example, a recent study by Socialbakers shows that only 5% of Wall posts on brand Facebook Pages ever receive replies. This kind of startling metric provides a real opportunity for your business. By investing the time and effort to make your social media presence more engaging to your followers, you’ll have a real advantage over your competition.
Use this competitive advantage to make your brand stand out as a social media leader. Use social media to become known as the brand that listens and responds to its customers. Before long, your followers will be singing your praises through social media, and drowning out your competitors’ voices in the process.
Myth 5: Social Media Is Not Worth The Investment
Often, when brands are just starting out with social media, there’s a steep learning curve and many think “what’s the point?” As you’ve seen in the above examples, social media provides increased awareness of who your customers are and what’s important to them. Social media is also a powerful business intelligence tool that you can use to monitor and outperform your competition.
The social media audience is also becoming a purchasing audience for the brands that are represented there. For example, a recent study found that more than half of the people that follow brands on Twitter are more likely to buy and recommend those brands’ products and services. Brands that have not invested the time or effort to get on social media are missing out on potential sales and powerful referrals.
The social media phenomenon appears as though it’s here to stay. If your business has not yet embraced social media because of your uncertainty about its ROI, the best advice is simply to get in the game and start busting a few of these ROI myths for yourself.