The Real ROI of Social Media

By Scott Allen on 24 May 2010 4 comments
Photo: pavlen

It's the question that businesses have been asking ever since the first person suggested that maybe we could actually do some business in all this new "social" media: "What's the ROI?"

It's not a bad question. Surely, if you're going to spend money on something in your business, it should generate some kind of return…or at least cut some visible and measurable loss.

And yet, there are all kinds of business tools and functions that companies commit money to without measuring the ROI — they're simply an essential part of business. What's the ROI of your HR department? Laptop computers and mobile phones for all your employees who travel?

If you're asking the ROI question about social media and expecting to be able to show it all on a spreadsheet, you're still looking at social media as a channel, most likely for just one or two business functions, such as marketing or recruiting. While it's true that social media can be used in that way, it has become something else entirely: an essential communication utility.

What's the ROI of the telephone? Or email? It's a ridiculous question, right? It would be impossible to have a business without them. They're how you communicate with your employees, customers, partners — everybody. Social media is just a collection of communication tools, and they have flourished because for certain tasks, they're better than the phone, email, or face-to-face communications.

The value of social media that's immediately visible and measurable is just the tip of the iceberg. The bulk of its value lies below the water line — not in the major corporate social media initiatives, but in the daily process of helping every employee do their job more efficiently and effectively.

Here are some tips on how you can realize the real ROI of social media below the water line:

1. Think bottom-up, not top-down

Social media as a business tool because it has enabled better communication between corporate employees and the public. While it can still be used as yet another broadcast channel, when you do so, you typically only affect one business process: whatever the campaign is focused on, i.e., branding, lead generation, market research, recruiting, etc.

What happens when you allow every person in your company to communicate directly with the right people in the right ways? The impact of that will be far greater than any single initiative ever could be. Have whoever is leading your social media initiative meet with key stakeholders in every department to explore how social media could potentially benefit their department.

2. Take a process-centric approach

Look at the core business processes within each department. (Flowcharts are incredibly useful for this. I highly recommend documenting your key business processes with flowcharts if you haven't already.) For each stage of the process that involves communication, consider if any social media tools could make that communication more effective in some way.

3. Think outside the box

Some of the potential benefits lie in areas outside your core processes. For example, one of my favorite applications of LinkedIn is using it to fill out your business trip. Going to a convention? Set up in advance to meet specific people. Got a free afternoon during a longer trip? Line up back-to-back meetings at a local coffee house, or get with a couple of local friends and organize an ad hoc gathering of several people via Twitter.

4. Give people the knowledge and tools they need to be successful

Some people will take to social media naturally while others may need guidance. If you have the resources and expertise, train them in-house. Otherwise, outsource it. Reimburse them for books, or keep a corporate library and pass the books around. And while many social media tools are free, in some situations premium accounts may be appropriate.

Also, social media monitoring tools can do the equivalent of hundreds of hours of work tracking activity and sentiment about your company and its products and identifying thought leaders and relevant communities for engagement. If it's worth spending time, it's worth spending the money on appropriate tools.

5. Develop a clear, simple social media policy

On the one hand, you must be clear about what is and isn't acceptable behavior in social media. You'd like to think you could trust everyone's common sense, but based on the number of recent incidents in which people have revealed information about new products or even mergers on their LinkedIn profiles before they're officially public knowledge, you can't. Spell it out. On the other hand, if your policy takes up more than a page (12-point, wide margins), how can you reasonably expect people to keep it in mind as they venture out into cyberspace?

6. Enable every employee to be a brand ambassador

One of my entrepreneurial mentors once told me, "Everyone in the company is in sales; everyone in the company is in business development; everyone in the company is in HR." He believed that everyone in the company should know what an ideal customer, partner and employee looks like, how to communicate with them about the company, and who to refer them to for more information. He took it so seriously that even a temp receptionist working for one day was trained in those things.

If you're looking at social media as a system-wide strategy, every employee who engages in social media is an ambassador for your brand — not just for marketing, but also for business development and recruiting. Make sure everyone knows how to recognize potential customers, partners and employees, connect with them, and introduce them to the right person in your organization.

7. Use social media internally

Again, it's just a communication tool, and for certain applications, it can be far more effective than other tools. Consider setting up a blog for a major project, a wiki to enable a department to build a body of knowledge, microsharing like Yammer for more timely internal communication, an internal video library, etc. Not only will you reap the benefits of improved internal communications, you'll also get people comfortable with the tools so they can use them more effectively "in the wild".

It's time for a paradigm shift. Social media is no longer just for "social media people." Who should "own" social media in your organization? Well, who "owns" email? Sure, your IT department makes sure the email server functions properly. The marketing department may have an email marketing specialist who handles email blasts, and a marketing communications specialist who writes a weekly or monthly newsletter. But no one person "owns" email or telephone. They're essential communication tools that help everyone do their job better.

Start looking at social media in the same way, and you'll start realizing its real power…the 7/8 that's below the water.

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Guest's picture

OMG! I'm sorry I didn't believe you! I'm sorry I didn't take your warning seriously! I should have known, what with the sorts of things you DO happily post, that anything that warranted that kind of disclaimer...

I may not sleep tonight! People be warned... it really is that horrible... don't click and never get a baby-shaped baby cake... ever!!!

Guest's picture


Social media ROI is difficult, if not impossible, to define because it means different things to different people and companies. For some companies, it's all about more sales or a stronger brand, while other companies are looking for improved customer service or better relationships with customers, employees or partners. In many respects, ROI depends on how success is defined, and that can be done in a variety of ways.

cheers, Mark

Mark Evans
Director of Communications
Sysomos Inc.

Guest's picture

Social media...? Worst case ever of the Emporor's new clothes. So may people falling for so much rubbish

Guest's picture

Social media is the largest outsource of the market this specific time of genre can offer. The accessibility and the efficiency of creating links between business people is the importance of the social media in terms of communicating with the market making it the most powerful tool in marketing.