How is your company determining the return on investment for its social media programs?

At the recent Corporate Social Media Summit in New York City, Richard Binhammer, Dell’s head of social media and corporate-reputation management, said the equation is a little more complicated than simply calculating money in and out. As social media programs evolve, they require a more sophisticated understanding of their benefits, he said.

A few lessons from his talk:

ROI is about more than sales. From many other companies, that would sound like a dodge, but Dell is one of the few companies that’s able to say it uses Twitter as a direct-sales tool. The company hasn’t announced an update to that sales figure in many months because it is thinking about ROI differently, Binhammer said. It’s not only one number because it isn’t only about sales; it’s also about increasing business value, he said.

Remember that social media are only another tool. The problem of social media scalability becomes apparent once you realize that businesses can’t win over a fan one time and then move on, thinking that they’ve made a fan for life. Social media aren’t a channel for pushing communications; they’re a tool for managing relationships. “Control is not as successful as influence,” Binhammer said.

Social media can transform your business. If you aren’t taking into account a network’s ability to affect your brand’s communication strategy, product development and customer service, as well as its sales and marketing potential, you’re not seeing the full ROI of social media. Done properly, social media can increase the value of every part of your organization that affects customers. Organizations shouldn’t be asking how social media are making them money; they should be asking how social media make an organization better. That means social media shouldn’t be run by any one division; they need to be part of every aspect of an organization, Binhammer said.

How are you using social media to increase your organization’s value?

Image credit: jpa1999, via iStockphoto

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14 Responses to “What Dell can teach your company about social media ROI”

  1. Socialite says:

    This is, in my opinion, one of the most difficult things to measure and yet one of the most crucial tools today. Social media takes businesses to an entirely different place in the market and its use completes a company's image. This is a great article- it's not about direct sales or profits from social media, but yet about the whole picture.

  2. Charlie Ferguson says:

    OH PLEASE! If a company is using Social Media to increase sales – and sales don't go up – IT'S NOT WORKING! Simply re-defining Social Media and removing any accountability for ROI is a great way to blur the picture and over-state it's importance. Marketers keep demanding more metrics from traditional media and Social Media isn't going to get a free pass either. Ask any retailer to choose between a "Like" and a "Sale" and we all know what's going to win.

    • @SuStokes says:

      Hi Charlie,

      I must disagree with you. Having a brand presence in the social media channels is far more than just driving sales. You need to look at the Social CRM portion as well. Social CRM is the business strategy of engaging customer in social networks with the goal of building trust and brand loyalty. It is requires a mutually beneficial collaborative approach between the organization and customer.

      I feel that Kathy Herrmann below sums it up the cross-departmental benefits quite nicely.

      • @refinch says:

        Great points, Suzanne.

        Recently in an exchange with a friend who also probably thinks too much about this stuff like I do, I had an epiphany that "Social CRM" should really be thought of and implemented instead as "Social CRF;" that is, "Customer Relationship Facilitation." "Social" anything when juxtaposed with "management" anything just seems too much of an oxymoron. It gives me visions of "herding cats."

        "Social CRF," on the other hand, gives me a mental picture more like the sound of a can opener attached to a can of tuna.

        One of the first jobs I ever had – in high school – was as a clerk in customer service department at Sears. It was there that I learned that customers really can't be "managed," but their needs can be "facilitated."

        I was there for two years before I left for college. By then I had learned that my colleagues and I could take the most irate customer and make him a friend and loyal Sears ambassador. Sometimes if the mood for devious sociology experimentation struck us, we could also take someone with the most pleasant attitude with the most innocuous question or concern and make them hate Sears for life.

        Not that we ever did that, mind you. Really! LOL

  3. Kathy Herrmann says:

    I agree with Richard Binhammer that smROI is about much more than sales. At a minimum, it also includes:

    * Marketing savings (consumer insights, brand protection, and lead generation);
    * Product development savings (better ideation and accelerated development); and
    * Customer service savings from agent deflection and higher agent productivity.

    How many benefits a company can gain depends on the holistic extent and strategy of their social programs.

  4. Sandy says:

    I think the premise that has to be gotten over is that companies social media "to increase sales." The relationship with a customer is a brand-building one – it's not something easy to stick onto a graph. It pays off, just not quantitatively with a number, in most cases. I know it's a hard sell to get budget to work in the sm space, but if anybody looks for an easy ROI calculation, it's just not there.

  5. @kevinbriody says:

    The problem is trying to define any one "right" way to measure social media ROI, and cram everything into that single box. Just like some traditional advertising campaigns are about brand building, and some are about driving specific in-store sales and promotions, same with social. Some social efforts are in fact goaled around driving direct sales, some are about lowering support costs (great examples for forums, Twitter, etc.), some are about building fan loyalty in order to encourage long-term (and often hard to measure) repeat purchases, and some are about moving the needle on far softer and less tangible metrics like competitive share-of-voice, sentiment, and so on.
    Social has evolved to a pretty diverse set of tools and tactics that fill a range of needs for the marketer. As such, measuring success and impact of social efforts varies according to those needs.
    My recent post What makes Google+ so appealing (for now)? A clean slate

  6. Elias Shams says:

    Here is my 2cents on all of them. It's all about the Pee Pee :-)

    Twitter: I need to pee pee!
    Facebook: I pee peed!
    Foursquare: I’m pee peeing here!
    Quora: Why am I pee peeing?
    Youtube: Watch this pee pee!
    LinkedIn: I pee pee well
    New myspace: let’s dance while pee peeing!
    Google+: Let's all pee pee in a circle http://awesomize.me : HOW AWESOME DO I PEE PEE on Twitter, FB, Foursquare, Quora, youtube, LinkedIn, myspace and Google+

  7. Amelia says:

    Social media has really changed the landscape of doing business and advertising products. True, ROI on social media would be difficult to measure as not all likes, fans and followers translate to sales.

    With social media as another aspect of today's business, companies should cultivate whatever relationships they have with their new and existing customers and build on them.
    My recent post The Future of Mobile Gaming

  8. MBF says:

    I think in today's social media playing field, many companies are funneling resources into it without first identifying which type of social media approach will work best for their audience. I work in healthcare and have found the most successful social media campaigns are supported by traditional campaigns, something I see less of outside our industry. It would be naive, in my field, to abandon the traditional in favor of social but the perfect blend can be hard to find. We engage consumers in the social realm but they are often not actually a part of our patient base. So then you have to ask yourself, given these dedicated resources to social media, is the CRM aspect actually beneficial if they are not specifically our consumers? I think this is where companies are struggling most.

  9. I'm planning on starting my own social media marketing company. However, I have been stuck for three days trying to come up with a name. I've gone through literally hundreds of words, and practically all of the good ones are taken. I need your help! I would like a name that is short (1-2 syllables preferred) meaningful, and that isn't taken/has an open domain name. Not as easy as it sounds.

    • jstanchak says:

      Just don't make the mistake of ending it in "ly" — every time someone starts a tech company with an "ly" ending, a kitten dies of loneliness. You don't want that on your hands.

  10. Keep in mind, though, that another part of a good social media campaign and tracking ROI is having a goal in mind when you start so you know where you want to be. Your goal could be monetary return (more sales), or non-monetary (brand awareness, increase in social media mentions). It's not too late to start tracking your progress so your business will know how your social media efforts are affecting your company.

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