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in the red

Why Does Social Media Need ROI?

Today, the agency introduces a new channel on the corporate blog called “Digital Trenches,” which will feature tactical suggestions and guidance on trending digital communications and marketing topics including search optimization, social media, mobile marketing, online media and the blogosphere.

Consumers are in the driver’s seat now. They expect companies to take care of their problems and to do so on their own terms. Consumers will not tolerate anything less than service in real time, without phones and web forms, and without hassle. Like the phones and websites of the days of yore, social media is currently the consumer-demanded touch point of today.

So why is ROI in the mix? Do you measure ROI on phones and websites? Sales firms will use phone call metrics to determine employee efficiency. Widget manufacturers will track traffic and determine the ratio of conversions. These metrics would be around things like productivity, efficiency, and sales. But are they measuring the ROI of these channels of communication?

The purpose of ROI is so that decision-makers can justify an investment because that investment is directly connected to a monetary return. So as companies brave the social media landscape they enter it with ROI glasses on and wonder how they can justify the time and cost to enter this channel in the first place.

I believe that this approach is way off. Time and resources put into social media is not an investment. It’s an expense. Like a website. Or a phone. Using social media is not a competitive option that will yield dollars to one’s bottom line, it is a cost of doing business.

Therefore, you should monitor and develop metrics that make the expense as inexpensive as possible: develop efficiencies, improve productivity, escalate reach, increase conversions, etc. None of these things have a direct monetary value and neither does your phone or website. They are business tools to fulfill a consumer demand of adequate channels of communication.

So a “return” on social media has more to do with operational considerations: website traffic, the size of one’s presence and influence, the number of impressions one creates to reach the largest number of eyes, changes in sentiment, and resolution of customer issues. Even taking on new prospects and converting them to customers or selling a widget is a function of operational costs, not investments.

The context around social media’s ROI needs to change. We can no longer afford to sit back and decide whether or not social media is “worth it” based upon the amount of time spent, but instead focus on how to make social media efficient, productive and essential for company’s operations given that it is now a necessary channel of communication.

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