What’s my return on investment? It’s a common question among business leaders trying to make a decision to spend more money or make a change. It’s understandable that they want to make more money, not lose it. But there are times when I think looking for an accounting formula prior to making a decision hampers business change.
Let’s say you have a small business and your accountant is good at your taxes but is typically late to your meetings and he’s not pleasant to be around. It’s a relationship that probably needs to be changed. Do you calculate the ROI of a new accountant or do you just do it?
The decision for your company to start participating in social media is similar. Imagine you’re the marketing director and you see thousands of potential customers on Twitter. Subsequently, you discuss a company Twitter account with the president and her response is, you guessed it, “what’s the ROI of Twitter?”
That conversation is dead. Good luck trying to figure out the profitability of a single tweet! It’s almost as if the ROI response is more of a cop-out, a way to avoid having to make a change.
My background is government cost accounting; I love the smell of spreadsheets in the morning. While there probably is a calculation for every single activity or expense, I also understand that it may be too expensive to try and find the answer. Sometimes business leaders just need to make a decision, take a risk. The Internet is an extremely measurable marketing medium but it’s too new, complex, and dynamic to know every detail before you get started.
Alternatively, a business leader could make the decision to start a Facebook social media campaign based on these, non-accounting parameters:
- Your customers are on Facebook.
- It’s free to start, except the time to manage it, so you can stop at any time without any loss.
- Once you start there are millions detailed metrics that you can use to measure success.
- There are ways to target ads directly to your specific target markets or maybe even a single customer.
- You can begin new conversations with your customers.
- There are ways you can use Facebook for research and information about your customers.
- It may even change the culture of your company.
- Every other business is doing it; what if you don’t participate?
The final point is probably the reason most businesses contact Site-Seeker. They’ve heard the buzzwords and are afraid they’re missing out on something. And they are missing out.
There are many ways to measure the value of social media, with almost all metrics coming after you begin a program. After a few months or even a year you should have a good feel if social media helps you make more money or at least is valuable on other ways. Stop your program if you don’t have metrics. However, if you’re waiting for the perfect formula to know exactly how much your social media campaign is worth BEFORE you start you might be waiting for a very long time.
What were the criteria and ways your company got started on social media? Is there a reason you’re not participating yet?
Levi Spires
Dumb luck or maybe divine intervention was Levi’s ticket to ride on the Site-Seeker train. It’s the only way a left-brained Air Force accountant can get a boarding pass for such a creative venture. Levi’s job is pretty simple; just shovel coal into the steam engine to keep Site-Seeker moving fast - as long as we don’t derail.
Levi’s military number-crunching background has given him the skills to grow people. Some might say that military officer leadership training prepared him to take on a management role, but it’s the accounting skills that give Levi a real advantage. Site-Seeker is a creative bunch that needs purpose, focus, a checklist, a process, a project management system, and a way to analyze results. With all of Levi’s talent on loan from God, he knows how to manipulate a spreadsheet to get to that one perfect number - just ask our clients!
When Levi’s not at Site-Seeker, he dreams about it. It’s the entrepreneur in him. He plays a little golf, hangs out with his family, and enjoys the Sabbath. But, mostly, he just likes to work. Site-Seeker fulfills all of Levi’s ambitions, pushing him to levels of learning and productivity that he had never imagined possible. Best of all, Levi enjoys his friends. He doesn’t have to come into the office to do business, but he chooses to. Everyone Levi knows is right here at Site-Seeker, and he likes it.
4 Responses to The ROI Cop-Out
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If you were to implement a vigorous social media campaign — and you could accurately forecast how much it cost to run, say 10% of your marketing budget — do you think it would be ‘bad’ to have a monthly expectation of revenue generated by the campaign? Or should you just run it for a year, as you said, even if it looks like it’s not returning your expenditure very well?
Of course you should measure it. My only point is don’t wait to start because you’re waiting to calculate the number. Launch then measure.
Levi,
You make some excellent points on social media. And I totally agree with that ROI is tough, you need to step and start participating and then get your arms around what you will measure. However, I think that companies do need to have goals and objectives for social media. So just jumping in with a plan and goals will definitely generate little ROI. Also, creating goals and objectives will establish a better metric for ROI.
Great post, thanks!
The part where the boss asks for the ROI is kind of funny. If the conversation is not dead at this point, it will be when you’ll tell the boss it will take months before seeing tangible results!
Unfortunately, social media isn’t as simple as buying a newspaper ad and give the production to a third party. And those that I know who tried this way sounded like those call centers in India where it just doesn’t feel right.
So I agree the company has to get his hands dirty. Someone from the inside has to do the job and build some corporate knowledge and identity about this.
In the end, it’s pretty much like back in the days when companies had to make the move and buy computers. The ones who make the move quickly benefited competitive advantage over their competitors. I think the same story is repeating with Social Media.