Social Media ROI for Small Business: Metrics, or Margueritaville?

I have been agonizing about the social media ROI issue for weeks now, and finally decided to give myself a break.  After reading every ROI-related thing I could get my hands on, it boils down to this:  Marguerita with Salt, or No Salt?  In other words,  brilliant minds on both sides agree to disagree.

Rather than be original, I am going to paraphrase  Jay Baer’s blog, guest written by Matt Ridings, and some of the 38 comments that followed. (I highly recommend a  read of the original post:  click here).

Proponents of ROI measurement favor defining the metrics that correlate most closely to business goals, carefully tracking these metrics, and measuring ROI as precisely as you can.  Anything less is too “squishy”… apparently, the cardinal sin of marketing.  Sounds, good, until you consider the other side.

Are such tools available?  And, at what cost? As Mark W. Shaefer points out, “You could use up your entire marketing budget in measurement”.   Jay Baer says, “What’s the ROI of precisely measuring ROI?”  When it comes right down to it, many factors are co-mingled when it comes to that next sale.

Problem is, for a smaller business, resources are spread thinly as it is;  if, on my recommendation, more goes into social media, then something else gets less.  I feel that I owe my clients more than squishy-ness…but, what can I provide?  Newsletter sign-ups?  RT’s? Traffic to a blog or comments on a Facebook page? Where is that killer measurement app?

Those of us who work with small businesses live in the real world, the “is traffic coming through the front door, is the phone ringing” world, not some ivory tower.  The IBM’s of the world may have the budget and staff to buy advanced dashboards…for now, entrepreneurs have their gut check.

The business owners I work with will give it a few months, then judge if they are seeing a return or not.  They are a practical bunch…if they start to see opportunities that wouldn’t have occurred otherwise, it’s a win. Social media is connected to an overall marketing strategy, and is never going to be the sole driver of results, but the bottom line still rules.

For now, I will offer up some metrics, but with little faith.  This is not an indictment of the opportunity that social media presents to small business…anyone who knows me, knows that I am a believer.  This is an indictment of the meagerness of our toolkit.  For now, the debate rages on.    I basically agree with Matt’s closing:

What a client really wants is a way to say semi-definitively that the decisions they have made were worthwhile. Social media ROI is about defense, not offense. You should measure as specifically and rigorously as you can, but the inability to precisely measure ROI shouldn’t be an obstacle to social participation, and too many companies are using “we don’t know the ROI” as a smokescreen for their fear of openness”.

Fellow small business marketers, I’d love you to weigh in on social media ROI…do you measure or use your gut?…thanks!

Add to FacebookAdd to DiggAdd to Del.icio.usAdd to StumbleuponAdd to RedditAdd to BlinklistAdd to TwitterAdd to TechnoratiAdd to Yahoo BuzzAdd to Newsvine

About these ads

About Rhonda Hurwitz

Rhonda Hurwitz, @rhondahurwitz on Twitter, is an internet marketer and business development strategist who helps businesses develop more effective online marketing strategies. I also blog at Forbes.com: http://blogs.forbes.com/people/rhondahurwitz/
This entry was posted in social media ROI and tagged . Bookmark the permalink.

7 Responses to Social Media ROI for Small Business: Metrics, or Margueritaville?

  1. Jay Baer says:

    Excellent summary. On behalf of Matt and myself, thanks so much for enjoying the perpetuating the post on this important topic.

    • Thanks Jay. The original post and conversation (comments) really crystallized the topic for me. I hope my readers take the time to read the original!

  2. Paul Gailey says:

    I do think there is a tendency to overcomplicate measurement of the success metrics for social media activities. Granted there are a plethora of devoted tools and as you say the Fortune 500 companies have armies of people and consultants to assist their more complex measurement needs.

    But for the small to mid size companies often there is often a chronic under use of existing tools that can do the job adequately enough to gain the all important management sponsorship of conducting social media before it gets taken seriously.

    That bottom line obsessed CEO with little regard for 21st century marketing metrics may often just want the answer to the question: “is it worthwhile to do/be in social media for company xyz?”

    That’s “worthwhile” in the Jerry McGuire sense.

    Case in point: Configure Google Analytics to systematically report your Goal Reporting segmented by referring sites. Better still if you have assigned monetary values to those goals. Overlay that report on your timeline of social media activity. Compare qualitative measures of your referral traffic v regular traffic eg. PPC or natural traffic. Is social traffic bringing you leads ultimately? – Probably
    Did those leads cost you? – Time and effort to craft content/comment
    Are those leads more sticky? – Very probably
    Is the proportion of social referrers growing? – Oh yeah
    Is the volume high enough yet to replace other channels now? – Unlikely
    Is social a new form of lead generation? – No way
    Is social worthwhile doing? – You betcha it is

    Of course every commercial company is different nonetheless all exist with the aim of being effective/profitable and I find that until that pill is swallowed, all the espousal of softer benefits falls on deaf ears.

    ps. Was it the Marguerita metaphor that attracted the “tequila loving” Jay Baer to drop by?
    pps. I’m pro salt in mine: Strictly marine crystals.

    • Thanks…I can see you speak from experience with CEO’s. I like the way you think, and explain things, re: an Analytics-based look at social referral traffic being likely to appeal to the CEO mentality in a way that the softer arguments will not do.

      The only place we part company is in Margueritaville…my preference is frozen, no salt, plenty of chips/salsa/guac. on the side. I don’t know why Jay dropped by but maybe I should start adding booze references to more of my posts…never know who else it might attract?

  3. Pingback: Book Review: The Executive’s Guide to Enterprise Social Media Strategy | she means business

  4. Pingback: Hubspot Inbound Marketing(Part 2): It’s a P-R-O-C-E-S-S | she means business

  5. Pingback: Solving the Social Media ROI Puzzle | she means business

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s