Simplifying Social Media: Is ROI the Answer?

Samantha Justus

May 16, 2014

Human nature drives us to compartmentalize and rationalize the world around us. Clean equations take chaos and turn it into understandable ideas. Synthesizing mass amounts of data down to simple patterns is a beautiful thing and, quite frankly, what I may or may not dream of at night. For someone like me, the idea of living and working in a world that is becoming more and more centered on social media is terrifying. Social media is so vital to success, yet so annoying. Its multi-faceted and constantly evolving nature makes it difficult to track its value. One traditional and simple measure commonly employed to try to tame the beast is the familiar metric of ROI (Return on Investment).

Whether or not ROI can be calculated, and whether it is even a valuable measure of social media, is the subject of heated debate. We find reasonable arguments from all sides. No surprise, this has to do with the complicated nature of social media. Through the exploration of this debate and looking at what is not calculated in ROI, we can uncover some of the key reasons social media engagement is vital to the health of the modern business.


ROI Exists

One argument claims that ROI exists for social media and we can readily use it to simplify the social media world. If I spend one thousand dollars on my social media initiatives and receive sales and customer retention, I can quantify the impact of my investment. However, in practice, this is problematic for several reasons.


We Just Need the Right Tools

Return is difficult to calculate because the vast ocean of social media is so complex that the tools to sort and analyze the data are not yet in existence. The overall impact is tough to isolate in the presence of so many moving pieces and the data is not readily available. It is evident that we are seeing a sharp rise in the number of tools, mainly in the form of SaaS (software as a service) platforms that provide data analysis across social platforms. The appearance of these tools reinforces the notion that there is a demand to quantify the impact social media has on a business. Unfortunately, a perfect measure for measuring ROI does not exist.


Asking the Wrong Question

If we look at what is not calculated in ROI we can discover that aiming for the ROI of social media initiatives is exhausting time and money to hit the bull’s eye of the wrong target. The target we should be aiming for is control of the relationship between the business and the customer. Social media is all about the relationship characterized by a two-way, human-to-human interaction that looks a lot like a customer service model. This relationship does not necessarily defy traditional measures of ROI but calculating its ROI could arguably be a waste of time.

Perhaps, we should shift our focus to hit the primary target and realize we do not need to look at social media in the same terms that we view other advertising mediums. I would not measure the ROI of the relationship between my barista and I. It is apparent that I receive x amount of benefit from having a good relationship, but it would be ridiculous to think of this in terms of ROI. When it comes down to it, the point of social media is to build relationships, which may monetize at some point in the future.


Focus on Relationships   

What happens when we just ignore ROI for a second and direct our focus to controlling the relationship?  Social media is becoming an established meeting place where relationships are constructed and maintained between customers and businesses. What happens when we fail to leverage these platforms? I’m reminded of the companies that invested in functional websites early in the internet age. At the time, there wasn’t a justifiable rationale for making the investment, but when the market caught up, they found themselves positioned advantageously compared to their competitors. Humans, by nature, are social beings and social media is about being social. Those businesses that socialize with a customer base will reap the benefits that good relationships always bring. Failure to leverage social media will start to be a characterizing quality of businesses that fail. Furthermore, it will result in missing out on vital conversations and opportunities.


The Conversation

Conversations are happening right now about you, your competitors, and your industry. Conversations across social media represent word-of-mouth in digital form. Word-of-mouth is arguably the most powerful determinant of a consumer’s decision to buy. When choosing restaurants, dry cleaning shops, and pet groomers, we rely heavily on word-of-mouth. The companies that start listening and responding on social media will build the strongest relationships. On what other medium can you create, control, and leverage the conversation on such a large scale?


Bottom Line

Even though placing focus on relationships is not as cut-and-dry as calculating ROI, it simplifies the world of social media a bit. At least we know where to aim. If you are not investing in social media because there is not a clear way to calculate ROI, you might be missing out. Social media strengthens the relationship between the brand and the customer. Giving up on social media because you do not see measurable results in the form of ROI, or waiting to invest in it until you can calculate ROI can be a mistake that is not worth making.