If you're evaluating the impact of your social media marketing strategy, there's a bottom line that is considered by all levels of a business: return on investment (ROI). As with any marketing efforts, it's the cornerstone of success. Why would you put in more than you get out?
However, the cynicism that social media users can show in response to marketing efforts on this platform – whether these campaigns are remarkably clever, or direct and blunt – has led to countless sales, PR, communications and digital marketing experts desperately searching for a silver bullet that can show quick, if not immediate, ROI. Sadly for many, the uncertainty regarding financial success (and failure) of investment in social media marketing is complicated by the lack of a solid metric with which to measure outcomes, not to mention the fact that the ‘I’ in ROI stands for investment, which is longer-term in nature.
Yet, despite the limits of benchmarking data, I'm certainly not one to discourage the use of it, as it exists for a reason; I still emphasise the importance of a structured approach. Put simply, the key to success when using social media marketing is to just keep on testing.
Given that social media is such a fast-paced environment, testing makes a lot of sense. With shorter lead times, more iterations are possible, giving more chances for repeat tests. In this context, an unhurried approach will pay off.
Regardless of what their ethos and marketing material might say, a company's biggest goal is to profit from their product or service by making sales. More and more of this is being done with social media replacing more traditional interactions, and this is called social selling.
But isn't all selling social?
The sales process depends on interaction, and using social media is a logical extension of this. Processes haven't changed as much as you might think – every prompt and action is geared towards closing a sale – it's just the format of these processes that have changed.
The sales process, traditionally depicted as a funnel, has become more of a continuous loop, which effectively reflects the real-life process of customer interaction with brands. Immersed in social media, the consumer's journey is a non-stop process.
Social networks have always existed, but technology has changed what we think of when the term is used. The concept of interaction remains the same, but the instant nature of technology means these interactions are far more dynamic. Buying and selling, comments and conversations, complaints and resolutions all happen constantly and instantly, and the data produced by these interactions is available to analyse.
As a result, there are far more channels to which conversion can be attributed, and this is the big hurdle when it comes to measuring sales through social marketing. How do we attribute conversion to social media interactions?
It's a simple way of looking at the sales flow, yes, but I think it's important to understand as simply as possible how your target consumers become aware of your brand, product or service. Awareness is the first step towards interest, which in turn leads to desirability, and then translates to action – i.e. closing a sale. In social media, awareness and interest are easily measured; page views, fans and followers, all the usual metrics that you should be familiar with if you're using social media for businesses purposes. As for the action side, this is easy to measure too, through transactions, revenue, profit margins and hard cash metrics. The big question is, how do we link the two together?
A slightly more nuanced way of looking at that big question is: have our social media efforts delivered a return on investment and increased our financial results? Getting involved with Facebook posts, Twitter jokes, Tumblr memes and Instagram hashtags as a way to spread your message and display your products may make your brand more visible, but has it actually resulted in stronger sales?
Unfortunately, finding an answer to this question isn't easy, and I can't offer a quick solution. There are so many ambiguities and intricacies in the way social networks interact with sales flows, and indeed with more traditional methods of marketing. Someone may see an ad online, but head out and buy a product in store rather than clicking through. A potential customer may see a YouTube video but, instead of making a purchase, recommend the product to a friend.
The good news is that as social selling becomes increasingly dominant, more and more tools are being developed. They range from elaborate statistical analysis – such as marketing mix modelling, which estimates the impact of various tactics based on time series data, and is used by fast-moving consumer goods (FCMG) companies to assess ROI, present long before social media existed! – to simple things such as affiliate marketing strategies and correlation analysis.
Some companies are even taking the radical approach of – wait for it – asking their customers! It just goes to show that even as methods and processes change, direct social interaction will always be essential to marketing and sales.
Personally, I would recommend looking into at least one or two methods of assessing the relationship between social campaigns and sales activity before applying too many (or too few) resources to the process. After all, measuring ROI provides an ROI itself, and is yet another balancing act of resources – but that's a conversation for another time.
By Francisco Marco-Serrano, programme leader on the BSc in Economics at GSM London.
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