Three Wise Dames

Marketing in the Life Science Industry

Guest Post Part I: 6 Key Steps to Determine Social Media ROI February 7, 2013

Filed under: Debbie,Guest Posts,Social media — Debbie Donovan @ 12:00 pm
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Guest Wise Dame Susan L. Brown for Brown & Associates

elelphantWgirlWbananasROI for social media and communities is the “elephant in the room.” Everyone wants a definitive answer to how to evaluate return on investment. Also how much investment is enough? What are the resources needed? What kind of social media is effective and why?

Addressing these questions is the first step to defining Social Media ROI.

Context is everything

The first issue to realize is that while social media and networking communities are new vehicles, however, they must be evaluated in context of each company’s business model, objectives, market and customers. Without this context there is no objective way to determine the value of social media and communities in a business situation.

What are these vehicles and why are they different? Mainly because the value of social media is interactive and immediate feedback as well as “user generated content,” a marketing-speak way of saying the content includes a dialogue with participants, instead of the advertising model where copywriters create text and readers are passive recipients.

Success in online marketing hinges on effective budget allocation and marketing mix decision making. Practitioners and executives must be able to identify the marketing campaigns and assets that help drive the business’ top and bottom lines, and invest in and optimize them accordingly. This of course requires access to comprehensive, granular, and accurate web analytics data with which marketers can measure campaign performance and understand the complex website and social media behaviors of prospects and customers. Performance measurements should not occur solely within the confines of individual channels and campaigns. The best online marketers measure performance and ROI in a comprehensive view that comprises all online channels, be they social media, paid and natural search, email marketing, banner or display ads as well as lead generation webinars, opt-in advertising campaigns, website content, coupons, contests, blogs, videos, etc.

Social Media Benefits and Risks



  • Distribution is cost effective with potential wide global reach
  • Reduced customer acquisition costs
  • Increased website traffic potential
  • Direct sales opportunities
  • Immediate feedback gives ability to respond to issues or complaints in a timely manner
  • Capability of viral marketing—to build a brand through building “fans”
  • Communities can create unique customer engagement and retention and selling opportunities
  • Lack of message  “control”—companies fear potential legal risk and liability for unauthorized statements
  • Social media requires ongoing updates and responses to participants’ issues; resources need to be assigned and costs more than originally estimated
  • Monitored vs. Open Forums; decisions regarding the type of communities need to be addressed; and what guidelines to be developed

6 Key Steps to Determine Social Media ROI

  1. What are your purposes and objectives?
    • To introduce new products and services?
    • To provide customer support and/or reduce call center expenses?
    • To generate leads?
    • To create customer, partner, patient communities as a vehicle for engagement and retention?
    • To create internal communities or collaboration portals for employee retention, engagement and to add to innovation?
    • To use communities to increase revenue through coupons, contests, direct sales?
    • Can you use social media to sell directly?
  1. What elements of social media would be most important and yield greatest benefits and ROI for your business?
    • Blogs
    • Customer, Partner, Patient, Internal Communities
    • Facebook page(s)
    • Twitter campaigns
    • Online ads
    • YouTube Channel
  1. Budgeting and Resources?
    • Determine % of Budget for Social Media (Consider 2-5 % of marketing budget to start)
    • Content creation; at least one dedicated FTE per blog, or vehicle; or outsource?
    • Participant response: at least one dedicated FTE per blog or vehicle; or outsource?
  1. Creating On-Going Content; What Content aggregation, lead management or listening tools to use?
    • Hootsuite
    • Social Mention
    • Marketo
    • Meltwater
    • Radian6
    • TweetDeck
    • Eloqua
    • Silverpop
    • Others?
  1. What to measure?
    • Website click through, Page views, downloads, etc.
    • Community/Fan page followers; membership, referrals, etc.
    • Social media activity; Community, Facebook, Twitter retweets/ activity/responses, engagement
    • Online ad follow through (leads, conversion to sales, etc.)
    • Lead results (qualified leads, scoring, contacts, registrations, etc.)
    • Customer or user conversion
  2. What analytic/measurement tools to use?

Next–Part II: Social Media’s Impact on Purchases

Don’t Miss–Part III: Judging Social Media Success

(C) 03/2011, updated, 1/2013; all rights reserved. This article may be shared in part or whole with credit given to author and link to Brown & Associates


One Response to “Guest Post Part I: 6 Key Steps to Determine Social Media ROI”

  1. The first three measures mentioned above are irrelevant to ROI. Social media ROI is calculated the same as for any other business initiative: by dividing the cost of a social media campaign into the (gain minus cost) from the campaign. You only get a financial gain if you increase revenue or decrease a business cost–both of these come from changing an audience behavior. Leads are good because your company would know what percentage of leads eventually lead to a sale and the average profit from each sale. You could also look at reducing the cost for servicing customers. E.g., if you can calculate that the number of phone calls to your call center on a particular issue dropped after it was heavily discussed on your Facebook page, that’s a decreased cost.

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