Return on Investment (ROI) is a simple concept: You set aside something of your own, be it time or money and expend it with the hope of getting something in exchange. ROI measures the profitability of your returns, when compared against your costs.
Many people have talked about ROI in relation to social media and one usually examines the performance of a social media marketing campaign using specific metrics like traffic, links or comments.
Some measure ROI in an more abstract way, by monitoring the amount of buzz or conversation in a community and the opinions of the public.
What you choose to measure is dependent on your goals, or what you want to receive as a return. If you’re purely interested in building links, your costs and investment should be measured alongside how many links you receive.
If an activity does not efficiently help you to procure links, you should reduce your investment in that area. Conversely, if a specific activity maximizes your efficiency in getting links, you should increase your investment in that area.
However, things are a little different when it comes to social media and specifically, the process of networking with others through various social media channels such as Twitter, Linkedin, Stumbleupon or Facebook.
ROI for Social Media Networking: Four Main Goals and Benefits
Whatever method you choose, there are usually four main goals:
Increased brand awareness. You’re interacting with others on the social media channel in order to build awareness for your personal and business brand. You’re increasing your visibility in the right areas and trying to stick in the minds of others through active interaction on many different levels. From this perspective, networking also works to drive traffic back to your website.
Improved reputation. You want to improve how others think about your website so you hang out in forums or networking sites, in order to respond to feedback. You want to keep the communication channels open on all social media fronts. You may also want to improve your reputation as an expert by being consistently involved in discussions on topics that are relevant to your business or website.
Personal Development. Networking with the right people will keep you in the loop on industry happenings and will also improve your knowledge levels. A big part of networking is observation. Seeing how others reflect or participate in conversations is a great way to improve your own experience in the field.
Relationships with benefits. One can network with others with the aim of extracting future benefits such as testimonials, links or recommendations. Others are more likely to provide you with a benefit when you’ve taken the effort to interact with them. Networking is a way to build relationships that can be mutually beneficial.
Social Networking ROI is Difficult to Quantify
It is also difficult to track the origin of a purchase or visitor, even although you may have information on the referring web page. How did the visitor first know about your website? What influenced them to subscribe to your newsletter or hire your services?
And how much of all the visible results you see stem from social networking? Did the hours you’ve spent on Facebook lead to a greater readership? How much did your forum posts contribute to your increase in subscribers or links?
It’s not easy to correlate the returns you receive with social networking. Any attempt at measurement will be inevitably incomplete. You can’t pin down every visitor and know how if networking has enhanced the way they feel about your brand.
What you can do is to focus on improving your ROI efficiency, which means improving the rate of benefits you’ll get from the time or money spent networking. It’s okay to have vague or broad goals for social media networking as long as you maximize the value you’ll get when compared to the cost you’ve invested.
How to Maximize Your Social Networking Efficiency
Record the amount of time you spend on each social website. Use tools like RescueTime or MeeTimer (firefox extension) to track time spent in a week. Do not restrict yourself for one week in order to estimate your level of interest in each social media channel. You’ll naturally find yourself spending more time on the social channel which interests you. Record these figures and split them up in terms of percentages.
After which, determine how much time you want to spend on social networking in general and portion that time according to the amount of time you naturally spend on each site. For example, if you only want to spend 2 hours everyday on social networking and have previous natural rate of 20% for StumbleUpon, you should probably spend 24 minutes on StumbleUpon everyday.
Operate with this time system initially and adjust the time spend on each individual social channel according to your level of interest or the benefits you receive. This is one way to limit your time cost and make sure that your ROI stays efficient, even if the returns may be vague.
After which, you need to focus on the networking process itself.
Start by determining what you can offer in a mutually beneficial relationship with an influencer, community or individual. This may come in the form of a link, feedback, a social news vote, a recommendation or a specific skill. This is the value you can offer from your end, irregardless of the benefit you will get. Build relationships by offering value and assistance before extracting a specific benefit. This is an efficient way of networking.
Make a list of questions you have for the community or individual. Use them during your conversations in order to extract specific knowledge. The keyword here is specific. You want targeted, relevant information you can use for specific purposes. Chit-chat is perfectly fine, but sometimes you need to structure the conversation in order to get the information you require.
Focus on specific benefits you want to receive from an individual or group. The best and most meaningful relationships occur when you genuinely respect the other party. Aim for benefits but do not do emphasize them at the expense of harming your reputation with the other individual or community. Keep the benefits you want to get in mind and obtain them within context: do not go out of your way to force specific returns.
Share Networking Duties If you’re working in a group blog or own a company, split up the focus by assigning a specific community to a specific person and get him/her to focus on it. This is more efficient because you’re making sure that each business is represented on all of the major websites. Nurture experts that can give you input on each social media channel.
Cross-leverage your social media profiles. Some people use multiple social media websites while others usually stick to one or two. It is always helpful to set up social media profiles even for sites you don’t use, because you’ll increase your points of possible interaction. Connect your social media profiles to each other via links and send users for one site to another. This is useful when you want to initiate discussions or promote content on another channel.
This whole process of networking via social media should be performed naturally and not mechanically. Authenticity in interpersonal interaction is important and the more you enjoy the process, the more it works to bring you returns.
I’m spending most of my free time on a social media service like Twitter because I find that it’s an excellent way to connect with both Dosh Dosh’s readers and other people with similar interests. But not all feel the same: some have suggested that sites like Twitter are a waste of time because they do not give a profitable ROI.
But then again, social networking is not a means to acquire any direct/predictable ROI. I feel that networking is more akin to domain name investing: you’re more likely to get a higher returns in the future than the immediate present.
Social networking allows you to maintain light and more in depth contact with both acquaintances and established friends. This consistent contact and the development of relationships will lead to both short and long term benefits, some of which are unexpected. For example, it’s quite common for someone to recommend your website to another person without any suggestion on your part.
A word of advice: Don’t try too hard to quantify the ROI for social media networking. It’s difficult and it doesn’t really work that way. Instead make your ROI efficient by managing your costs and streamlining your expected returns.