How are you measuring social media?

Whether it is Facebook, Twitter, LinkedIn, Foursquare or some other social media platform, marketers everywhere are faced with the need to answer a critical question…

What is it worth?

Here is what we do know:

1. Consumers are leaping into social media by leaps and bounds.  Grandmothers are friending their grandchildren and finding lots friends from years ago.  Facebook alone now has over 100mm U.S. users and still has a double digit growth rate. (istrategylab report, January 2010)
2. Millenials are beginning to replace email with Facebook Wall posts, and doing their chatting within FB rather than through a separate network like AIM.
3. Consumers are doing more and more research online before considered purchases (higher value purchases or those considered to be riskier), and more of that research is coming from social media than before.  Research shows that 97% of consumers research products online before purchase (BIA/Kelsey study, March 2010)
4. Businesses are also researching purchases online, and building virtual communities of similar type businesses to share tips and learnings
5. E-commerce is becoming integrated into Facebook by some leading retailers and e-tailers.
6. Smartphones are changing the way consumers and business people interact with each other and with their suppliers. Over 50% of consumers are forecasted to have smartphones in the U.S. by the end of 2010 (Nielsen, March 2010)

This week, I attended Blogworld, an international New Media conference, with over 4000 of the world’s top bloggers and social media experts.  My goal was to find out how corporations measure the impact of social media.  Through a series of fascinating sessions with such thought leaders as  David Alston, Don Bartholomew, Connie Bensen and others, I learned the some valuable lessons.

1. Companies are moving more aggressively into social media because their consumers are there, particularly business-to-consumer industries.  Most commonly, companies start with Facebook and Twitter.
2. The first place that companies see value is in customer service.  Using Twitter and Facebook to interact with consumers who have problems saves time in the call center.  Trained C/S agents can solve more problems quicker on these platforms than by taking calls.  (In addition, on-line chat is increasingly prevalent to achieve the same objectives)
   • The most common measurements of impact of customer service impact is reduced hours in a call center, and an increase in Net Promoter Score (likelihood to recommend the product to close family, friends and colleagues).
3. One of the next places that companies turn is a Facebook fan page as a coupon/discount mechanism.  Short-term sales on specific products seem to provide incremental lift, although it is difficult to develop and monitor control groups to ensure incrementality.
   • Coupon distribution tends to be measured in a traditional way, by examining redemption rates and gauging incrementality overall by comparing short-term lift in revenue with overall revenue over time.

The one place that social media is the hardest to measure may be its greatest benefit.  If Marketing is all about building and sustaining relationships with customers, social media facilitates a direct conversation that is hard to replicate in a scaled approach through any other venue.  At this conference, speakers referred to Return on Engagement, Return on Relationship, etc.  as a way to describe this value.  The challenge is that it is hard to identify the consumer you are speaking with, and then to determine the long-term impact of your conversations.

In a certain way, the issues with measurability of relationship-building social media is similar to the challenge of measuring great customer experience in-store.  Retailers strive for a superior customer experience in-store, and yet seldom measure the impact of that customer experience on the long-term behavior of individual customers.  The way great customer experience is measured is through increased retention, revenue growth and such tactics as Net Promoter Score.

The problem with social media is that the consumers you interact with are spread out, not concentrated in a specific store or market.  As a result, although it did not come up in the conference, I recommend an aggressive survey program to better understand consumers who are on social media and to measure changes in attitudes over time in response to your intervention.

Coming back from this conference tonight, I have many ideas bouncing around in my head.  Next time, I will summarize what I learned about B2B businesses and social media.