ROI vs. KPI — Why Social Media Can’t Show You the Money


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When the boss assigned me a blog on the ROI of social media, I accepted the task with a certain amount of hubris. Confident in my favorite data-full online tools and toys, it seemed obvious that a simple-sounding metric like return on investment would be, not only calculable for social media, but more easily tracked and updated than it has been before.

Technology, apparently, is no cure for being dead wrong.

Having read, crowdsourced, debated, and scoured, I am now convinced that, despite what you may read in Google search results, there is no meaningful way to track ROI for social platforms, unless you are lucky enough to be in straightforward e-commerce, using trackable coupon codes, landing pages, etc–and even those efforts may only quantify a fraction of your results. For service, professional, brand-based, and B2B businesses, the unsettling truth is that social media value cannot be gauged by a simple equation because, much like traditional tools for PR, marketing, customer service, and branding, its returns are not strictly monetary. Buzz, loyalty, trust–all about as numeric as a firm handshake.

But they’re as important, too. We’ve all read the stories about customer loyalty trends (down); the importance of recommendations and trust (up); and the consumer’s increasing pursuit of value, particularly as encapsulated by a real or projected relationship with a product or service provider. Absent an army of sales and service people and a political campaign-like physical network of mom-and-pop storefronts in every town from Acadia to Kodiak, few businesses can provide the expected level of communication and contact without social media technology. But successful use of the tools requires more than the ability to subtract and divide.

Must haves? Specific goals. Consistent messaging. Inspiration. Flexibility. Commitment to long-term reputational growth. And the business sense to find the social media niches and purposes that work best for your company, instead of just following the other cubicle lemmings into the latest hot properties.

Positively detrimental? The kind of blind faith espoused by the subset of social media gurus. This isn’t just my research frustration talking (not just); people who insist that the question of social media ROI is irrelevant give us reasonable proponents a bad rep because only a moron would pour resources into a business tool without asking questions about how to gauge success and determine investment. “It’s all cool, man,” isn’t just momentarily asinine–it makes the whole industry looks like a bunch of snake oil salesmen who are either stupid or dishonest. Not really a ringing endorsement for diving right on in.

What’s doubly frustrating is that such dissembling often prevents or stymies the development of the metrics that do apply to social media and should be used to help direct a company’s investment. The acronym that applies isn’t ROI but KPI, or Key Performance Indicator. Referring back up to the list of Must haves, these are an outgrowth of the specific goals that can only come from a deep understanding of what actually benefits a business. As such, they are deeply individual, which suits the multifaceted world of social media (in it for sales? PR? service? coolness?) just fine.

As often happens, the best practical brain byte on this whole topic was a tidbit from Wikipedia (how’s that for social value?):

“A KPI can follow the SMART criteria. This means the measure has a Specific purpose for the business, it is Measurable to really get a value of the KPI, the defined norms have to be Achievable, the improvement of a KPI has to be Relevant to the success of the organization, and finally it must be Time phased, which means the value or outcomes are shown for a predefined and relevant period.”

That is, the first thing you need to know is what you hope to gain, and “worldwide domination” isn’t an appropriate answer unless you’re Mark Zuckerberg. Identify the potential value of your purpose, and use a social media tool if it’s the best fit. A couple of cases in point (thanks, Mashable):

  • Facing a nasty economy and fuel-efficient rivals, Ford targets social media-based customer service and user-generated content; gets half a million Twitter and Facebook followers; manages the 2011 Explorer product launch via social media; and doubles their order projections.
  • Vodafone aims for a 100% customer inquiry resolution rate; crosses platforms but focuses on Twitter; and nearly hits their (impossible) goal notwithstanding inquiry volumes that can exceed 5,000 inquiries per month.

The common threads? Measurable (if not 100% financially quantifiable) goals, aligned with key company priorities that result in reputation enhancement leading to sales and/or customer retention. Far too many steps removed for ROI. But not too many steps for trackable indicators of success–or failure.

As happens with so many hot new technologies, social media has been stuck in a messiah phase–it’s social media; how could you go wrong? Well, unfortunately, a Twitter account is not a guarantee of exponential revenue growth, and it is possible that not every “like” is your next big client. This whole brouhaha over ROI–from total dismissal to results based on assumptions and ceiling wax–is, I hope, the beginning of the end of the social media Gold Rush. It’s time for clearer heads and more analytical minds to prevail, using metrics that matter, apply, and point the way forward.

Kate Schackai is the Social Media Director at Crawford PR and the author of White Hat PR, where she crusades to bring best practices to the online wild west.

Kate Schackai
Kate combines a technical understanding of web 2.0 with classic PR savvy, resulting in online communications that both humans and Google love. She joins Crawford from WordPress development firm TCWebsite, where she worked in online marketing and search engine optimization.


  1. Great article on this topic. I think it will be one of the largest topics of the coming year as more and more people look to Social Media as a place to spend marketing dollars. My concern is throwing out ROI for KPI’s. Too many of the customers I have talked with have stated that if there is no ROI, then they will not look at it.

    All of the information you have gathered is great and valid, but I would say that we need to look at quantifying “Return” in such a way that we CAN show ROI to our customers – a return that can “lead” to sales or leads or inquiries or … that IS the big question….

  2. Hi Kate:

    A welcome article that is currently receiving lots of RTs in Twitter on 12/21!

    Your quote: “The acronym that applies isn’t ROI but KPI, or Key Performance Indicator.” appears to me to confuse the difference between the two. ROI and KPIs are not mutually exclusive. You can have ROI as a Key Performance Indicator (KPI) for your marketing intelligence dashboard. It could be the only indicator or it could be one of many. KPIs are a collection or group of metrics that an organization or team have decided will constitute measurements by which they gain insight into operational performance. I took my definition from Wikipedia so forgive me if it’s not perfectly accurate:

    Your quote: “I am now convinced that, despite what you may read in Google search results, there is no meaningful way to track ROI for social platforms” is curious. I’m not sure why you think it’s impossible to craft a meaningful way to track a ROI as a KPI. Although we may not be able to attribute every sale or customer conversion to Social Media, we can start with goals and determine whether Social Media helps us achieve them. No? We don’t need to track every conversation in social media, but if we run promotions in social media, then we should track them. No?

    We can do 3 things in Social Media:
    1) Promote
    2) Share
    3) Converse

    I’m quite sure we can track attribution and impact on #1 and #2 while leaving #3 alone as not necessarily possible/easy to track returns. Conversations are interactions, not transactions.

    For my reasons above, I would propose that we can track ROI. I would also propose that we can measure promotion wins and sharing wins in Social Media. I will also go so far to say that we can also set ROI as a KPI and measure it and optimize it for the goals we set for our organization.

    I think we give up too easy if we say ROI is impossible.

    What do you think? Am I off base still stuck in the Lunar Eclipse?

    Taariq Lewis

  3. Hi Mark,

    I definitely agree with your desire, but the conclusion I reached is that wishful thinking just won’t make it so–and that that’s something we have to help clients understand. Trust me–I wanted to come to the opposite conclusion, but the facts just didn’t support it.

    What concerns me is that “throw out ROI” as a statement makes people think that it’s fine and dandy to just throw money at social media without any kind of benchmark, and that’s clearly irresponsible from any perspective. What we *are* looking at here is a combination of a) the historic problem with showing ROI in PR and b) the rather heedless excitement of a new tool that is labeled “free.” By raising the idea of KPIs, my goal was to insist on set goals (ie, a solid notion of what you’re using social media for), and serious performance reviews of the efforts. Crawford PR’s president goes berserk every time he hears the “what’s the ROI of your phone?” defense of social media expenses, but the annoying question has a point–I could say my phone enables $100,000 worth of business, but does that give me any useful information in terms of what I should be willing to spend on it?

    So KPIs are one answer, but there are undoubtedly others. What do you think?

    Thanks for the reply!


    Kate Schackai is the Social Media Director at Crawford PR.

  4. Hi Kate,

    I think we are a lot closer in our position, and I COMPLETELY agree with not promoting the Messiah Phase mentality of many in this space (or the fear mongering self promotion of many others). If you are not able to show some sort of up-tick, don’t waste the time or money on Social Media.

    I think my response was more aimed at “there is no meaningful way to track ROI for social platforms”. We have to FIND a way to quantify or qualify an ROI answer – just as PR has had to do in the past. It’s not easy, and it may not be pretty, but if we hope to have a legitimate line item in our customers’ budget, KPI’s alone will be a challenge.

    I like what Taariq said in his post “Conversations are interactions, not transactions”. I think THAT is where we need to develop some kind of measure. If you are able to become a thought leader in your social space (think Gary Vaynerchuk of – That will allow you to grow your following and in turn your market, and in turn sales. I’m not talking about the “straightforward e-commerce, using trackable coupon codes, landing pages” tracking, I mean the less able to quantify “service, professional, brand-based, and B2B businesses” you wrote about. I am hoping over time we will have case study data like the PR world that will allow us to use those KPI’s to offer a “derived ROI” for our clients – and not just fear and hype.

    You really are causing me to think deeply about this, so thanks for the exercise 🙂


  5. KPIs and ROIs are not mutually exclusive, and in fact one KPI could be the ROI of social media initiatives. In simplistic terms, marketing requires three steps – Attraction, Engagement, Conversion. Social Media has a definite place to play in the first two of these and we can measure Attraction and Engagement with numbers of Followers, Fans, Likes, Mentions, Tweets, Retweets, Sentiment etc. We can also combine social media measurement with website analytics to understand the next level of engagement. Number of visitors who came to the website from a social media source, number who stayed on our website, number of goal conversions etc, all show engagement.

    We can then track this through to a lead, opportunity and sale by combining website information with CRM data to show Conversion – and another set of performance measures. We can take this further by extracting information from the ERP system to show incremental revenue and gross profit associated with those sales that came from a social media referral to the website, and now we get to true ROI KPIs.

    Of course this doesn’t capture all the ROI of social media since there are other aspects of brand building, and website visitors may be influenced by social media, but not come to the website directly from the social media source. But measure ROI as outlined above is a good start and targets could be set appropriately.

    Bringing all this information together in an easy to understand and use format can be painful, but today’s operational BI solutions can automate the data capture and visualization.


  6. Mark,

    My pleasure! And thanks for sharing your mental exercise–good for my brain, too. 🙂

    I do hear what you’re saying, and I am more than sympathetic to a rational executive’s concern for quantifiable value. I suppose my position is just that ROI is a simple equation if you have the numbers required. But if you don’t, it’s fiction, and the ROI attempts I unearthed in my research might as well have been numbers plugged into E=mcˆ2.

    Now, I’m sure more $$ measurements will surface as the field matures, and it’s probably best to look for those in the success stories (if you can separate them from the *supposed* success stories). One company that comes to mind is ModCloth–a retro clothing e-shop that has social interaction built into its core, with site visitors voting on what inventory they want available, designers submitting ideas, extensive FB and Twitter relationships, etc. According to their press kit, they’ve experienced two consecutive years of 600% annual growth. Surely, their relationships have played a role–but, gosh, even in that case, I’m not sure how to reliably put a dollar sign to it.

    Thanks again for commenting!


  7. Hi Taariq,

    First of all, thanks for reading and commenting! I think we’re in agreement on the trees; it’s the forest we see differently.

    You’re absolutely right that conversations are interactions, and not transactions. But to my mind that’s why ROI is the wrong metric. When I started my research, I didn’t think so, and that was because I had read too many articles on ROI written by people who didn’t understand it. ROI is just math. Gain from investment minus cost of investment divided by cost of investment. If you don’t have hard numbers for those variables, you don’t have ROI.

    But that certainly doesn’t make social media either worthless or untrackable. In fact, I think it’s vital–especially for advocates of social media–to lay out campaigns and mini-campaigns with definite goals, milestones, end dates, and performance feedback during and after. When both the cost and gain from social media, however, can be difficult or impossible to quantify (what is Apple’s reputation worth?) fuzzy math ROI does more to obscure the facts than illuminate them.

    Thanks again!


    Kate Schackai is the Social Media Director at Crawford PR.

  8. Hi Wayne,

    Thanks for your comment! I do agree that, with sophisticated tracking, ROI is not quite the nightmare for e-commerce that it is for other business types. That’s why Dell, for example, knows, within reason, what their work on Twitter has done for them. But, even in those cases, I think there are significant variables that destroy the equation.

    I mentioned ModCloth in another comment just a minute ago, and they’re relevant here as well. They know their sales figures, and because all of their promotion is online, they know at least what they spend on online interaction/promotion as a whole. But what is the value of the weekly photo contests they run for fans on Facebook? How much is their fan-vote-based inventory, creating a sense of investment and ownership in their selection, worth? Beats me. 🙂

    Thanks again!


    Kate Schackai is the Social Media Director at Crawford PR.


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