One of the biggest challenges we hear from companies implementing social media marketing, customer service or other social media approaches to their businesses is how to measure the effectiveness of their efforts. This frequently starts with determining the right metrics to measure performance, but before anyone gets too far down that path, someone asks about ROI.

Maybe your boss pops her head into your office and says, “You know all that time you are spending on social media? Well, what’s the return on that? They’re really breathing down my neck from upstairs, and I’ve got to show ROI on everything. Those are the numbers they are used to seeing.”

And what do you suppose the response would be if you come back with, “What’s the ROI of your mom?”

Many social media experts have ignored the question of ROI because social media’s adoption was a natural course of action for them and their companies. They did not have to prove the value in the early stages. We are now at a place where the early majority is making decisions about social media adoption and they require proof of value. Companies are spending real money and they need to understand what the return is on their investment.

According to a study by the Lenskold Group, less than 20% of marketers feel they can adequately measure the ROI of their social media efforts. The easy part is the formula for measuring it. It is your revenue earned minus your costs, or investment in the effort, divided by your costs. This is usually represented as a percentage, but it relates to dollars. Not followers. Not fans. Not likes, comments or retweets.

The hard part is gathering those two numbers and making them inclusive to get an accurate picture of your social media ROI. For this to be truly successful, the ROI and the metrics that contribute to it needs to relate to your company’s business objectives. And no matter how many social media strategists, experts, gurus and ninjas try to show you how to do this, because it ladders up to YOUR company’s goals and objectives, you must be a key part of determining these numbers.

Read more about why we are at a tipping point that requires us to now measure the ROI of social media and learn how to measure it yourself by downloading this ebook written by Dr. Natalie Petouhoff.

Tags: Dr Natalie, return on investment, roi, social media measurement