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Online ROI Revisited

November 4th, 2009

ROISome time back, I posted a lengthy article on how to measure your Social Media ROI. That seems to have become a big topic recently, so I decided to revisit it.

Several recent articles have varying thoughts on the topic, from Sysomos blog that states that there is no ROI to measure in your Social Media campaign (and I blatantly stole the image on the right from their post) to Oliver Blanchard’s fantastic presentation on how to measure your ROI.

I’m more in agreement with Blanchard. Mostly for the reason that I’ve done exactly the same type of measurement in the past and it proved, without a doubt, that our primary web visitors were spending more with us than non-web visitors.

In a past life, I had to prove that our website was actually delivering value to the company. And there was no buying into the old stand-bys of ‘increased brand recognition.’ The powers that be wanted to see one thing… dollars.

Fortunately, I had our entire customer database at my disposal. We decided to set up an A/B/C comparison. We knew who our frequent site users were (frequent meaning visiting at least once per week), and who our non-visitors were. We started built a baseline to show what our sales were with visitors and non-visitors. That chart showed a clear pattern. Site visitors were more valuable than non-visitors. However, we didn’t have a control group. We didn’t know for sure that it was the website that made sales increase among that group. We had to set up a control case.

We started a campaign to recruit 1,000 new visitors and watched their sales patterns over a year. Using the baseline previously established, there was a clear inflection point in sales once those new recruits started using the website more frequently. Without going into numbers, you could see with the naked eye an inflection up in sales (and other measures) once users registered for the site and started using it more often.

Key Steps to measuring ROI:

1. Establish a Baseline: Understand the objectives you are trying to measure, measure them today for as far back as you can, and establish a baseline. Otherwise, you’ll have no idea if you’re reaching your goals.

2. Keep your time line: Every time you do something of significance online, add it to the timeline.

3. Control for other actions: If other outreach actions are happening in your organization, control for them as they will also impact your baseline measurements. If possible, look at the impact during similar campaigns in the past and establish a way to discount for those impacts when measuring yours.

4. Keep measuring: Keep an ongoing tally of your stated objectives and metrics.

5. Look for the inflection: Don’t be disappointed if the inflection doesn’t come quickly. It takes some time to see a real financial impact from your digital strategy. You’re looking for something like the following slide, copied from Blanchard’s presentation:

roigraph

6. Adjust: If the inflection doesn’t come, or it’s not as big as you had hoped, adjust. Don’t just sit there with your fingers crossed. Look at your qualitative measures to see if they are adding up. They don’t always correlate into dollars, but if they aren’t where you expect either, you may need a larger adjustment.

As much as we in the digital world would love to believe that our qualitative measures are the be all and end all, eyeballs and positive sentiment don’t pay the rent. Our strategies and campaigns, at some point, have to translate into real $$$.

Categories: social-media, Strategy
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