“What is the value of social media?“ has to be one of the top questions I am asked by my business savvy friends. When attending a SXSWi core discussion on how social media professionals calculate the return on investment, I was amazed by the utter silence in the room. The lack of an industry standard on a measurable form of value seems to be an issue, and I feel the answer is right in front of us!
How many of you have heard of ‘Return on Relationship’? Ted Rubin and Kathryn Rose define it as,
“the value that is accrued by a person or brand due to nurturing a relationship. ROI is simple $’s and cents. ROR is the value (both perceived and real) that will accrue over time through loyalty, recommendations and sharing” (tedrubin.com).
For months, I struggled in researching a ‘one-best-approach’ or unified way for highly individualized industries to calculate the monetary value of social media ROI. In social media, you will never find a singular approach to determine ROI across every industry. Take for example the following industries: retail, healthcare, entertainment, finance. In some industries, identifying Key Performance Indicators (KPIs) like click-through conversion rates can help you determine the monetary value of your social media practices. For others, you have to look beyond the quantitative measurements and take a look at the value of your relationships with your customers.
Social media practitioners are in dire need of an industry standard to measure value. How many of you know the monetary value of a single Twitter follower or Facebook fan? The problem with that question is that it varies across the board. Return on Relationship is a tailored approach to calculating the value of your fans. No one else’s. A single health care patient might be monetarily worth a great deal more than a life time customer at a dry cleaner.
So how do you determine the Return on Relationship in a variety of industries? Develop a metric system that identifies the worth of your audience. Measure engagement. No matter how you choose to measure relationships, in the end your customers are your business. They are invaluable. Social media is an investment in those than invest in you.
Here are some key takeaways from the SXSWi core discussion on calculating the worth of social media.
How do you measure the Return on Relationships? Share in the comments.
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