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Identifying the ROI of a Social Media Community

January 21, 2013 10 Comments
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One of the things many social media purists will tell us is that we can’t “monetize” social media communities. A social media community is a warm, fuzzy place where no marketing should occur, and we simply talk about how cool social media is for individuals and brands alike.

The problem with this is that it’s impossible for any business to remain afloat without sales – and a smart business knows this along with another key point: their social media community can drive these sales.

By identifying who’s driving traffic to a product page, and which community members are the most respected and listened to, a brand can react to this new information, improve their product and/or adapt their own messaging to better serve that community. Do that, and your return on investment becomes truly measurable and scalable.

So how do we identify these community members? Mark Miller was kind enough to invite me onto his 30 in 30 series to chat about that exact conundrum, and a few other things in-between.

I hope you enjoy, and make sure you check out the rest of the 30 in 30 series so far, there are some great discussions over there. Cheers!

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About Danny

Danny Brown is Chief Technologist at ArCompany and an award-winning marketer and blogger. His blog is recognized as the #1 marketing blog in the world by HubSpot. Danny is also co-author of Influence Marketing: How to Create, Manage and Measure Brand Influencers in Social Media Marketing.

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Create Online Magazines
Create Online Magazines

Thank for the information you have shared here. I was looking for the information. You can easily monetize your digital magazines/ eBooks with pageturnpro.

Christine Steffensen
Christine Steffensen

Sales is important when it comes to a business. The objective is almost always the same, how to generate more sales in order to raise ROI of a social media community. Social media enables the marketers to build stronger relationships with their clients.

Adi
Adi

It's important to remember that sales is just one possible use for a social media community, especially in the sense that you're trying to measure last click wins.

Take Lego for instance. They use their premium members to design new products for them. It's the easiest thing in the world to then find out how much money those products have generated and you have a simple ROI.

Or if a company turns to Kickstarter to seek funding, a very obvious ROI is then achieving their funding goals.

What the best examples of social use tend to have in common is that they look at what they're trying to achieve as an organisation, and then look at how social can help them. It's a business thing, it's not a marketing department thing. If you have that clear purpose then measurement becomes very easy.

Danny Brown
Danny Brown

Exactly, and that's the very point that many companies miss. Where this particular discussion is coming from is the sales funnel, because purists advise not to use social as a selling platform.

Kickstarter, for me, is losing steam, since many funders are being left in the dark, and project deliverables are being missed. And Kickstarter don't offer any real due diligence in checking in on projects once funded. It'll be interesting to see how KS can continue with that negativity surrounding them.

Post Planner
Post Planner

Great interview. It's important for businesses to take time in figuring out the ROI of social media and not rush to condemn it as not profitable.

Danny Brown
Danny Brown

But then that would show the weak players and those living on past glories for what they really are - empty space costing the business money. ;-)

Scott Ayres
Scott Ayres

I think measuring the ROI of social media is the most difficult thing for business types and numbers type people to wrap their head around. So glad I'm not a numbers guy.

Danny Brown
Danny Brown

And the irony is, it shouldn't be. With the technology we have today, measurement should be the last thing a brand needs to worry about. Instead, be worried about lazy decision-makers who don't understand this simple truth.

Brian D. Meeks
Brian D. Meeks

When ever I read a post about measuring ROI, I think about GEICO. I was an analyst in their marketing department and spent a lot on this very subject. There were quite a few things that GEICO did that were not measurable, though. Does a patch on the sleeve of a tennis player during Wimbledon, have value? I don't know.

I do know that GEICO believes there is value in the unmeasurable. It has taken decades and literally billions of dollars over that time, but they're a household name and they're profitable.

I'm sorry that there isn't a point, because I can't prove that the patch had value, but my gut tells me that if there are enough opportunities for someone to learn about your product, that it will eventually lead to a fatter bank account. Maybe that was my point?

A social media community seems valuable to me. I suspect it is more valuable than we might know.

Danny Brown
Danny Brown

Hi mate,

There's definitely a case for the unmeasurable and the long-tail value that can bring. But when it comes to the opportunities to learn about a product because of the amount of times it's discussed, it comes down to what's being said. If I hear the same apathetic feedback 1,000 times, that's not going to encourage sales (especially if I don't act on that feedback). If 10,000 conversations are happening about Product A when the sales focus should be on Product B, then that's not going to offer the profits I need to sustain success.

There's immense value in a social media community especially - but we still need to make sure it's the right kind of value.

Thanks for a great insight, mate!


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