Last week, as part of the Unternehmerwissen seminar series, I delivered a workshop on using Twitter for businesses. As always with social media workshops, the question of ROI quickly arose. I've given this some thought, which is also available in a slightly modified form on Unternehmerwissen.

Presumably, every business owner is interested in: What do I get for my expenditure, or what is the return on investment? In social media, it's not much different. Few questions polarise as much as that of Return on Investment. Or, in short: What does it achieve, and how much does social media marketing cost? A question that, unfortunately, cannot be answered as unequivocally as it is asked.

Return on Investment fundamentally describes the relationship between advertising costs and profit, and represents a calculation that is no longer so easy to break down in the information age. Or can loyalty, trust, and enthusiasm be calculated 1:1 in sales completions? ROI is an outdated model, as the parameters have changed. No question: measuring success is important, but classic models reach their limits here. Many factors resonate on a meta level and cannot be converted into a classic cost-benefit analysis.

Cross-media Customer Journey

The use of social media is another channel in the cross-media mix. The days when traditional advertising, PR, Facebook marketing, blogger relations, print and TV campaigns were measured individually are over. Social media marketing is no longer just a gimmick; it has professionalised.

From a company's perspective, the customer journey describes the touchpoints a consumer has with the respective company across all media channels. These so-called touchpoints range from classic TV or print advertising, through affiliate marketing, newsletters, websites, to social media channels.

Ideally, all available channels are interconnected and subordinated to overarching corporate goals. And with added value. And in this case, added value does not mean increasing the company's own ROI, but providing users with relevant content, consciously engaging with them, and generating interest.

Goals in Social Media

However, clear objectives and the question: What should actually be measured? are important beforehand. Some areas for this would be: increasing brand awareness, optimising search engine rankings, increasing sales, market research, public relations, expanding customer loyalty, product feedback, newsletter subscriptions, building blogger relations, or increasing website traffic.

Key Performance Indicators that truly matter

As sad as the truth may be. There are no uniform metrics, known as Key Performance Indicators, that determine success or failure in social media. Rather, it is necessary to relate quantitative and qualitative factors together with target group analyses and existing company key figures, in order to define objectives and measures for their achievement based on these. Every company has different objectives and individual metrics that are measured. Followers, shares, likes, retweets, and mentions are easy to determine. However, these are not truly meaningful. So how do you define so-called Key Performance Indicators?

Quantitative Measurement

This category includes the number of fans / followers and the number of user-provided information. In short: What does engagement with the brand or company look like? But these figures can be deceiving. High fan or follower numbers do not clearly indicate whether they are relevant to the company in any form.

Qualitative Measurement

It is more important to observe the interaction level and the general tenor. Are there mainly positive or negative comments, are there opinion leaders among the fans / followers, is company-relevant content being picked up, are there support requests indicating shortcomings? Has the ratio of positive to negative comments improved? In ongoing campaigns, the strategy can thus be easily adjusted. A loyal fan base will then also defend you in a crisis.

SOME WELL-KNOWN KEY PERFORMANCE INDICATORS

• Share of Voice = Total mentions of the brand / Total mentions in the industry (Brand + Competitor A, B, C…) How often is the brand / company mentioned compared to competitors?
• Sentiment Ratio = Positive : Negative : Neutral mentions of the brand / All brand mentions How often is a brand / company / product mentioned in social media within a specific period?
• Conversation Reach = Reach of posts in context to a specific topic / keyword This allows the development of a specific topic in social media to be measured.
• Active Advocates = Number of users who have communicated a positive contribution within a specific period / Total number of users Can be used very effectively to test campaign effectiveness and addresses the question of which users have spoken positively about a topic within a specific period.
• Issue Resolution Time = Total time required for inquiries / Total number of service inquiries This metric measures the response time to user inquiries and serves as an indicator of customer service efficiency.
• Topic Trends = Number of mentions of a specific topic / Mentions of all topics By calculating topic trends, trends can be easily identified.

Looking beyond the immediate

Once qualitative and quantitative figures in social media marketing have been determined, the real work begins, and the central question is: How do these figures relate to general corporate goals? And these, as is well known, are very diverse: an electronics manufacturer will measure in sales figures, and an accommodation provider in overnight stays and consumption. Web analytics tools (such as Google Analytics) can be used very effectively to determine how many users find the website via social media and whether they are one-time or returning visitors. Sales completions of any kind can be tracked, and the impact of campaigns analysed.

However, not much happens overnight. Social media relations serve to build a long-term reputation, generate leads, and increase conversions. Short-term activism — if well executed — can temporarily boost sales figures, but is too one-dimensional in the long run. Take Twitter as an example. Compared to Facebook, there are only limited opportunities for integrating various prize draws. In contrast to Facebook Ads, one has to dig very deep into their pockets for Promoted Tweets. However, Twitter is excellent as a service channel for customer inquiries, or for implementing cross-media campaigns, and is a communication medium where one can directly interact with the user.

In conclusion, one can say: results can be measured, but there is no universal magic formula. Concrete analyses are individual. Classic advertising impact calculations lose their effectiveness with the complexity of social media. The focus is on sustainable interactions, which, based on predefined objectives, are also measurable.