This post is part of the Social ROI Blog Carnival at Think Customers: the 1to1 Media blog. Visit the blog carnival post at the link above to check out the full list of posts from numerous well-known social media thought leaders.
There are many ways to measure the success of social media at an organization. Some of these metrics are often focused only on tactical results (ex: number of followers or fans). Other metrics tie directly back to the bottom line (ex: value of sales coming directly from Twitter). On occasion, we see true ROI calculated from social media initiatives.
Most companies, however, view social media ROI in the same way they view the legendary pot of gold. They believe that it is there, and they keep looking for it even though it eludes them. Finding ROI in your social media initiatives doesn’t have to be imaginary. As we move into 2012, I fully believe this will be the year that executives begin asking the difficult questions to their social media teams, including what kind of returns they are getting on their social media investment. In order to answer this question, one must consider the true cost of managing a social media program.
What are the costs?
In order to consider calculating ROI, one must understand the costs involved with social media. Some of these are fairly clear, including cost of the platforms (such as community software or social media monitoring tools), cost of social media consultants or agencies (to help create strategy or execute campaigns), advertising spend (yes, you probably need to spend money advertising your social media efforts), and cost of personnel involved in social media (community manager, customer service social response team). Other costs are not quite as obvious. These include the opportunity cost of personnel that may be involved with social media in some aspect (ex: an executive spending time writing a monthly blog post is not spending time doing other things), the cost of training employees in social media (even those that are not executing social media should be trained on it), and the cost of social media influencer programs. I encourage you to understand these costs for both social media campaigns as well as your overall social media program so ROI can be calculated on both.
Measuring the gains
There is more than one way to measure the gains from social media. The first area that usually comes to mind is revenues; this is often a bit difficult to determine from social media, much as it can be difficult to determine from other marketing programs. However, the fact that social media is a web-based activity gives companies (especially those in the Business to Consumer space) the opportunity to measure actual product purchases coming from social media. Dell is one of the most commonly cited examples of this from their Twitter Dell Outlet account. Sanuk is another example. Per social media manager Rachel Gross (shared in an interview I did with her for my book, p. 44-46), even though Sanuk doesn’t often post direct links to their website from their corporate Facebook page, they are able to track conversion rates. They do this by looking at how many visits to their website (via Facebook) result in a sale, thus measuring their return on using social media as an engagement tool.
The other side of the coin from revenue is cost savings. One of the largest areas where companies can find significant returns on their social media investment is in customer service and the use of online branded communities. Most brands that host a peer-to-peer support community find that they are able to directly measure the number of calls deflected as a result of the answers provided by community members to each other; this occurs for both B2C as well as B2B businesses. Companies such as Best Buy and Verizon (where I was most recently actively engaged in this as the community program manager) see these gains and are able to use them to calculate an ROI on their communities. While we are on the subject of online communities, there are other benefits that can factor into the ROI equation. For example, Verizon’s residential community also has an Idea Exchange, where customers have the opportunity to help Verizon improve their products and services, as well as innovate around new products. The returns for such a community can include additional sales from new products as well as improved uptake of existing products with current customers due to improvements made via the idea site.
Finding the Pot of Gold
While you may not find the elusive “pot of gold” in your social media programs right away, more than likely you will see both direct and indirect benefits by engaging with customers and prospects via social media. Hopefully this post has helped you get past thinking only about the numbers of followers and fan your sites have. Read some of the other posts in the Social ROI Blog Carnival to learn how you can better answer your executives when they ask you what your company is getting out of social media, and let me know what your key takeaway is from the carnival.
(Photo credit: DNY59)

As many of you know, I teach a popular class at UC San Diego Extension on Marketing via New Media. I help my students understand how to look at social media as an opportunity to build relationships with customers rather than just as a campaign or tactic to “increase buzz”. This summer, I had 



















Thank You! Celebrating my blog’s 2 year anniversary
Customers Rock! Blog Year in Review
- To date, I have written 270 blog posts (including this one) with 1565 comments – woo hoo!
- I moved my blog to my own domain, CustomersRock.net (with the help of Joel – thanks!)
- I did quite a bit of speaking, both locally as well as at great events such at BlogWorld and Marketing Profs Digital Mixer. I got a chance to meet (and video) quite a few wonderful bloggers as well, so thank you to all!
- Jay Ehret and I started the Re-Experiencing Starbucks project to chronicle the change agenda from Howard Schultz to see how it impacted the customer experience. (Note – while those postings have slowed down, at least on my end, expect to see a nice year-end wrap on this soon.)
- I once again participated in the infamous Bathroom Blogfest to discuss how the customer experience extends even into forgotten places!
- I had four marvelous guest bloggers this year: Brian Solis, Esteban Kolsky, Colin Shaw, and Eric Brown. Thank you all for the time you gave my readers.
- I started teaching the UC San Diego class Marketing via New Media; this has been really fun! I also started a blog to chronicle my journey there Teaching Social Media. The blogs of the students are there, too.
- I joined Brickfish as their Director of Social Media. Brickfish helps major brands connect with their customers via the social web and turbo-charges word of mouth from brand evangelists. Plus, you can watch it all live on their Viral Map (this is an example from a current campaign with Microsoft “I’m a PC”). Very cool!
The Biggest News
The biggest news of all is YOU, my Customers Rock! readers. I have enjoyed talking with you over the past two years, and I am looking forward to many more conversations in the years to come! I really want to thank each and every one of you, but I only really know who you are when you leave me a comment.
So – I created a list of my commenters, in chronological order, from the first day of my blog up until now. I have linked to your blog/website if you left me one. It was great fun to look back at all of those who have turned Customers Rock! into a two-way conversation and to see how many I am still active with two years later!
This list of commenters also makes for a great read for the upcoming holidays of some very worthy blogs (those in my feed reader are marked with an asterisk *)! This is my gift to all of you this year.
Thank you again for your continued support. You all rock!
(Photo credit: antony84)
Commenters on Customers Rock! (and also a great blog reading list!!)
* Mack Collier (Thank you for being my first commenter, Mack!)
* Gavin Heaton (Thank you for being my first international commenter, Gavin!)
* Kevin Hillstrom
* C.B. Whittemore
Anne Simons
Marc Rapp
* Doug Karr
* Roberta Rosenberg
Sue Crocker
* Maria Palma
Tammy Vitale
* Lewis Green
* Meikah Delid
Steve Miller
Luis de Paiva
Rich G.
* KG
* Tim Jackson
KSAdams
* Jordan Behan
* Laurence-Helene
Bob Glaza
* Tom Vander Well
* Glenn Ross
* Ron Shevlin
* Douglas Hanna
* Maki
* Dale Wolf
* Mike Wagner
* Phil Gerbyshak
* Chris Brown
Robyn McMaster
* Drew McLellan
Troy Worman
Ugyen
Louiss Lim
Maryam in Marrakesh
Adnan
Chris Cree
Kermitfan
Marc Gregory
* Valeria Maltoni
* Steve Woodruff
* Sandy Renshaw
Jeff Brooks
* Lolly
* Roger von Oech
Paul McEnany
* Amy Jussel
Robbie Wright
Ryan Karpeles
* Doug Meacham
Ron E
* Robert Hruzek
* Joe Rawlinson
Threethan
* Jim Kukral
* Toby Bloomberg
Stacy Madison
* CK
Janet Green
Andrew
Bob
Natalie Ferguson
* Geoff Livingston
* Roger Anderson
Chris Clarke
* Christy Brewer
Delaney Kirk
James Taylor
Adam Kayce
David Koopmans
Laura
* Ann Handley
Jake McKee
Rachelle Lacroix
* Patrick Schaber
* Kevin Dugan
Martin Jelsema
* Paul Schwartz
Bill Bluel
Sylvia Martinez
Chad
* Katie Konrath
Nancy Heifferon
* Stephanie Weaver
Enrique Burgos
* David Armano
* Daksh
Anders Rask
Jeffrey Jackson
Uwe Hook
Jill Konrath
Daniel Sitter
Cord Silverstein
* Suzanne Obermire
Carolyn Manning
* Jay Ehret
* Mark Hurst
Mark E
* Terry Starbucker
* Rosa Say
NAJ
Crafty Bernie
Matt Havercamp
Dan Neely
Teri Isner
Ben Thompson
Jack Jia
* Anita Bruzzese
Maureen Valdes Marsh
Hajar
Anne Libby
* Connie Reece
The Knitting Bee
* Peter Kim
Andrew
Jonathan Treiber
Hank Brigman
Pat Fisher
Scott
* Dan Schwabel
Karin H.
Frank Phelan
* Doug Fleener
Darcy Moen
Brent Applegate
Sabine
Hari Vasilev
L.P.
Dan NessDarren Patrick
Joe Provenzano
German Parra
Jon Burg
* David Morse
Scott
* Bradon Caudle
Bill Gammell
Jeff Vincent
Richard Binhammer
Amber
Lissa Bergen-Boles
Brandon M
Wes
Mark
typestries
bsilvia
Jeronimo
Jeffrey Long
* Andy Nulman
* Kami Huyse
Rachel
David Reich
* Anna Farmery
Jeanne Dininni
Albert F A Matthews
Marc Karasu
Brit
* Olivier Blanchard
* Esteban Kolsky
Jen
* Chelle Parmele
Rebecca Caroe
Chris Wilson
Peter Fankhaenel
* Matt Dickman
* David Brazeal
Ahndunk
Boring Market
Justin
Marc
Gordon Whitehead
Julie
Erin Cavallo
Aaron Kahlow
Elaine Fogel
Dawn Hobbs
Micha
* Mike McDerment
* Tsufit
Kelvin Leung
* Todd Andrlik
Jack Shipley
Scott Howard
* Nancy Arter
Campbell Moore
Bhuwan
Jack
* Charlene Li
Ron Weber
* Josh Bernoff
Eric BrownJohn Gillett
Vicki Flaugher
Graham Hill
* BJ Cook
Ravi Kiran
Beth
Lee Jordan
* Sybil Stershic
Bonnie Larner
Leo Bottary
Curt
* Stephanie Gulley
Chuck
James Shields
Alison Terrell
GL Hoffman
Joseph Young
Paul
Kamal Kumar
Chris
Jimmy Hendricks
John Maver
* Pam Brown
Kathleen
John
Christine Morrison
Priyanka
Stephen Hampshire
Bernhard
Nathan Poling
ascanlar
Liz Walker
Kenny Lauer
Kristina Evey
Jody Reale
Paul Blunden
Elizabeth
* Colin Shaw
Chuck Van Court
Jeff Whitton
Matt Wilson
Mark Krupinski
David Tinney
naranjadude
Mark David
* Nicoletta Staccioli (one of my students!)
* Marji Chimes
Ryan Graves
Sarah Hughes
* Susan Abbott
Faris
Graham Brown
Sandeep Arora
Chad Horenfeldt
Shahar Boyayan
Maria Elena Duron
Allan Young
Robert