To follow on from last week’s post about how essential having a social media strategy is to business, here is an interesting article by David Rogers about how to measure your social media and digital marketing activity.
With social media and digital marketing, simply doing it is not enough. You need to be able to measure your outcomes to determine if what you are doing is the best possible use of your time and resources. As David says, one of the most exciting aspects of digital marketing is its measurability. His article breaks down the data into three types and is a great starting point for anyone wanting to use more structure and strategy in their social media and digital marketing activity.
How to Know If Your Social Media Is Paying Off
By David Rogers
Just because you can measure your digital marketing does not always mean it is easy to know if your efforts are paying off. Sure, you’ve added a thousand Facebook fans, but how much are those Facebook fans worth? How much value is your blog generating for your firm? Much as we might wish for it, there is no single “silver bullet” metric to measure the impact of all digital marketing in a single bold stroke. Instead, businesses need to develop a variety of metrics to measure the return on their own digital marketing efforts.
The first key to developing good metrics is to know your objectives. Are you trying to support market entry and drive awareness of a new product line? To build a relationship and maintain loyalty among your existing customers? To reduce the cost of customer service by helping customers help each other in an online community?
Secondly, understand how close your metrics are to measuring a financial value delivered to your business. Some digital metrics measure firm value quite precisely, whereas many others are almost useless. I find that it is helpful to think of digital marketing metrics as falling into one of three broad stages:
Stage 1: Activity Metrics
This is the lowliest level of digital metrics. By definition, an activity metric is one that really only tells you that “something is happening.” Classic examples are: number of page views, site visitors, Facebook fans, or members joining your online brand community. Not that you should ignore these numbers or fail to gather them (they can be helpful in tracking trends, and benchmarking). But you should never be satisfied with activity metrics alone. Don’t get stuck on stage 1.
Stage 2: Engagement Metrics
An engagement metric is anything that measures the level of your customer’s involvement, attention, and commitment. Examples could include: average time spent by members in your online community, percent of Facebook fans who “like” or comment on your wall posts, or the number of ideas actually submitted to your innovation sourcing site. Engagement metrics are much more meaningful than activity metrics. And in some cases, they may be the best measure that you can get. (It’s hard to ever know how many cars were sold because 20,000 people “liked” your pre-launch product photos on Facebook). At the same time, it is hard to justify a major marketing investment on engagement metrics alone. So wherever possible, you want to reach beyond stage 2 to the next stage.
Stage 3: Business Metrics
Business metrics measure the impact of digital marketing on critical business outcomes: your KPIs (key performance indicators), or ROI (return on investment). Business metrics could include direct sales through a digital channel, lead generation, or cost savings to existing business processes. What was the business value achieved, perhaps in terms of new sales, better customer retention, or increased market share? Business metrics allow you to optimize your digital efforts, compare their results with traditional marketing activities, and decide how to best allocate resrouces.
It’s critical to make sure you know which stage of metrics you are operating at. Because only when you get to stage 3 can you actually answer the most important question: is my digital marketing paying off?
David Rogers examines the five core strategies of successful networked businesses in his newest book, “The Network Is Your Customer: Five Strategies to Thrive in a Digital Age.” He teaches Digital Marketing Strategy at Columbia Business School, where he is Executive Director of the Center on Global Brand Leadership. Rogers has advised and developed marketing and digital strategies for numerous companies such as SAP, Eli Lilly, and Visa. Find him on Twitter at http://twitter.com/david_rogers
Read the original article on the Bnet website by clicking here.