Post by Dr. Marsha Firestone, contributing Women On Business writer
Return on Investment or ROI is a profitability measure that evaluates the performance of a business. One of the most common ways to determine ROI is to divide net profit by total assets. ROI on social media would be calculated by the money you put into different social media outlets and the business you get in return. However, ROI isn’t just based on the money you get from social media, it is the influence you gain and the connections you make.
When joining social media sites such as Twitter, Facebook and LinkedIn, you are expanding your company’s reach. You now have a larger audience to speak to, and more potential clients to gain. Social media success does not happen over night. If you are just starting to tread the waters of social media, don’t expect the rewards to happen immediately. It takes time and effort put in for a few months before you can measure your Return on Influence from social media.
At this time, there aren’t any tools to specifically measure the influence on your business from your involvement in the social media world. However, if you are on several different sites, have your own blog, and you update them frequently, that is an excellent start. For example, by just having a Twitter account, you are not going to reach new clients. It is necessary to Tweet often, and follow other important businesses. You want to get involved in conversations, make new connections, and build relationships. These sites allow you to connect directly with current clients as well as potential. You have the access to gain first hand feedback directly from them.
One tool that can help in analyzing your social media impact is Twitalyzer. It allows you to evaluate your activity on Twitter to get an idea on your influence. Google Analytics is another tool to consider. It basically analyzes the visitors to your sites (website, blog, etc.). You can see how many people per day click on the site, how long they stay on the site, and how they got there, whether directly, from a search, or linking from a different site.
In the end, if your social media efforts are leading people to your website, where they can potential buy your goods or services, and you have made new connections, then it is likely that you are on your way to a high ROI.