An Employee's Look at Social Media ROI
If you're a database marketer like me, you also find it difficult to listen to social media marketers proclaim that social media return on investment is something “bean counters focus on.”
Nobody is going to agree on the right set of metrics for determining if social media delivers an increase in sales and profit. But might we be asking the wrong question?
Assume it's time for merit increases, for example. You have to allocate a merit increase budget across your employee base. One of your employees is the pay-per-click manager, and she had a really good year. Working with a 5 percent decrease in the pay-per-click budget, she delivered a 15 percent increase in sales and a $475,000 profit increase — all compared to the year prior. Overall, you're happy with this level of performance, so you increase her salary by 10 percent.
Up next it's time to review the performance of the social media manager. How do you know if this individual had a good year? Well, there are a small number of metrics that are easy to calculate. This employee hosts the company blog, a blog with 900 subscribers and a total of 70,000 annual visitors. Five percent of the blog visitors clicked through to the company's e-commerce website, and 5 percent of these individuals purchased merchandise, spending a total of $22,000.
Your social media manager also hosts a company Twitter account, where 1,300 followers learn about products and discounts. The company's Twitter presence generated $6,000 in sales. Based on data you can “prove,” your social media manager generated $28,000 worth of demand.
If the social media manager is compensated at the same level as the pay-per-click manager, how much of a salary increase does the social media manager deserve to receive?
Such is the challenge with social media. The real argument isn’t about the ROI of social media; it's about how to value the efforts of one set of employees vs. another.
When I led the database marketing department at Nordstrom, I kept a scorecard that quantified the incremental profit each employee generated on an annual basis. Every employee was graded on the amount of incremental profit he/she generated on an annual basis. When all employees know that generating profit is important, intriguing collaborations occur. The email marketing manager works closely with the business intelligence manager, for example, both attempting to create profitable sales for the company.
And when the CMO wanted to eliminate positions, I simply pulled out the scorecard and asked him which profitable activity he wanted to eliminate.
Needless to say, job security is protected when you can point to tangible increases in profit.
For social media managers, it isn’t critical to tie tweets to profit. But it is important to find a set of metrics that prove the value of the employee. CMOs need to know that if the employee is no longer with the company, a certain set of metrics will begin to turn negative — and that's a "bad" thing.
So, my social media friends, what are the metrics that'll help you be compared on equal footing to your marketing co-workers? In next week's column, I’ll consider some of the metrics that a social media manager might publish to be compared with other employees on a fair basis.
Kevin Hillstrom is president of MineThatData, a database marketing consultancy. He can be reached at firstname.lastname@example.org.