Practical Tools for Measuring the Impact of Social Media Use

A recent AIIM study [1]  found that 51% of respondents consider social media to be an important factor that may contribute to improved customer service levels and productivity.   For example, 48% of organizations surveyed indicated that deployment of social media technologies resulted in improved internal processes such as better collaboration across different functional groups.

 

While the application of social media in corporate environments is in the early adoption phase there are best practices and tools to assist in the measurement of their value add.   Of particular note is the AIIM Report on “How to Conduct a Social Business Assessment” and the related AIIM social business roadmap[2].  Together these reports provide a framework for how to effectively implement and operationalize the assessment of the value of social media, what information to gather and how to analyze it.  The social media road map lays out a structured approach consisting of eight (8) steps “to help organizations effectively develop social business processes.” These steps include emergence, strategy, development, monitoring, participation, engagement, governance and optimization.   

In the emergent phase the use of social media tends to grow in the absence of formal policy.  Nonetheless, its adoption should be encouraged: “Management should provide visible support through public acknowledgement and recognition, for example by publishing good ideas on the intranet or even by providing material rewards.”  Experimentation in the form of prototyping is useful to “determine whether there is value to its use beyond the novelty or “coolness” factor.”

The strategy and development phases should encompass an assessment of the organizational objectives for the integration of social media technology within legacy IT applications such as identifying target audiences – internal and external, establishing intended outcomes such as direct and indirect benefits measured in terms of increased revenue, decreased operating costs, increased productivity and improved job satisfaction.  The impact of social media should also be taken into consideration.  Will its use foster improved knowledge sharing among employees?  Will it be embraced by management as use of social media tends to challenge traditional organizational hierarchies?  Equally important is an understanding of how the application of social media will impact brand equity with external stakeholders?  How its use will engender improved customer relationships and perceptions about the company?  An overarching consideration is the need for clearly articulated and communicated social media governance that should include social media policy, terms of use, security and privacy considerations.

The challenge in measuring social media effectiveness lies in the monitoring and optimization phases.  What are the relevant metrics?  Are there hard metrics to measure or they are mainly soft metrics such as sentiment analysis, brand perception, customer or constituency satisfaction?   Is there a hard ROI associated with social media?  For instance customer life time value (CLV) measure not only the financial benefits associated with a single purchase but the likelihood of additional services or referrals by a customer as a result of more persistent engagement through the application of social media technologies.  Another useful metric is new customer value (NCV) by tracking conversions from click through to sales.  Or you may measure customer service value (CSV) that tracks customer sentiments monitor responses and interactions.  Social media ROI is then a function of the return on investment which is the sum of life time customer value, new customer value and customer service value less total spend on social media divided by total spend on social media.

The AIIM report concludes that “Organizations need to approach social business processes and technologies formally and methodically in order to ensure their success, just as with any other management project or process.”

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[1] http://www.aiim.org/Research/Industry-Watch/Social-Business-2011

[2] http://www.aiim.org/Social-Business-Roadmap