jim.hamill@energise2-0.com

Measuring Social Media Performance and Business Impact (Part 1)

Social Media Performance Measurement

Introduction

Brian Solis and Charlene Li, in their State of Social Business 2013 Report, argued that social media/social business initiatives in most organisations lacked a strong strategic foundation. Only 17% of companies claimed that their social strategy was ‘mature’. The failure to adopt a strategic approach to social may be even more pronounced on this side of the Atlantic. Our own research suggests that fewer than 10 per cent of organisations have an agreed digital strategy in place.

Two of the main barriers to the adoption of a more strategic approach to social are the lack of senior management awareness and understanding of the business benefits to be derived and the key steps involved in developing, implementing and managing an effective social media presence.  A third reason, in our view, is the absence of an agreed framework for measuring social media performance and business impact.

To convince reluctant executives of the need to commit additional resource to becoming a social business, a robust Performance Measurement System is required – one that establishes a close link between social initiatives and the achievement of agreed business goals and objectives.  As social media moves towards becoming mainstream, a robust framework for monitoring on-going performance and business impact is required.

This paper presents a suggested approach to social performance measurement built around a Six I’s Framework.  Parts 2 and 3, to be published over the next few weeks, will provide highly practical advice in implementing the Framework focusing on the measurable KPIs you can use and the range of performance monitoring tools available.

Social Media Performance Measurement

The topic of social media performance measurement is an emerging and somewhat controversial one.  It is far from being an exact science.

Our review of recent writings has identified five different schools of thought:

  • Social media is a waste of time. It delivers no real business benefit: therefore, does not need to be measured
  • Social media is ‘cool and funky’. The benefits are obvious: therefore, does not need to be measured
  • Social media has the potential for delivering real business benefits but these are intangible and cannot be measured: therefore, we will stick with tried and tested marketing channels and campaigns
  • It’s all about engagement. We can measure the performance of social media through number of likes/followers, shares, RTs etc
  • The Return on Investment Camp – we need to measure the performance of social media using traditional ROI approaches e.g. ROI (%) from Social Media = Net Profit/Investment x 100

There are major flaws in each of these schools of thought. Social media, implemented effectively, can deliver real business benefits to any organisation.  Performance is measurable and a wide range of measurement tools are available. What is missing is a robust framework for linking social media performance to agreed business goals and objectives.

The Six I’s Social Media Performance Framework

This section presents our Six I’s Social Media Performance Framework. The Framework has been derived from the Balanced Scorecard approach we use when developing and implementing effective social media strategies for client organisations.

The two main strengths of the Framework are:

  • The close link established between ‘Lead’ and ‘Lag’ measures, between social media drivers and ultimate business impact – see Figure 1 below. Social media success is not a business objective in its own right. However, it has become a major driver of future business performance
  • The recognition that social media performance can be measured. However, it requires the adoption of a much wider, medium-to-longer term perspective compared to the more traditional and short-term ROI approach to measuring business impact

Figure 1: Balanced Scorecard – Lead and Lag Measures

 Social Media Balanced Scorecard Lead and Lag Measures

                  Source: the authors

Taking a medium-to-longer term perspective, a fundamental premise of the Six I’s Performance Framework is that the three main foundations of sustained growth and profitability for any company are:

  • The quality of its customer base
  • The strength of the relationship it has with quality customers
  • The company’s ability to leverage that relationship e.g. ‘up’ and ‘cross’ sell

In a social media era, sustained business success is becoming increasingly dependent on:

  • The quality of your online network
  • The strength of the relationship you have with this network
  • Your ability to engage with that network for business benefit

Based on the above, the primary objective for any organisation in developing and implementing an effective social media strategy should be to build a quality online network – a strong network of high value, high growth potential loyal customers, partners and other stakeholders.  The Six I’s approach takes this fully into account. Rather than focusing on the impact of social media on short-term sales (as important as that is), the driving force should be to establish a strong online network to support sustained long-term growth and profitability.

The 6 I’s are listed below and shown in Figures 2 and 3:

Lag measures (ultimate business objectives):

  • Insight – actionable customer insights derived from Social Media Listening
  • Impact – business impact especially in three main areas; increased sales, reduced costs (improved marketing efficiency and effectiveness) and building a quality customer base

‘Lead’ measures (social media drivers):

  • Involvement – network numbers & quality, time spent, frequency, personas, demographics & geography
  • Interaction – actions they take – read, post, comment, reviews, recommendations, social shares
  • Intimacy – affection or aversion to the brand, community sentiments, opinions expressed, shares
  • Influence – reach and advocacy, quality of your extended network

 Figure 2: The 6 I’s Framework for Social Media Performance Measurement

Six I's Social Media Performance Framework

Source: the authors

Figure 3: Lead and Lag Performance Measures

BSC Social Media Lead and Lag Measures

Source: the authors

The 6 I’s are not abstract, difficult to measure concepts.  They can be measured to a very high degree of accuracy, at least for the four main ‘Lead’ drivers.  Post 2 will cover the KPIs you can use to measure Involvement, Interaction, Intimacy and Influence for individual social media channels and overall ‘buzz’ across multiple channels.

Over the last few years, significant improvements have taken place in the availability of software tools for monitoring social media performance. These will be discussed in Post 3.

As always, comment and feedback on this article are very much welcome.  Do you think the Six I’s approach is useful? Could you apply it in your organisation?

Jim and Vincent

@DrJimHamill
@VHSocialMedia

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