Monthly Archives: March 2012

Establish Key Performance Indicators for Social Media

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Establish Key Performance Indicators for Social Media

In our previous post, Understand the Social Media Maturity Stage of Your Organization, we suggested that emphasizing Return On Engagement (ROE) rather than ROI may be appropriate for social media, especially inside the enterprise. In this post, we take a brief look at Key Performance Indicators (KPIs) that you should consider to help measure social media performance.

Key StatueAttributionShare AlikeSome rights reserved by william.neuheisel

Establish KPIs

Your Key Performance Indicators are not going to be the same as someone else’s. You need to determine what your organization’s goals are and how you are going to measure them. But to get you started, here’s eConsultancy Editor in Chief Chris Lake’s list[1] of 35 KPIs:

Key Performance Indicators
Alerts (register and response rates / by channel / Click Through Ratio / post click activity) Profile (for example, update avatar, bio, links, email, customization, and so on)
Bookmarks (onsite, offsite) Print page
Comments Ratings
Downloads Registered users (new / total / active / dormant / churn)
Email subscriptions Report spam / abuse
Fans (become a fan of something / someone) Reviews
Favorites (add an item to favorites) Settings
Feedback (via the site) Social media sharing / participation (activity on key social media sites, for example, Facebook, Twitter, Digg, etc)
Followers (follow something / someone) Tagging (user-generated metadata)
Forward to a friend Testimonials
Groups (create / join / total number of groups / group activity) Time spent on key pages
Install widget (on a blog page, Facebook, etc) Time spent on site (by source / by entry page)
Invite / Refer (a friend) Total contributors (and  percent active contributors)
Key page activity (post-activity) Uploads (add an item, for example, articles, links, images, videos)
Love / Like this (a simpler form of rating something) Views (videos, ads, rich images)
Messaging (onsite) Widgets (number of new widgets users / embedded widgets)
Personalization (pages, display, theme) Wishlists (save an item to wishlist)
Posts

Establish Key Performance Indicators for Social Media is the 48th in a series of excerpts from our book, Be a Person: the Social Operating Manual for Enterprises (itself part of a series for different audiences). At this rate it’ll be a long time before we get through all 430 pages, but luckily, if you’re impatient, the book is available in paper form at http://bit.ly/OrderBeAPerson and you can save $5 using Coupon Code 62YTRFCV

See the previous posts What is Social Media?, Social Sites Defined, Why Social Media? How is Social Media Relevant to Business? First Steps Toward a Social Media Strategy, and Decide What Your Business Will Do About Social Computing, pt. 1

Next up: Assign a Social Media Monitor

[1] Chris Lake is Director of Innovation for eConsultancy: bit.ly/cFjEe4

Understand the Social Media Maturity Stage of Your Organization

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Understand the Social Media Maturity Stage of Your Organization

In our previous post, Emphasize Share of Conversation to Measure Social Media, we wrapped up our look at various social media metrics with Share of Conversation. In this post, we turn to the topic of whether your organization is ready for social media.

Maturity GraphAttributionShare AlikeSome rights reserved by guaravanomics

Social media expert Brian Solis, one of our favorite pundits, argues that until an organization’s social media practice has matured, discussions of the return social media delivers may be premature. Here are his ten stages of social media maturity,[1] as modified by us. Which stage are you at?

  • Stage 1: Observe and Report
    We call this Social Media Listening — Your organization starts to track what is being said online and reports back to executives
  • Stage 2: Setting the Stage + Dress Rehearsal
    You’re beginning to develop your social media presence by creating accounts on the popular social sites. You may begin to track numbers of followers and set targets.
  • Stage 3: Socializing Media
    We call this Joining the Conversation — You start to pay attention to how your community reacts to you and use this feedback to improve future engagement. You begin to converse with your community and identify supporters, and begin to track friends, fans, followers, conversations, sentiment, mentions, traffic, and reach.
  • Stage 4: Finding a Voice and a Sense of Purpose
    You begin to understand your community, their goals and interests, and start to integrate their ideas and energy into your efforts. You begin to track sentiment, including negative and neutral commentary, and monitor trends in responses and ultimately behavior. You begin to focus your efforts on particular social media areas that are most relevant and productive rather than trying to be everywhere.
  • Stage 5: Turning Words Into Actions
    Characterized by empathy and sense of purpose, in this stage you begin to truly understand your community, their challenges, objectives, options, and experiences, and better connect with them. You start to communicate strategically as you better understand how the community reacts to you.
  • Stage 6: Humanizing the Organization and Defining the Experience
    We call this Be a Person (Not an Organization) — You realize that your brand and your reputation is embodied in your people, and feel comfortable letting their voices be heard. Your story migrates from person to person, and evangelists are shaping it. In redefining the experience of new community members, prospects and influencers, you essentially make over aspects of your organization.
  • Stage 7: Community
    Surprised that this stage is this far from the beginning? We’ve said earlier that community is one of the hardest, and most rewarding, things to create online. Solis defines community as an investment in the cultivation and fusion of affinity, interaction, advocacy and loyalty that is earned and fortified through shared experiences. You proactively reach out to ideal participants and potential ambassadors, becoming social architects, building the roads necessary to lead people to a rich and rewarding network, full of valuable information and connections.
  • Stage 8: Social Darwinism
    Solis says that social media as practiced in the earlier stages is not scalable. To survive, the organization must integrate artful listening, community building, and advocacy that aligns with the organization’s ability to adapt and improve its products, services, and policies. This means external collaboration cannot evolve unless internal collaboration with stakeholders inside and outside the organization keeps pace. Solis describes the transformation as an integrated and interconnected network of evangelists that must work internally to ensure that the organization is responding to its community.
  • Stage 9: The Socialization of Business Processes
    Multiple disciplines and departments will socialize, and the assembly or adaptation of infrastructure is required to streamline and manage social workflow and develop a Social Customer Relationship Management (SCRM) system within the organization. The key concept is that all people in the community are equal, which is a concept far removed from the way most organizations operate today.
  • Stage 10: Business Performance Metrics
    From the cry to find the ROI of social media, we’ve come to the realization that the metrics of the entire organization must change to support the preceding transformations. Solis says, “make no mistake: Social is measurable, and the process of mining data tied to our activity is extremely empowering. Our ambition to excel should be driven through the inclusion of business performance metrics, with or without an executive asking us to do so. It’s the difference between visibility and presence. And in the attention economy, presence is felt. [ . . . ] Stage 10 reveals the meaning and opportunity behind the numbers and allows us to identify opportunities for interaction, direction, and action.”

You may be thinking this is more than you thought you signed up for when you decided to try to use social media in your organization!

It’s very conceivable that Solis is mistaken in this vision of organizations transformed by going social. He could also be right. There are lots of social media thinkers who tend to agree that social media is, and will be, much more than just another communication channel for external relation­ships.

One thing is sure, however: You will find implementing social media for external relationships much easier and much more rewarding if you also adopt social media for internal relationships.

Just listen to Manish Mehta,[2] Dell’s Vice President, Social Media and Community:

Today’s corporate leaders are struggling to figure out how to use social media to further their business strategy. At Dell, we believe this is backwards thinking. Social media isn’t a means to further a corporation’s strategy; it’s a means to help determine it.

So if you are wondering about how to leverage Twitter, Facebook, blogs, forums, and the company Website to achieve your organization’s goals, perhaps you are starting from the wrong point. As with the corner store, if your business uses social media to engage in conversations on a human level, you strengthen your business and allow your strategy — both corporate and social media — to evolve based on customer feedback.

“Mom and Pop” knew that their business was only as successful as their relationships with customers could make it. That’s the value of the direct connection to your customer, and that’s how every company can achieve success using social media — by facilitating the conversation. No strategy necessary.

Make sure you thoroughly understand the commitment your organization must make to properly implement and benefit from social media. Half-measures taken by a less-than-committed organization could conceivably do more harm than good, as several examples we present in our Social Media Hall of Shame demonstrate.

Understand the Social Media Maturity Stage of Your Organization is the 47th in a series of excerpts from our book, Be a Person: the Social Operating Manual for Enterprises (itself part of a series for different audiences). At this rate it’ll be a long time before we get through all 430 pages, but luckily, if you’re impatient, the book is available in paper form at http://bit.ly/OrderBeAPerson and you can save $5 using Coupon Code 62YTRFCV

See the previous posts What is Social Media?, Social Sites Defined, Why Social Media? How is Social Media Relevant to Business? First Steps Toward a Social Media Strategy, and Decide What Your Business Will Do About Social Computing, pt. 1

Next up: Establish Key Performance Indicators for Social Media

[1] The 10 Stages of Social Media Business Integration:bit.ly/9fUxlG

[2] Isn’t the Value of Social Media What Business Is All About?: huff.to/cUcQ7b

Emphasize Share of Conversation to Measure Social Media

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Emphasize Share of Conversation to Measure Social Media

In our previous post, Return On Engagement is Not a Numbers Game, we delved a little more deeply into ROE. In this post, we take a look at another social media metric, Share of Conversation.

AttributionShare AlikeSome rights reserved by procsilas

Emphasize Share of Conversation

We’ve seen that Return On Engagement is a social computing metric you can use to measure how you’re doing with your own community. And that’s great. But no matter how well you’re doing, you must remember that your community members spend 99.99 percent of their time on other Websites.

Not only do they spend most of their time away from you, they may be talking about your business in other venues. Thus you may be able to learn a lot about how to improve your ROE by looking at how others are addressing the community.

Part of wanting to know about the competition is, frankly, driven by ego, and it’s a story that started with a different type of measurement in the 1920s.

A young engineer named Art Nielsen was finding it hard to sell his concept of measuring sales by count­ing cans on drugstore shelves. (Yes, the term bean counter was coined to refer to Nielsen’s auditors, who counted cans of Campbell’s beans for Nielsen’s first customer.) On a train ride on his way to make a sales pitch, Nielsen came up with a concept to overcome the objection he often heard from prospects: “We’re doing just fine. Sales are good.”

The concept Nielsen invented was market share, and it was a success because now the self-satisfied mogul could see that his competitor was selling more — had a bigger share — and his now-bruised ego caused him to sign the contract.

The market share concept has been expanded and adapted into the social media metric known as Share Of Voice (SOV), defined as the number of articles, posts, tweets, videos or images where a brand and its competitors are mentioned, can certainly be used to stoke the ego-driven competitive fires, and often is in the commercial online world.

For example, a seminal post[1] by Marcel LeBrun, CEO of social media measurement service Radian6, recounts a Share Of Voice study of social media discussions about painkillers that found the following shares:

  • Tylenol 43.9 percent
  • Aspirin 24.8 percent
  • Advil 18.8 percent
  • Motrin 12.5 percent

If you’re Tylenol, you feel good; you’ve got a bigger share. You might think you dominate the online conversation.

If you’re Motrin, you may set a target to improve your SOV from the paltry 12.5 percent measured.

But this is the same ego-driven thinking that gave birth to market share. Looked at from a social media perspective, however, we realize that it really isn’t about the brands. It’s about the people — the community — whose problems the brands exist to solve.

Looking solely at SOV limits the field of measurement to a handpicked set of competitors, and misses the larger context — and larger opportunity to use social media.

To understand this context, take a look at a slightly different metric — Share Of Conversation (SOC) — which may be a more honest assessment of social media influence.

SOC can be defined as the degree to which an organization is associated with the problem it seeks to solve. Put slightly differently, SOC is the percent of all people talking about a problem online that are talking about you.

Thus SOC has a broader scope than SOV. SOV focuses only on a brand and its competitors, rather than the whole range of discussions about the problem, making it of limited use in truly understanding the needs of your community.

In the Tylenol/Motrin example, you might broaden your social media listening to track all conversations, for example, about arthritis. When the SOV analysis is redone as an SOC analysis, you get very different results. Tylenol has a miniscule share — 1.7 percent — of the conversations about arthritis, versus aspirin’s 98.3 share. The self-satisfied Tylenol brand manager who thought the brand dominated online conversations would be shocked to see Tylenol is barely in the game for arthritis.

The larger set of conversations is really where the opportunity is. Bob Pearson illustrates the difference between SOV and SOC in a great blog post:[2]

I’ve measured hundreds of brands online and I can tell you that share of conversation is routinely 20-40x higher in volume than share of voice. Here’s a few examples using Google search as a simple diagnostic tool, so you can do your own analysis after reading this post.

If you search Orbitz,[3] you find 8.14MM results, but travel has 770MM. Salesforce.com has 3.03MM, but cloud computing has 31.3MM. I’m writing today on a Latitude E4200 which has 3.14MM results, but laptops has 63.1MM. Even Google has 2.1 billion results, while search has 5.6 billion.

You can calculate Share Of Conversation for a given time period by counting the number of con­versations about your business and the subset of these conversations which also mention you. Divide your total (or your competitors’) by the overall total and express as a percentage.

But don’t stop there. Aren’t you curious about what people are saying in those conversations that aren’t about you? You can learn a lot about your community by tuning in to those conversations, and that learning can help shape a more successful social media strategy.

Improved social media measurement necessarily leads to improved social media listening. The more you measure your effect on your community, the more you’ll know your community, and the more you’ll want to listen.

You may be convinced. You may be ready to get your organization on the Cluetrain,[4] and improve your social media use through listening and measuring. But is your organization ready for this? We consider this in the next section.

Emphasize Share of Conversation to Measure Social Media is the 46th in a series of excerpts from our book, Be a Person: the Social Operating Manual for Enterprises (itself part of a series for different audiences). At this rate it’ll be a long time before we get through all 430 pages, but luckily, if you’re impatient, the book is available in paper form at http://bit.ly/OrderBeAPerson and you can save $5 using Coupon Code 62YTRFCV

See the previous posts What is Social Media?, Social Sites Defined, Why Social Media? How is Social Media Relevant to Business? First Steps Toward a Social Media Strategy, and Decide What Your Business Will Do About Social Computing, pt. 1

Next up: Understand the Social Media Maturity Stage of Your Organization

[1] Share of Voice study: bit.ly/2KI3qH

[2] SOV and SOC: bit.ly/sLC1v

[3] Orbitz search: bit.ly/d53RuB

[4] The Cluetrain Manifesto is a must-read: bit.ly/d3JKnQ

Return On Engagement is Not a Numbers Game

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Return On Engagement is Not a Numbers Game

In our previous post, Emphasize Return On Engagement to Measure Social Media, we  suggested that emphasizing Return On Engagement (ROE) rather than ROI may be appropriate for social media, especially inside the enterprise. In this post, we delve a little more deeply into ROE.


AttributionShare AlikeSome rights reserved by Michal Marcol

One thing to remember is that Return On Engagement (ROE) is not a numbers game; it’s a quality of interaction game. It’s not how many followers or community members you have that counts. It’s how well you do know one another? How likely are they to recommend you or to become evangelists for your organization? These are the returns you get from your engagement with your community. You’ll notice they differ from the typical Return On Investment types of measures you may be familiar with.

ROE’s differences from ROI are aptly summed up by Amy Sample Ward:
[1]

Table 1 — ROI vs. ROE

ROI

ROE
Asks how many Facebook fans you have Asks how many people are “liking,” commenting and sharing your Facebook content
Asks how many staff and how many hours Asks how many posts, updates, replies or individual responses
Asks how many email subscribers Asks how many people send you emails
Asks how much money you raise Asks how many people are campaigning on your behalf

Your organization may need to adopt a very important attitude shift in order to fully benefit from measuring ROE. It’s one of the organizational transformations that effective use of social com­puting demands: the shift from pushing out messages to engaging in conversations. Put bluntly: You can’t measure engagement if you aren’t engaging your community.

This is a lesson that many organizations have to learn as they transition from offline marketing to leveraging social computing.
The differences in measurement mirror the differences in attitude summed up by Mike Valentino,
[2] CEO of media promotion company TMPG Inc.:

Return On Engagement (ROE) is a concept that begs the question: Do you want your consumers to be active or passive. Put another way, do you want to pay X for a 30-second spot passively watched by 2 million prospects; or, for example, a special event, or a Web experience ignited by non-traditional radio techniques where 500,000 engage with the brand for seven minutes, then use Word of Mouth (WOM) to pass along their experience?

Valentino’s rhetorical question begs us to answer, “The Web experience.” Yet it may be hard for your organization to give that answer. Traditional push media — whether it be Public Service Announcements (PSAs) or push email campaigns — have worked for you before despite their low engagement factor. You’re comfortable with them, and changing modes to engage with your community, especially without the well-defined metrics you’re used to, may be difficult.

Jeremiah Owyang provides a list[3] of somewhat informal ROE measures that demonstrates the powerful insights you can get when you start engaging with your community. We’ve edited the list slightly and adapted it:

  • We learned something about our community we’ve never known before
  • We learned something from our community that we didn’t know before
  • We connected with a handful of community members like never before as they talk back and we listen
  • We were able to tell our story to community members and they shared it with others
  • We have a blogging program where there are more community members talking back in comments than there are posts
  • We have an online community where members are self-supporting each other and costs are reduced
  • We learned a lot from this experimental program, and paved the way for future projects
  • We gained experience with a new way of two-way communication

Ask yourself: If we were to receive these returns on our social media engagement, would that make our efforts worthwhile? The value of some of these insights is easily quantified in dollars (reduced support costs) others are hard to put a price on (learning something about your community you never knew — that could be priceless).

To derive benefit from using ROE, you need to decide what your goals are, and how to measure your performance against them.

Return On Engagement is Not a Numbers Game is the 45th in a series of excerpts from our book, Be a Person: the Social Operating Manual for Enterprises (itself part of a series for different audiences). At this rate it’ll be a long time before we get through all 430 pages, but luckily, if you’re impatient, the book is available in paper form at http://bit.ly/OrderBeAPerson and you can save $5 using Coupon Code 62YTRFCV

See the previous posts What is Social Media?, Social Sites Defined, Why Social Media? How is Social Media Relevant to Business? First Steps Toward a Social Media Strategy, and Decide What Your Business Will Do About Social Computing, pt. 1

Next up: Emphasize Share of Conversation to Measure Social Media

[1] Amy Sample Ward is a social media writer and consultant: bit.ly/cBB6NK

[2] Mike Valentino on ROE: bit.ly/bZCJLo

[3] Why Your Social Media Plan should have Success Metrics: bit.ly/crzTy2

Emphasize Return On Engagement to Measure Social Media

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Emphasize Return On Engagement to Measure Social Media

In our previous post, Using Online Promoter™ Score to Measure Social Media Effectiveness, we looked at various social media metrics. In this post, we suggest that emphasizing Return On Engagement (ROE) rather than ROI may be appropriate for social media, especially inside the enterprise.

Economics of Engagement

Emphasize Return On Engagement

Metrics such as Net Promoter Score, Online Promoter Score, and Return On Engagement attempt to do a very difficult thing: measure the quality and effect of relationships.

Think about that. Could you put a monetary value on your relationship with your friends? How about with your coworkers? Just as it is hard to quantify the strength and positive effect of your personal re­lation­ships, so it is difficult to measure the value of online relationships.

Add to this the very different nature of social media, including the Long Tail effect and you can see why there is controversy about how to measure social computing’s effects.

Return On Engagement is relevant not only for your external social media efforts, but also for your internal efforts. According to a 2008 study by Gallup, about 54 percent of employees in the United States are not fully engaged, and 17 percent are actively disengaged. Only 29 percent are engaged.[1] The Gallup organization says:

Research has shown that engaged employees are more productive employees. The research also proves that engaged employees are more profitable, more customer-focused, safer and more likely to withstand temptations to leave. Many have long suspected the connection between an employee’s level of engagement and the level and quality of his or her performance. Our research has laid the matter to rest.

Disengaged employees are more than inert drains on your resources. Employee disengagement is estimated to cost the U.S. economy as much as $350 billion per year in lost productivity, accidents, theft and turnover.

Positive management of internal ROE also will affect your success in your external endeavors, including social computing efforts. Gallup created the above graphic to show the effect of internal engagement on external engagement.

So the concept of ROE is useful outside and inside your organization, making it a doubly useful metric.

Emphasize Return On Engagement to Measure Social Media is the 44th in a series of excerpts from our book, Be a Person: the Social Operating Manual for Enterprises (itself part of a series for different audiences). At this rate it’ll be a long time before we get through all 430 pages, but luckily, if you’re impatient, the book is available in paper form at http://bit.ly/OrderBeAPerson and you can save $5 using Coupon Code 62YTRFCV

See the previous posts What is Social Media?, Social Sites Defined, Why Social Media? How is Social Media Relevant to Business? First Steps Toward a Social Media Strategy, and Decide What Your Business Will Do About Social Computing, pt. 1

Next up: Return On Engagement is Not a Numbers Game

[1] Many of the stats in the section come from the excellent article by Enterprise Engagement Alliance called ROE: Return on Engagement bit.ly/adtOW6

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Using Online Promoter™ Score to Measure Social Media Effectiveness

In our previous post, Using Net Promoter Score to Measure Social Media Effectiveness, we took a look at Net Promoter Score as a social media metric. In this post, we look at some other social media metrics, including Online Promoter Score.

Online Promoter Score chart

Using Online Promoter™ Score

One metric that has been shown to produce a positive correlation between online promoter measures and sales is Online Promoter™ Score (OPS), developed by Northwestern University and MotiveQuest.

According to MotiveQuest, OPS measures the number of people online who are recommending your brand to others combined with sentiment measures, which are a way to determine the attitude — sentiment — expressed in online postings. MotiveQuest says OPS differentiates persons who discuss more than one product and assigns a score to their most-favored brand.

MotiveQuest did an analysis[1] covering 16 months of data from January 2006 through April of 2007 for car company Mini USA. The graph above shows the correlation of the monthly change in online promoters for the previous month versus the change in sales. MotiveQuest claims that statistical analysis gives 99.8 percent confidence that the metrics are positively correlated.

Other Metrics

In 2008, the Interactive Advertising Bureau, an advertising industry group, created its Social Media Ad Metrics Definitions.[2] The IAB breaks social media into three categories, and applies different measures for each:

  • Social Media Sites — Defined by inherent functionality that facilitates the sharing of information between users within a defined network
  • Blogs — Used by individuals, groups or business entities to publish opinions and commentary on various topics
  • Widgets & Social Media Applications — Social media software programs designed to work on one or more platforms, for example, Facebook apps like Mafia Wars or Farmville

The social media metrics IAB defines comprise a whole long list that you can find online. We excerpt a few of the measures here to give you a flavor.

  • Unique Visitors
    • A unique individual or browser which has accessed a site or application and has been served unique content and/or ads. Reported unique visitors should filter out bots.
  • Cost per unique visitor
    • The total cost of the ad placement or application, divided by the number of unique visitors.
  • Return Visits
    • The average number of times a user returns to a site or application over a specific time period
  • Interaction Rate
    • The proportion of users who interact with an ad or application.
  • Time Spent(section, microsite, community)
    • The amount of elapsed time from the initiation of a visit to the last user activity associated with that visit. Time spent should represent the activity of a single cookied browser or user for a single access session to the Website application or other property. Most publishers consider a session continuous if and only if not broken by more than 30 minutes of inactivity.
  • Conversation Size
    • Number of Conversation Relevant Sites
    • The count of sites in the conversation whose content contains tracked conversation phrases
    • Number of Conversation Relevant Links
    • The count of links to (in-links) and from (out-links) content that contains tracked conversation phrases across all sites identified for and/or supporting the campaign plan
  • Conversation Reach
    • The number of unique visitors (monthly) across sites in the conversation
  • Author Credibility
    • Number of Conversation Relevant Posts on the Site
    • The number of posts on the site with content containing tracked conversation phrases
    • Number of Links to Conversation Relevant Posts on the Site

As you can see, there’s lots to measure, and lots of ways to tie metrics to your efforts. If you want to learn more about social media metrics, read Tia Fisher’s excellent survey of measurements on the eModeration blog.[3]

But we’d like to talk about a couple of other measures that are getting some interest: Return on Engagement and Share of Conversation. That’s what the next postis about.

Using Online Promoter™ Score to Measure Social Media Effectiveness is the 43rd in a series of excerpts from our book, Be a Person: the Social Operating Manual for Enterprises (itself part of a series for different audiences). At this rate it’ll be a long time before we get through all 430 pages, but luckily, if you’re impatient, the book is available in paper form at http://bit.ly/OrderBeAPerson and you can save $5 using Coupon Code 62YTRFCV

See the previous posts What is Social Media?, Social Sites Defined, Why Social Media? How is Social Media Relevant to Business? First Steps Toward a Social Media Strategy, and Decide What Your Business Will Do About Social Computing, pt. 1

Next up: Emphasize Return On Engagement to Measure Social Media

[1] MotiveQuest analysis: bit.ly/90gewK

[2] Interactive Advertising Bureau Social Media Ad Metrics Definitions: bit.ly/asRNe2

[3] eModeration blog: bit.ly/9450vS

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Using Net Promoter Score to Measure Social Media Effectiveness

In our previous post, Social Media – Replacing ROI, we took a first look at replacing ROI as the be-all, end-all metric for social media. In this post, we take a look at Net Promoter Score as a social media metric.

Net Promoter Score

Using Net Promoter Score®

According to netpromoter.com:

Net Promoter® is both a loyalty metric and a discipline for using customer feedback to fuel profitable growth in your business. Developed by Satmetrix, Bain & Company, and Fred Reichheld, the concept was first popularized through Reichheld’s book The Ultimate Question, and has since been embraced by leading companies worldwide as the standard for measuring and improving customer loyalty.

NPS is based on the value of a single customer to an organization. For example, Dell estimates[1] that their average consumer is worth $210 over five years. A Dell detractor costs the company $57, and a promoter generates $328.

NPS divides online contributors into three categories by asking simply: How likely is it that you would recommend [organization] to a friend or colleague? Based on the answers on a 0-to-10 point rating scale, individuals are categorized as:

  • Promoters — Score 9-10 — Loyal enthusiasts who will keep buying and refer others
  • Passives — Score 7-8 — Satisfied but unenthusiastic people who are vulnerable to competitive offerings
  • Detractors — Score 0-6 — Unhappy people who can damage your reputation and growth through negative word-of-mouth

Tracking these groups helps you get a picture of your organization’s reputation and performance through your clients, prospects, and supporters’ eyes.

To calculate your organization’s Net Promoter Score, take the percentage of people who are Promoters and subtract the percentage who are Detractors.

You should know that, like many new social media metrics, Net Promoter remains somewhat contro­versial, with studies denying and confirming its effectiveness. Nonetheless, just by making the effort to measure promoter activity, you will know a lot more about your community, and thus the effort is likely to be worthwhile.

According to Wikipedia: [2]

  • General Electric uses NPS to evaluate process excellence for its customers, and plans to use NPS as a metric to decide the compensation of its leaders
  • Procter and Gamble uses NPS to measure consumer reactions to its brands
  • Allianz uses NPS to maintain what it calls “customer-centricity”
  • Verizon Wireless uses NPS in all business channels including their call centers and retail stores

Using Net Promoter Score to Measure Social Media Effectiveness is the 42nd in a series of excerpts from our book, Be a Person: the Social Operating Manual for Enterprises (itself part of a series for different audiences). At this rate it’ll be a long time before we get through all 430 pages, but luckily, if you’re impatient, the book is available in paper form at http://bit.ly/OrderBeAPerson and you can save $5 using Coupon Code 62YTRFCV

See the previous posts What is Social Media?, Social Sites Defined, Why Social Media? How is Social Media Relevant to Business? First Steps Toward a Social Media Strategy, and Decide What Your Business Will Do About Social Computing, pt. 1

Next up: Using Online Promoter™ Score to Measure Social Media Effectiveness

[1] Dave Chaffey: bit.ly/cA0uLs

[2] Wikipedia: bit.ly/bGFS3R

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Social Media – Replacing ROI

In our previous post, Use Social Media Monitoring Tools, we listed several free tools you can use to measure your social media presence.. In this post, we take a look at replacing ROI as the be-all, end-all metric for social media.

money

Replacing ROI

You’ll see lots of discussion about Social Media ROI (Return On Investment). But as you know, there are lots of everyday activities that are essential to the success of your organization whose value may be hard to quantify. Online wags have asked sarcastically, “What is the ROI of putting on your pants?” Or “What is the ROI of your phone?” Or even more cheekily: “What’s the ROI of your relationship with your mom?”

Sarcasm aside, there are a great many activities in the offline world that have a tenuous connection with ROI, including one of the mightiest and most-ingrained metrics in the offline advertising world: Cost Per Thousand Impressions (CPM).

In the classic print advertising model, deciding not to measure CPM would be career suicide. CPM is the mainstay of the advertising world despite the fact that it is actually a very gross measure.

For example, to calculate the CPM for a newspaper, take the cost of an ad divided by the news­paper’s circulation in thousands. However, this assumes that everyone who gets the newspaper has seen the ad, which is preposterous.

This offline measurement has been transferred to the Web, calculating the number of impressions (in thousands) of an ad being shown in a browser and dividing it by the cost of the ad.

The problem with CPM is it doesn’t close the loop — directly linking the impression to the desir­ed behav­ior (typically a purchase). Online and offline, organizations forge links between the number of impressions and purchasing behavior in a way that involves lots of assumptions (such as that an impression has one direct effect — purchase stimulation — rather than a variety of possible effects — tell a friend, improved opinion of the product, long-term attitude change, and so on).

Online, CPM doesn’t actually make a lot of sense for another big reason: The thing that causes the impression — a blog post, a Facebook post, and to a lesser degree, a Tweet — persists. Forever. Or at least as long as there’s a Google.

This means every action you take in social media has what is termed a long tail — a declining residual effect that may continue for years.

Here’s an example: Janet Fouts, a social media coach and speaker,[1] wrote a post about Twitter manners on her blog that received 86 clicks when she tweeted about it. In her Twitter post, Fouts included a link to the blog post that was shortened using the Bit.ly service, which tracks the number of times people click on the shortened link. (You’ll notice we use Bit.ly for the links in this book!)

Fouts says:

Over the next three months, the shortened link [ . . . ] was clicked 10,383 times. That means that once the link went out, people shared it in some way. It could have appeared in an e-mail, been re-tweeted on Twitter or another microblog service, or mentioned in a blog post. Of course that 10,000 click rate doesn’t begin to tell us what [the number of views] of the Twitter post was, but if we’re guessing there was a 20 percent click-through rate, then it may have been viewed 51,915 times so far.

So instead of measuring the effectiveness of that blog post by counting the 86 initial clicks, you need to factor in the long tail of more than 50,000 viewers.

Because of the long-tail effect, one of the first things to understand about measuring social media is that it takes time to see results. Since the metrics involved with social media are in their early days, you’ll want to experiment with various social media tactics, and their associated measurements. And you’ll want to be patient, trying various measures to craft the proper KPIs for your organization.

Social media theorist Brian Solis lists[2] various attempts to replace ROI as the dominant social media metric, including:

  • Return on Engagement — The duration of time spent either in conversation or interacting with social objects, and in turn, what transpired that’s worthy of measurement
  • Return on Participation — A metric tied to measuring and valuing the time spent participating in social media through conversations or the creation of social objects
  • Return on Involvement — Similar to participation, marketers explored touchpoints for documenting states of interaction and tied metrics and potential return of each
  • Return on Attention — In the attention economy, we assess the means to seize attention, hold it, and measure the response
  • Return on Trust — A variant on measuring customer loyalty and the likelihood for referrals, a trust barometer establishes the state of trust earned in social media engagement and the prospect of generating advocacy and how it impacts future business

To Solis’ list, we’d like to add Net Promoter Score® and Online Promoter™ Score, which we cover in the next posts.

Social Media – Replacing ROI is the 41st in a series of excerpts from our book, Be a Person: the Social Operating Manual for Enterprises (itself part of a series for different audiences). At this rate it’ll be a long time before we get through all 430 pages, but luckily, if you’re impatient, the book is available in paper form at http://bit.ly/OrderBeAPerson and you can save $5 using Coupon Code 62YTRFCV

See the previous posts What is Social Media?, Social Sites Defined, Why Social Media? How is Social Media Relevant to Business? First Steps Toward a Social Media Strategy, and Decide What Your Business Will Do About Social Computing, pt. 1

Next up: Using Net Promoter Score to Measure Social Media Effectiveness

[1] Measuring Social Media’s Return on Engagement by Janet Fouts: bit.ly/aKuwu1

[2] The Maturation of Social Media ROI by Brian Solis: bit.ly/axgv4v