Is it better to have 1000 Likes on Facebook, or 100 conversions on your web site?
There’s no doubt that social media is important to the success of your business, but just how important is it? WHY is it important? And how do you know when you’re doing it right?
The “why” is easy enough: you and your business need a strong social media presence because, generally speaking, your customers are present on social media. If you aren’t on Facebook and Twitter or wherever your customers are, you’re missing out on valuable opportunities both to learn about your customers and to build a relationship with them. Social media allows companies to communicate with their customers more directly than ever, and, more importantly, it gives companies access to all kinds of information about their customers, information that allows them to craft targeted (and therefore more successful) marketing campaigns.
Obviously, then, social media is very important to companies. The thing is, it’s still difficult to gauge the specifics: how much should you be spending on social media, and how do you measure return on investment (ROI)? What makes your social media campaigns successful?
Institutions like Bank of the West are trying to establish social media models that accomplish goals like increasing their member base. They’ve seen first-hand the benefits that can come from doing social media well, but their understanding of the correlation between Facebook referrals and conversions (in this case, account openings) is still only vague. There’s enough data to suggest that there is indeed a positive connection, but the data isn’t strong enough or detailed enough to indicate exactly what worked or why, much less what the ROI ended up being.
There are services out there, like Adobe SocialAnalytics, that attempt to provide more calculated information: they can tell you, for example, how much you’ve spent to earn each of your Facebook fans. But those services cost a ton of money, and they still don’t give you a good idea of how valuable each of those Facebook fans is. If you spend X amount of money to get N number of fans, and each fan is only worth Y amount of money in terms of actual sales or conversions… It’s still hard to see just how effective the money you’re spending on social media is.
I know I’ve raised a lot of questions here and offered little in the way of answers. I really don’t think there are legitimate answers to these questions yet. I think there will be soon enough; social media has proven that it’s too important to ignore, too valuable not to quantify. It’s just a matter of time.