You can also track social brand mentions, customer-generated product ratings and reviews, and other signals of brand equity. While this is not strictly an ROI calculation, showing a correlation between social media impressions and positive brand image is an entirely valid exercise. Improved brand equity always means improved business performance.

Cost savings: Some organizations have shifted substantial costs for telephone call-centers onto cheaper social channels. Consumer insights teams can gain free and instant feedback from online communities rather than paying for a focus group. Marketers can forgo some traditional advertising and promotional expense, and business-to-business (B2B) teams may be able to skip some business travel or conference-going by hosting

webinars or Google+ hangouts, or by doing wiki-style online collaboration. Loyalty impact: Probably the biggest ROI contribution of social media is the enhanced relationship between brand and consumer. It’s a chicken-and- egg question whether social media engagement creates brand loyalty, or the other way around, as the most loyal consumers gravitate to a brand’s fan page.

Either way, though, if you’re not there to return your customer’s love, the opportunity is lost. Assume a conservative 50% improvement in customer retention, positive brand sentiment, spending, or lifetime value when you turn an ordinary customer into a brand advocate. Grow your Facebook and other online communities in raw numbers and as a percentage of your customer base, and you should see an improvement in customer loyalty and bottom-line revenue.

Pull data from your Facebook wall to identify active members by name and location, and match them up with your consumer database. With a cell of flagged “Facebook loyalists” in your database, benchmark their buying patterns against the customer base as a whole. This exercise quantifies the added value of your Facebook fans. Invest in growing that fan base and cultivating a positive relationship with members, and the ROI is easily calculated. 

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Deye Muel

Psychologist and Blogger.

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