Social Media ROI

This past week I had the pleasure of participating in the PR Newswire panel as well kick off the Social Media Club Dallas event. At both events, the question of ROI came up. Now there have been countless blog posts and stories in traditional outlets about this topic. As companies still attempt to determine the ROI, before jumping in full force, we have seen evidence that strong engagement in social media drops to the bottom line.

Altimeter and WetPaint published a great report titled: “The World’s Most Valuable Brands. Who’s Most Engaged?“ a few months back that demonstrates how the most engaged brands have correlated that effort into financial performance. The image above depicts the leaders from a financial perspective.

According to the research document, brands fall into one of four engagement profiles:

1. Mavens: These brands are engaged in seven or more channels and an above-average engagement score. Brands like Starbucks and Dell
2. Butterflies: These brands are engaged in seven or more channels and have a lower than average engagement score. Brands here include American Express and Hyundai
3. Selectives: These brands are engaged is six or fewer channels with higher than average engagement scores. Brands here include H&M and Philips.
4. Wallflowers: These brands are engaged in six or fewer channels with below-average engagement scores. Brands here include McDonalds and BP.

The paper also concludes that deep engagement with a few channels can have a positive impact to profit margin. This is evidenced by the higher net margin growth for Selectives vs. Butterflies.

The remainder of the document highlights best practices from Starbucks, Dell, Toyota and SAP. It’s definitely worth a read. We know there are all sorts of discussions about how social media is improving customer service, aiding in the product development process, as well as become an outstanding channel for PR and brand reputation management.

What do you think about measuring ROI for social media? What are your best practices?