By Jim Sterne

Measuring the Business Value of Social Media

Any technology that makes it easier for humans to communicate will be broadly adopted. The printing press, telegraph, telephone, telex, fax, email, websites, texting, blogs, photo and video sharing sites and Twitter have each lowered the amount of effort required to exchange ideas with others. Virtual worlds are fun, but haven’t caught on as an ubiquitous way to communicate as they raise the friction rather than lower it.

The value of communicating easily and economically to individuals, groups and constituents has always been of value to organizations. But the question remains: Just how valuable is it? How does one go about measuring the outcome of engaging in social media? There are a number of areas of social media measurement for business offered up for your consideration. We’ll start with the basics of web measurement and then look a social media metrics from six different perspectives based on objectives and outcomes.

The Web Metrics Foundation

Traditional web metrics can be classified into three, broad measurement categories:
Online Behavior
On-Site Behavior
Customer Satisfaction

Online behavior is measured from the top down and bottom up. From the top, companies like Hitwise watch from the Mount Olympus of Internet access providers to see where the traffic is flowing. On the other end of the telescope (bottom up), companies like comScore empanel people who have consented to hosting monitoring software on their computers. This later method allows for some very in-depth assessment of individual behavior across multiple websites. The intent is to discover which websites are most popular and these services are invaluable for auditing online advertisement sales.

On-site behavior is also known as web analytics. This is the art and science of tracking individuals on a specific website in order to optimize their experience and improve the desired business results. Whether those goals are sales, registrations, downloads, or contest entries, web analytics helps improve the ratio of visitors to action-takers.

Customer satisfaction in the form on online surveys offers the “Why?” to the previous two metrics’ “What?” We have recorded what they did – what actions they took – but we don’t know why or how they felt about it. A twenty minute visit to a website is wonderful from the perspective of brand engagement unless the purpose was to find a specific piece of information and the visitor was unsuccessful… and upset.

Social media has a stake in all of the above, but takes the idea of measuring behavior and mood into a new and uncontrolled dimension.

Social Media from an Advertisers Perspective

One view of social media is through the lens of outbound marketing. One can easily think of social media in terms of Gross Ratings Points and attempt to measure the size of an audience reached by a specific message over a given period of time. Awareness, reach, and frequency are the first metrics necessary to determine if your message is getting out there.

If a marketing manager tweets in a forest and nobody follows him, he does not make a sound. Success in social media is found not only in how many people got your message, but then in how many thought your message was remarkable—literally.

How many people were intrigued enough by the point you were making to comment on it and pass it along to their friends? Reach depends on timeliness and pass-along.

New mothers might wish to follow @PamperCoupons until they realize there have only been two tweets, both on July 24, 2009. Nothing to retweet here, move along. Meanwhile, Dell has more than one and a half million followers of @DellOutlet and, according to, those followers propel DellOutlet into the top 99.59 percentile of most retweeted tweeters. People seem to like sharing discounts.

Social Media Metrics from a PR Perspective

If getting talked about  is the coin of the realm, then it pays to know the players. The work of the public relations professional is based on knowing which journalists, which industry analysts and which industry insiders are the most influential. So it’s not just the number of people who follow you, but how many follow them and whether they retweet.

We can now map the social network node graph of influence between individuals on any given topic. The marketer is responsible for understanding the impact of reaching the most influential people – the communication nodes – with remarkable (retweetable) material.

In the good old days, we’d send these people on junkets to conferences, buy them dinner and send them a bottle of wine. These days, we have to send them better content, more up-to-the-minute details and get personal. They are the market makers and we measure their role in terms of how often their blog posts are backlinked, how many followers they have and how many followers their followers have.

In the old days, we tried to come up with the modern day version of the publicity stunt and hoped it would go viral on YouTube. These days, we strive to be interesting enough to be quotable. Your influence depends on your ability to be authentic, your value to your community and your ability to measure the influence of those you are targeting.

Social Media Metrics from a Brand Perspective

In Hollywood, there’s no such thing as bad publicity. Such is not the case online. Oscar Wilde was right when he said, “The only thing worse than people talking about you is people not talking about you.” But what they are saying about you is more than important, it is crucial. A report showing a 245% increase in product mentions yesterday can be terrific unless you are Toyota and each mention includes the words, “unintentional acceleration.”

Structured, online surveys allow data to be collected from larger and larger numbers of people:
Do you like our products?
Do you like our website?
Do you like our customer care process?

But social media is neither controlled or structured. Understanding the sentiment behind each comment in an unending stream of posts, comments, tweets and video satires is necessary to determine how the public is feeling about your organization. Using automation to measure that sentiment may be the biggest problem we face in marketing. We can finally listen in on public conversations, but we just don’t have enough ears to hear them all.

All of the problems of sampling are magnified in social media. Here, the universe is so fragmented, there is no way to properly determine whether that tempest in a teapot is replicated at every other online tea party or is a local incident.

Analyzing the outpouring of millions of souls can reveal attitudinal shifts that are not visible in opinion polls, survey takers, or customer satisfaction questionnaires. Tracking public sentiment over time provides invaluable insight. It represents an opportunity to stay right on top of changes in the marketplace and your organization’s brand equity.

Sadly, the tools are not quite ready for prime time. There is enough value to be provided by those who crack the code that millions will be spent on research trying to do just that. But for the moment, speech recognition and sentiment analysis are just beyond our reach.

The moment this barrier is breached, marketers will have perfect data about how well their products, positioning and messaging is received and disseminated. We will also have companionable robots in our homes to tuck us in at night, flying cars and a cure for the common cold. I remain hopeful but not confident this will happen any time soon.

Social Media Metrics from a Direct Response Perspective

People might read your message and like it, but if they don’t repeat it, blog about it or run it up the flagpole for everybody to salute then your social media programs and projects have no impact. This is where classic web analytics comes back into the picture.

When your message ricochets around the sociosphere, it eventually causes people to click through and interact with your iPhone app, website, call center, office or store. Which social media endeavor generated the most traffic to your website? What viral contest got the most people to reveal personally identifiable information? Who’s company blog is getting the most attention and is generating the most participation in the conversation?

Tracking the variations in brand affection in the hearts and minds of the public is important, but measuring the business results is vital. Do people click through to your web site based on their social media interactions? Do they engage with your organization in new and different ways? Are more people drawn into a profitable and sustainable relationship with your company? Tracking the actions that result from all your blogging, tweeting, and YouTubing is where the money is.

Social Media Metrics from a Customer Service Perspective

Getting the right message to the right person at the right time has been the hallmark of great advertisers and marketers. But with the customer in control of the message, you want to make sure you are measuring your ability to receive the right message from the right people at the right time.

Social media has become the Giant Market Research System. It allows you to eavesdrop on your marketplace and learn where you are hitting the target and where your products and services are falling short.

You can incorporate that knowledge into your marketing mix. You can make it a fundamental part of your customer service and support. You can feed it directly into your business strategy planning. Measuring how well you hear is much different from measuring how well you speak or sing or shout.

Classic customer service metrics are still in play. How many people communicated with your company via which channels? How many calls to the call center were you able to avoid by tweeting a solution to a common problem? How much happier are your customers now that you are actually paying attention? How many good ideas for product improvements or whole new product lines did you absorb and took action on?

Social Media Metrics from a Business Value Perspective

Each of those actions is measureable and indicative that you are (or are not) on the right track. But unless those interim metrics are correlated to business-critical results like profits, this is just so much fun and games.

Whether you employ an intern, use a spreadsheet, or even just glance at a dashboard, social media is not going to do provide any value to your company unless you can tell if your efforts result in increased revenue, lower costs, and/or more satisfied customers.

The whole purpose of measurement is to determine whether you are moving closer to or further away from your business goals with the ultimate question being future investment.

Given the wide variety of ways to reach out and engage with your prospective customers, which methods are going to yield the most valuable responses the fastest? Which are going to help you achieve your business goals the most efficiently? Which are going to grow your customer base and improve retention? And which, if ignored, could present the greatest danger to your brand and longevity?

Tracking how much you invest and measuring the business results when you can will reveal where you need to spend more time, more money and more attention. Just like offline marketing, only more so.

Jim Sterne is an international speaker on electronic marketing and customer interaction. A consultant to Fortune 500 companies and entrepreneurs, Sterne focuses his 25 years in sales and marketing on measuring the value of the Internet as a medium for creating and strengthening customer relationships. Sterne can be reached at or visit