A study by Bain & Company, "Putting Social Media to Work," confirmed that many companies remain on the sidelines of adopting social media. Additionally, the study documented that "the gulf between the early adopters and those waiting to take the plunge has actually widened."
However, the study also noted that companies that have moved aggressively into social media have captured significant economic value from their investments:
"We found that customers who engage with companies over social media spend 20 percent to 40 percent more money with those companies than other customers. They also demonstrate a deeper emotional commitment to the companies, granting them an average 33 points higher Net Promoter Score, a common measure of customer loyalty."
For many companies, one of the biggest barriers to social media adoption is determining its ROI. Finding the right metrics to determine success can be intimidating for many companies.
In a Radian6 eBook, measuring social media can be broken down into 5 steps:
Step 1: Align your Objectives with your Metrics - The more specific the better. A classic methodology for developing objectives introduced by management guru Peter Drucker is SMART: Specific, Measurable, Achievable, Realistic and Timed.
Step 2: Measure Awareness, Attention and Reach - The best way to measure the effectiveness of a company's social media relationships is via awareness, attention and reach.
Start with fans, followers, subscribers and potential reach.
Then measure your share of the conversation.
To determine the value of a Facebook like, use this equation.
Step 5: Measure Cost Savings - A penny saved is a penny earned. Social media is offering efficiencies to companies, most notably in the customer service side, but also in areas like communications and training.
Click here to download a PDF version of "5 Steps to Effective Social Media Measurement" or view the SlideShare below.