As I’ve written in this blog, new media will die if an ROI is not attached to it. In this environment, it is not good enough to tell prospects that their brands must engage in the online conversation because it’s the “new marketing thing.” CEO’s will ask the question, “what is our strategy behind all of these conversations?” And that answer better have something to do with sales.

So, let’s start with some basics. I am borrowing some thoughts from Connie Bensen, Community Manager for Techrigy and a good brain on the subject. 

using-social-media-monitoring-to-show-roi

I’m adding my thoughts for outdoor recreation companies who are considering moving into new media. Okay, let’s start.

1. Compare Your Brand with Competitors who are more established in New Media than you.  Using a new media monitoring device, measure a close competitor against your brand. If that competitor is getting more positive buzz, then you can assume that you may be at a competitive disadvantage.

2. Begin by Establishing a Baseline. Again, using a new media monitoring tool you can measure a competitor’s performance by breaking up the data into key areas such as brand perception, product acceptance and customer service performance. How? By breaking down each area into the number of online conversations a competitor is having with consumers. 

    Now we set a value. The estimated total cost of implementing your new media program is divided into the key competitor areas; brand perception, product acceptance and customer service. You divide again by the number of competitor conversations in each area to attain a cost per contact. Let’s just throw out an example using some out-of-the-air numbers for customer service.

• 1000=your monthly cost in dollars of implementing new media customer service
• 200=the number of online consumer conversations a close competitor is having on a monthly
• basis
• 5=your cost in dollars per conversation. This is your baseline for customer service.

3. Set Your Company Goal. Using the baseline of $5 a conversation set your customer service goal by approaching it from the number of conversations you hope to make.

•     5= cost in dollars of each online conversation
• 200= competitor conversations a month
• 150= your goal in conversations in the first 30 days. 

This means your ROI in customer service will be -$250 for the first month. (-50 calls below the baseline X $5= -$250.)

4. The ROI. Measure all performance areas in 30, 60 and 90 days.  Remember your goal should be going up each month because your conversations will be going up. Your baseline, for this 90 day period, remains the same. Set up a graph and measure the difference between the baseline and your company goal. The difference is the start of measuring return on investment.

Okay, let’s be clear. In new media an increase in conversation volume will need to result in an increase in sales volume. When a company establishes a 5% increase in conversation volume over the competition, then does that result in a 5% increase in sales? Don’t know. Let’s find out.