Today I listened to a podcast interview with Jake McGee of Big in Japan on the Marketing Monger Podcast. His firm specializes in helping companies tap the benefits of social media such as Blogs and message boards. While he praises social media as an important loyalty builder, he claims that the ROI is not very measurable. Since customer loyalty is a key goal (particularly in my company where we sell subscription based software) – I began thinking about how social media might be measurable.
For a company with registered users/customers, it is best to start by creating a field in the database representing each social media program. Each time a logged in customer participates in a program (such as reading the message boards) it should be recorded in the database. After enough data has been collected it should be clear whether there is any correlation between participating in the program and higher customer lifetime value (improved customer loyalty). If there is a correlation, more funds should be concentrated in social media programs. If no correlation can be identified, resources should shift to other, more direct ROI generating programs.