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The Ever Illusive ROI Versus ROE of Social Media for Channel Marketing

by channelmaven on May 7, 2012

When working with clients on social media engagements, one of the questions we often get is: “What’s the ROI on this engagement?” This question is a challenging one to answer. While we are certain that vendors and solution providers alike are going to get more interaction with partners and prospective clients by investing in a social media engagement, it is often hard to put a dollar amount on what one interaction is worth.

Because of the issue with quantifying interactions, I’ve found it  more helpful to think about Return on Engagement (ROE) instead of Return on Investment (ROI). Are you engaging the right people? If so, measure this by how your engagement has improved. This is more effective than putting an actual dollar amount on each activity. Here’s why:

  • How can you measure ROI on current activities?  Today more than ever, it takes more than just one interaction to get a real lead. You may tweet something and then someone follows you, goes to your website, downloads an eBook giving you their email. You then email them your newsletter for two months before they pick up the phone and call you. So which of these activities do you tie the lead to? The original tweet? The eBook? The newsletters?
  • ROI doesn’t help you build your network. You have an immediate circle of prospects or customers, people you could pick up the phone and call today who would be happy to take your call. Then you have a group of people in your immediate network; they’re connected to you on LinkedIn or Twitter. They’re in your call list, they’re connected to your colleagues. What if we told you that they are only 3% of your prospective network and over 70% of the people on your list today are NOT viable prospects? The first thing you need to do is strengthen the list of people you’re communicating with on a regular basis and improve your engagement with them. Social media allows you to do that better than any other resource. You just need to be in the right place at the right time.
  • ROI is a false metric. If you only measure activities with dollars behind them, you’ll be selling yourself short. The things you’re doing with social media today are going to help you build your pipe in six, twelve, eighteen months. Should you discount those just because they aren’t in your funnel today? Probably not.

Brian Solis also has an interesting view on ROI vs. ROE as well. What do you think? Is it worth changing the way you think about ROI and getting a ton more business?

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