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I’m a BIG believer in social media and outreach via social networking sites – which is why I’m constantly taking about Twitter, LinkedIn, Digg and Facebook and the value they hold for entrepreneurs. But something I haven’t covered is how to know whether or not your efforts are truly beneficial – measuring the ROI. Without knowing your exact offering or what you have going on, it is difficult to ascertain what tools are most suitable for measuring the ROI surrounding any social media/PR efforts or targeted campaigns you might be engaged in or considering. Regardless, whatever investment is made should accomplish the following and, with social media, should be highly targeted:

1. Exposure/Engagement - Identifying and capturing qualified/targeted prospects
2. Influence - Moving prospects along the sales continuum from sales to purchase
3. Action - Once prospects convert to customers, are they staying with you? Are they buying more/different products/services? Are they willing to refer others to you?

Here is one of my favorite graphics from Don Bartholomew (Principal of Acumentics Research - a social media and public relations research and measurement consultancy) that summarizes the above methodology:

Keep in mind there is no single tool available to measure and track social media efforts. Using available applications such as Google Analytics, you can easily track traffic increases related to specific campaigns, customer engagement and interaction, demographics and other related trends and search patterns. Unfortunately, mainstream tools fall a little short at measuring the true impact of social media. So you would want to add-on other measurement tools. One that comes highly recommended for Google Analytics is located here. And there are others (with specific dashboards – not so much add-on): Radian6, Nielsen BuzzMetrics, etc. Most social media sites will also email stats to you – so get proactive and ask for what you need.

Now don’t get confused or try to categorize social media into a class all its own. Social media/PR campaigns are similar to other types of traditional marketing campaigns – when done right. You identify a target market or markets and create an offer to attract them. Via the Web, this can be done using an effective landing page that explains the offer without a lot of “fluff” and providing a simple, clean call-to-action. What is it you want the visitor/potential customer to do? Spell it out quickly or lose them! If you’d like to learn about the differences between social media and traditional marketing, I highly recommend this post from Microgeist.

Prior to launching any campaign, you should measure your Web site traffic using Google Analytics and conversions for the product/service you are selling (if any). This information will be used as a baseline. Throughout your social media/PR campaign, you’ll want to measure and keep a tally of the traffic coming to your Web site, particularly the landing page and the click-through (call-to-action) to check conversion rates and measure against the baseline. It’s also important to keep a running score of any and all direct or indirect sales (purchases via the Internet or inquiries (phone calls) referring to the campaign). When the campaign ends, you will be able to compute ROI by analyzing traffic stats, trends, click-throughs, comments left on blogs, sales increases and so on, and comparing the actual time spent on the campaign to the monetary results.

Again, none of this is new - you’re just using social media (i.e. blogs, microblogging, forums, online commentary, online networking sites, bookmarking, videos, photo sharing, etc.) as inbound (often viral; two-way marketing) marketing tools instead of the traditional outbound marketing (often called one-way marketing) - . The most important aspect is the strategy you put together before starting and understanding that efforts should be extremely targeted.

Tags: Acumentics Research, BuzzMetrics, Digg, Don Bartholomew, exposure engagement influence action, Facebook, how to measure social media, LinkedIn, Nielsen, Radian6, ROI from social media, Twitter