Eight Principles of Social Media ROI

I was honored to be a part the WomenWhoTech online summit.   I did a panel titled “Social Media ROI” with Lauren Vargas from Radian 6 and moderated by Roz Lemieux from Fission Strategy.   Here’s the description:

Do you know what kind of an impact social media is having on your brand, mission, or bottom line? How do you put a monetary value on branding? This panel will discuss realistic metrics and benchmarks any organization can use in their campaigns and ensure that your using the right strategies and tools to listen and engage your audiences on different social networks.



Return on Investment

The Return on Investment financial process was created by DuPont and used by Alfred Sloan to help make General Motors manageable in the 1920s. ROI had it origins as an accounting term and was originally a measure of return on the total investment in the entire business. It is a flow chart that calculates business performance taking into account not only whether the company had a profit, but whether that profit was good enough relative to the assets it took to generate it. Over those 80 years, the chart has been polished, refined and so deeply embedded in business thinking.. Wall Street views it as the only legitimate means of measuring business performance. But ROI was not really intended to measure a technology project, program, or tool or any other isolated aspect of an organization.

Return on Investment is what many executive directors may be thinking when social media strategy comes up. They want to know:

  • How much will it cost?
  • How much time will it take?
  • What are the results?
  • Is it worth it?

And we wonder how do we calculate that? But I urge you not to think of ROI in this limited, narrow way … ROI has a much broader definition than “Show me the money!” At least in the nonprofit sector.

An analysis that looks at the benefits, costs, and value of a technology project over time. It uses metrics to measure your results and help you improve your strategy over time. Helps us move away from tool driven decisions to results.

The Four I’s of ROI

If we look at a broader definition of ROI – I see four different “I” words …

Return on Insight

This is using key metrics to harvest insights about what works and what doesn’t and the process of iteration. David Armano describes this process as “Listen, Learn, and Adapt” In my book, The Networked Nonprofit, we describe this process as “Learning Loops.” This process isn’t always valued, but it the only way to get to more tangible results. It helps you:

  • Find your secret sauce of social media success

  • It may require internal culture change – actionable listening
    and experiments
  • May initially feel like “extra work” but should be embedded
    in your implementation process
  • Requires longer-term thinking which is difficult given
    financial pressures
  • Requires a mind-shift to incorporate reflection at the end
    of the process

Return on Interaction (Engagement and Relationships)

This the process of designing deep engagement and relationship building with your network and measuring it. For example, you are constantly putting conversation starters to your audience – asking their opinion, testing their knowledge, pairing with promotions w/content, and saying thank you. Engaging conversations revolve around getting people to look and discuss your cause or program and getting them to ready to become donors, members, or volunteers. But tactics are only half of the equation, you need to track and measure and there is no better expert to follow and learn from than KD Paine.

Return on Investment (Dollars)

An analysis that looks at the benefits, costs, and value of a social media strategy over time. We are looking at business results or for nonprofits the more tangible financial results that boil down to fundraising, recruiting volunteers, getting names on list, or ways that a social media strategy can save time or be more efficient. The latter, for example, could be reduction of support or administrative costs because your fan base is helping you answer questions or spread the word. Here are a few more.

Return on Impact (Social Change)

Affecting social change is, of course, the ultimate goal for nonprofits. Connecting with people and depending engagement are important building blocks for getting a tangible dollar results — more donors, more volunteers, etc. But this involves looking at the role that social media plays in the total equation of social change — where there is on the ground systemic change.

ROI Analysis Must Begin With SMART Objectives

For measurement to be effective, it has to align directly with the measurable objectives you’ve set. Those measurable objectives should be specific, measurable, actionable, realistic, and timed (following the SMART methodology), and directly correlate to your organization’s big-picture goals for this program (i.e., we want to increase brand awareness).

Having a hypothesis to start from is important. For instance, “We think that an increase in blog subscribers over six months will correlate with an increase in sales,” or, “Post activity on our help forum will decrease call center costs,” are strong hypotheses to get started measuring and benchmarking. Build your goals based on these hypotheses, and measure against them to see if you’re on the right track.

8 Principles of ROI

In the rest of the presentation we go through some principles of an ROI process:

  • Identify Benefits: Tangible/Intangible
  • Link metrics to objectives
  • Mix Traditional and New Metrics
  • Track the Entire Funnel
  • Spreadsheet Aerobics
  • Track Your Time: Don’t Waste It
  • Use Financial Formulas to Make Your Case
  • Communicating Results



Additional Resources

Here’s a list of ROI/Nonprofit/Social Media resources suggested by different people on my Facebook Page:

Oliver Blanchard “Social Media ROI for Associations and Nonprofits

KD Paine’s Twitter Measurement List

Will Hull “Measuring ROI with Outcomes In Mind

SmartBlog “Understanding Social Media ROI in the Nonprofit Space

Additional links are here.


This work is licensed by Beth Kanter under a Creative Commons Attribution 3.0 United States License.  Some rights reserved. It was originally published on Beth's Blog on September 15, 2010, and is used here by permission.


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About the Author

Beth Kanter is the author of Beth’s Blog: How Nonprofits Can Use Social Media, one of the longest running and most popular blogs for nonprofits.  She co-authored the book titled “The Networked Nonprofit” with Allison Fine published by J Wiley in 2010 that received Honorable Mention for the Terry McAdams Award.  Beth has over 30 years working in the nonprofit sector in technology, training, capacity building, evaluation, fundraising, and marketing.   Her second book,  Measuring the Networked Nonprofit,  with Co-Author KD Paine, will be published in October, 2012.  In 2009, she was named by Fast Company Magazine as one of the most influential women in technology and one of Business Week’s “Voices of Innovation for Social Media.”  She was named Visiting Scholar for Social Media and Nonprofits for the David and Lucile Packard Foundation in 2009-2012.  She was a Society of New Communications Research Fellow for 2010.  Beth was honored with the inaugural PepsiCo Women’s Inspiration Award at the 2011SxSW Interactive Festival.  A frequent contributor to many nonprofit technology web sites, blogs, and magazines, Beth has authored chapters in several books, including “Managing Technology to Meet Your Mission: A Strategic Guide for Nonprofit Leaders,” edited by NTEN both published in 2009 and the 2011 Craigslist Bootcamp Nonprofit Management Guide to be published by J Wiley in 2011.  A much-in-demand trainer, Beth was the keynote speaker for the Cambodian Bloggers Conference in Phnom Penh, The Connecting Up Conference in Brisbane, Australia, State Department’s Tech@State Conference, Minnesota Council on Nonprofits, Making Media Conference in Chicago and many others. She has presented about nonprofits and social media at some of the leading social media industry conferences including O’Reilly’s Graphing Social Patterns, Gnomedex, SXSW, Blogher, and Podcamp.  Beth is an internationally recognized trainer who has developed and implemented effective sector capacity building programs that help organizations integrate social media, network building, and relationship marketing best practices. Beth is an expert in facilitating online and offline peer learning, curriculum development based on traditional adult learning theory, and other instructional approaches.  Beth has designed and deliver workshops that include interactive key notes,  90 minute “sprints”, half-day, one-day, two-day and for international projects, week long training programs.  She is currently the instructional designer for the E-Mediat project, a networked approach to capacity building of NGOs to use social media the Middle East.  She curated NTEN’s “We Are Media: Nonprofit Social Media Starter Kit,” an online community of people from nonprofits who are interested in learning and teaching about how social media strategies and tools can enable nonprofit organizations to create, compile, and distribute their stories and change the world.


This work is licensed by Beth Kanter under a Creative Commons Attribution 3.0 United States License.  Some rights reserved. It was originally published on Beth's Blog on September 15, 2010, and is used here by permission.


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