Benchmarking requires setting objectives and measuring performance to see if one has surpassed it.
Here we propose five best practice steps to help you develop useful Key Performance Indicators (KPIs) that will result in actionable metrics for your social media activities.
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1. Ensure management understands the difference between operating and financial metrics.
As Anthony (Tony) Tjan put it in one of his recent posts:
It is critical to understand what the most important drivers or operating metrics are when it comes success or failure. Accordingly, what contribution for achieving the company’s operating metrics, such as higher customer retention, will come from social media efforts, must be addressed.
- Tip 1: Define, write down and agree on the operating metrics you want to use and stick with them.
2. Know your customers and derive everything, including social media activities, from that knowledge.
Companies produce their corporate magazine or place brand advertising in a daily to reach and communicate with the targeted audience. Improving a magazine’s or corporate blog’s reading attractiveness works even better if it:
a) provides information that helps customers do their work smarter, and
b) empowers readers to get more out of services they purchase from the company.
- Tip 2: Choose a social media tool that at least 20 percent of your current and potential clients already use themselves (e.g., would they read blog content delivered by email and/or RSS feed) AND provide content that is perceived as useful and adding value.
3. Establish how a particular social media channel can drive cost reductions and/or new product/service uptake.
Every office building has air conditioning and nobody asks for ROI on this. Plus, ROI (Return on Investment) or ROE (Return on Engagement) are the wrong measures for social media.
ROI is the outcome, but we need to understand how social media efforts contribute to operating metrics. Hence, we must establish how the input – social media or corporate blogging – drives the desirable output, such as lowering marketing costs or improving customer satisfaction.
- Tip 3: Make sure your operators are clearly tied to your social media efforts.
4. Focus on the 3 to 5 KPIs that represent the most important drivers of value creation for your social media activities.
We suggest that a few clearly defined KPIs are more likely to assure people paying attention, without getting too distracted from the real job at hand.
Most important, KPIs must fit your company’s needs, like custom-made loafers or black heels. Otherwise, who would want to wear or make use of them?
- Tip 4: Assure KPI buy-ins from your stakeholders, including your team, superior(s) and possibly key clients and/or investors.
5. Establish a baseline and timeline.
A baseline is a measurement used as a point of comparison. In turn, it can be used to asses progress against the budget or set of other objectives, including KPIs.
So it is advisable to first collect data whenever one begins social media monitoring to see where you stand.
Benchmarking against your own past performance is the only completely relevant measure. Therefore, improvement over the course of several months is what really matters.
For this reason, we developed the ComMetrics Footprint, ComMetrics Health Check, and ComMetrics Resonance, which are each made up of several measures. These allow tracking from the baseline onwards, as well as benchmarking against the ComMetrics Blog Impact index.
- Tip 5: Establish the baseline numbers and compare such as Q1 2008 with Q1 2009 in order to improve.
For example, if you focus on backlinks, have they increased over the last quarter? And what about Quarter 3 2008 compared to Quarter 3 2009, what kind of improvements are seen there?
Bottom line
Surely nobody tries to quantify the ROI of air conditioning. Having it when outside temperatures reach 35 degrees Celsius helps office productivity, making it a mediating factor for, though NOT a cause of, ROI. Similar reasoning applies for social media measurement.
Above we outlined five tips that should help in developing KPIs that make sense to your company’s decision-makers and, most importantly, provide social media monitoring that helps your company improve.
More resources on KPI and benchmarking:
- - Beth Kanter: Riffing on David Armano’s Listen, Learn, and Adapt: Need Your Organization’s Adaption Stories!
- Vijay Rayapati: Why social media ROI is the most over debated & misunderstood topic?
- Olivier Blanchard: Basics of social media ROI slide presentation.
- Mikey Ames The Hermit: Alumni Association Twitter Use – Baseline Comparisons.
- Beth Kanter: What’s Your Social Media Baseline?
- ComMetrics: Social media analytics and KPIs: From simple to refined.
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Now, it’s your turn. What are some of your organization’s metrics, analytics and measurement stories for blogs?
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Agree.
KPI, metrics and ROI of marketing, branding, social media & website are difficult to define, set and execute appropriately aligning with business goal but necessary.
Like you pointing out the difference between the drivers or operating metrics and the outcomes such as ROI.
I find ROI discussions regarding social media including blogging and micro-blogging such as Twitter not that helpful. Your post is a real exception. Thanks.
Dear Megumi and Joseph
Thanks for the encouragement and positive feedback.
Needless to say, whatever one does with social media somehow one has to show
a) how it helps the bottom line (whatever you use as a measure) and
b) will it result in a better conversation, greater word of mouth amplification for a longer time to be read by more customers
Finally, unless customers use the technology, why try to launch a social network on Ning or anywhere else.
Looking forward to your next comment. Thanks so much for sharing.
Urs
@ComMetrics
.-= ´s last blog ..The importance of competitive benchmarking =-.
Urs, thanks for this insightful material. Very interesting, helpful stuff. Great points on metrics nuances.
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