ROI of Social Media


A summary of the September 1, 2011 Dreamforce session, covering:

  • The seven key business drivers of social media success
  • How to assess the impact of the social web on your business
  • Ways to achieve tangible return from social media
  • Case studies of social media successes
  • How to measure the ROI of social media

The Speakers

Dave Thomas Dave Thomas
Director of Community and Strategy, Radian 6.
twitter@davidbthomas - Dave’s blog
Jason Falls Jason Falls
Social Media Explorer, Co-author of ‘No Bullshit Social Media’


Watch the full ‘ROI of Social Media’ Dreamforce session.

Customer Video

Quick Summary

Social media may be a fine place for touch-feely engagements – but it’s also a place for serious business. This Dreamforce session discusses seven key business drivers that will help you secure social media ROI – and explains how to measure it.

How do you evaluate your social media marketing?

ROI is just one measure of success. You might also want to measure:

  • Customer satisfaction scores
  • New product ideas
  • Higher search engine results
  • Conversions versus public
  • More subscribers
  • Higher retention rates
  • More online media coverage
  • Lower cost per lead
  • Lower call centre costs
  • Faster response times

Social media sound bites

Jason Falls

“We should be asking not, ‘what is the ROI of social media?’ because social media does a lot of different things. I think the better question is: ‘what do I get in return?’”

Jason Falls

“You can count Facebook followers all you want but it doesn’t mean a damn thing if they don’t buy your product. I want the real metrics.”

Jason Falls

“The truth is you can sell in social media, you can automate in social media, you can broadcast in social media… if you have an audience that will respond to that.”

Seven business drivers of social media: How to get return and measure it

1. Enhance branding and awareness

In 2007, Greenpeace held a social media competition to name a humpback whale. One entrant suggested the name “Mr. Splashy Pants” – which horrified some of the more conservative members of Greenpeace. The name, limping along with only 5% of the vote, looked destined to lose.

But then someone posted the contest up on, the social bookmarking site. People loved the name – and 20,000 of them swiftly went to vote on the Greenpeace website. In less than a day, Mr. Splashy Pants secured 75% of the vote – and romped into first place.

Greenpeace’s initial reluctance faded when they noticed the record number of visits to their site. They capitalised on the opportunity, calling the whale Mr Splashy Pants and even selling merchandise. They also created a site where people could track the real Mr. Splashy Pants and donate to save whales in general.


How to measure branding and awareness:

  • Audience awareness before and after
  • Reach and resonance of messaging
  • Number of online conversations about brand
  • Percentage change in customer preference
  • Percentage change in conversational market share
  • Percentage share in Q-Score (US measurement of brand appeal)
Jason Falls

“Social media is about the conversation… about listening to the conversation and providing value but when you add the word ‘marketing’ to the word ‘social media’, you’re talking about business and you have to talk about revenue and what you’re going to get from what you put into it.”

Jason Falls

“…For conversational market share, you can use a tool like Radian6 that goes out and scans the globe looking for mentions of brand names and your competitors and whatnot. And you can compare what percentage of the conversations around your industry is focused on you versus your competition and so you can see what your conversational market share is.”


2. Protect your reputation

Who would you rather be – Chi-Chi’s, or Domino’s?

In 2003, the US Mexican restaurant, Chi-Chi’s, had a hepatitis A outbreak in Pittsburgh. Admittedly, this was before a lot of social networks exploded, but Chi-Chi’s crisis reaction was still lacking.

Guided by their legal department, they focused on not saying anything incriminating rather than trying to respond to the public’s outcry. So the public sued – and there are now no Chi-Chi’s in the US.

Compare this to Domino’s response to a similar public backlash.

In April 2009, two employees in North Carolina posted a video on YouTube that showed them doing unsavoury things to a Domino’s pizza. Within 24 hours, Domino’s CEO was also on YouTube… apologising.

His swift response saved the day. Before the pizza desecration incident, Domino’s barely used social media. Since then, they’ve gone fully social – and even have feedback mechanisms on their boxes.

How to measure reputation:

  • Number of positive mentions of brand
  • Number of negative mentions of brand
  • Number of negative mentions mitigated
  • Q-Score
  • Search engine result rankings for top keywords
  • Equivalent value of search engine traffic based on rankings
Jason Falls

“You can establish goals through social media marketing… using your listening and monitoring service using Radian6 to find those mentions and troubleshoot and look for problem areas.”

Jason Falls

“…Search engine terms… can be manipulated or at least helped through social media marketing particularly blogging… on your website.”

Jason Falls

“If you really want to draw some bottomline numbers to what your search engine numbers look like, you can also do an ad equivalency value because Google will tell you how much a pay-per-click advertisement costs per click.”

Jason Falls

“So you can put some bottomline dollar figure ROI type measurements into the search engine part of this but on protecting your reputation it’s really more of a broad-based sort of intangible benefit of ‘people like us and when something goes wrong we respond and fix it.’”

3. Enhance public relations


Southwest Airlines proves the power of overt corporate blogging.

Blogging two to three times a day at, they’ve built their own loyal community, potentially reaching millions of people. They even announce company news on their own blog before they send out press releases.

But blogging can be just as successful when the company is more covert. is a blog aimed at women about home making, while is a blog about being a good father and husband and doing stuff around the house.

Both of these blogs are very popular… and both are from Proctor & Gamble (something the company downplays). Instead, P&G focuses on creating compelling content that it knows people wants to read and serves banner ads to its well-earned audience.

How do you measure social public relations?

  • Size of stakeholders groups
  • Activity enacted by stakeholders groups
  • Successful placements within outreach groups
  • Response time to a crisis situation
  • Sentiment of brand before/during/after
  • All the other metrics we mentioned
Jason Falls

“South Airline’s blog can potentially reach millions of people. How much would they have to pay for that in traditional media?”

Jason Falls

“Both of those blogs [ and] are very high traffic, they get a lot of attention and they get a lot of readership. Scroll down to the bottom of the blogs and at the footer you’ll see that both are a Proctor & Gamble production. Those are media outlets, mechanisms to deliver ads.”

Jason Falls

“This is a social media strategy that P&G put into play: ‘We want to get eyeballs, we’re delivering great valuable content to that audience and we’re going to deliver our advertising messages there.’”

Jason Falls

“Social media changes the game. Social media allows you, your public relations arm, to become your own media outlet.”


4. Build community

Fait Ici (‘Made Here’) is a shop in Montreal that sells local and home-grown products, including organic food.

Six months before they launched, Fait Ici started a blog about the subjects they were passionate about – buying local, being green and eating healthily. They also invited other people to blog about these topics, and created a committed community of likeminded individuals.

Fait Ici then announced they were opening an eco-conscious store.

In the first week, hundreds of people showed up. What was astonishing was that Fait Ici had spent no money on advertising to announce their opening. Instead, they had relied solely on social media.

How to measure reputation:

  • Size of community
  • Activity of community
  • Purchase/trial/conversion from community
  • Dollar value versus non-community member
  • Referral and recommendation from community
Jason Falls

“Fait Ici had probably one of the most successful store openings in the history of Canada because they spent zero advertising to advertise the fact they were opening this store.”

Jason Falls

“Their complete social media strategy was to build a community around their ideas so when they launched their product the community was ready and willing to listen to them.”

Jason Falls

“This is a really good example of using a social media strategy, having a goal – of building a community – that down the road, obviously, is going to lead to bottom line numbers.”

Jason Falls

“But building community in and of itself isn’t always measured in dollars and cents.”

5. Enhance social customer service

The Canadian retail giant, Canadian Tire, shows how effective social customer support can be.

They made their site social just by adding one thing: a live chat

This meant customers could type questions to their sales team – and receive replies in real time. The public found this addition to the Canadian Tire site very handy, and many opted to use live chat rather than a call centre.

The result? Customers were happy because they could get immediate answers to their queries. Canadian Tire was also happy because it saved $40,000 a year in call centre costs.


How to measure social customer service:

  • Number of issues handled
  • Number of customers retained/upsold
  • Cost savings for diverting call centre costs
  • Customer satisfaction rating
  • Plus or minus positive and negative online mentions
Jason Falls

“Customer service is the starting point for a lot of companies in developing goals for what they want to do with social media.”

Jason Falls

“If you talk to executives at companies, there are three business metrics and these are the only three metrics they care about… revenue, cost, customer satisfaction.”

Jason Falls

“Customer service is the easiest of those three to manage, mitigate and report on to the executive team in a manner that they will understand and say ‘aha, now I see why social media drives business.’”

Jason Falls

“You can also tap into your monitoring and listening software… like Radian6 so you can see those positive and negative online mentions.”

6. Facilitate Social R&D


Research and development can cost hundreds and thousands of dollars.

Pizza chain, Papa John, got it for free with a crowdsourcing pizza recipe contest.

They asked people to come up with a new recipe for their restaurants – and more than 12,000 fans responded, submitting videos of themselves cooking proposed recipes.

The videos were peppered with invaluable consumer insights, for example why they’d added certain spices and vegetables. There were also illuminating comments from other customers under the videos.

Papa John didn’t just feature the recipes of the winner and the runners-up in their restaurants. They also used the competition to propel research and development. The gained invaluable insights into their customers’ tastes and they’ve said they’ll use them to create new pizza varieties.

How to measure R&D:

  • Number of product ideas
  • Revenue from new product ideas
  • Number of feature ideas
  • Revenue increases from new feature ideas
  • Insights gleaned for product team
Jason Falls

“Papa John’s crowdsourced a new product from their audience, put that stores and they made money off it. They also used some of the runner-up recipes and rotated them into stores so they were actually driving business that you can measure with dollars and cents.”

Jason Falls

“They didn’t turn to their executive chef. They turned to their customers.”

Jason Falls

“The VP of marketing and communications…at Papa John’s told me…‘We were getting raw customer feedback that was more insightful and intelligent than what we would pay hundreds and thousands of dollars to a market research firm to get.’”


7. Drive sales

Miss Shirley’s, a restaurant in Baltimore, offers a brunch that’s so popular people are prepared to queue for up to two and a half hours.

Miss Shirley’s wanted to further drive loyalty. So they came up with a promotion using the location-based social network, foursquare. If customers became their foursquare mayor, they could jump to the head of their Sunday brunch queue.

But first Miss Shirley’s had to educate its customers about foursquare. It had tent cards explaining how foursquare worked. They also explained that foursquare uses people’s phones to pinpoint where they are – and check them in. The person who checked in the most would become their virtual mayor.

The idea of queue jumping had strong appeal and people aggressively competed to become the mayor of Miss Shirley’s. So much so the number of check-ins over a three-month period increased 427% – and sales 18%.

How to measure sales and leads:

  • Sales and leads from blog
  • Sales and leads from social network activity
  • Revenue from those leads
  • Social media customer versus traditional customer
  • Conversion rates (social media to purchase points, and all points in between)
Jason Falls

“Their number of check-ins on foursquare in a three-month period increased 427%... So what does that mean? So I’ve got more check-ins? It’s like having more Facebook fans. It doesn’t mean anything! Sales increased 18% over those three months… because in order to be the mayor you had to come back and check into the restaurant.”

Jason Falls

“The thing about social media in the digital world that fascinates me is that we can probably for the first time delineate our communications channels and tell ourselves exactly how much revenue we’re getting from each of our different efforts.”

Jason Falls

“You need to decide which business drivers you… want to focus on. And develop goals that are measurable, that have a target audience… an expected level of attainment, a deadline… and then [you’ll know] ‘what’s my ROI?’ ”

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