Lorna Garey, content director of InformationWeek Reports explains the challenge many organizations face when dealing with cloud technology:

“Companies that cannot compare costs for public cloud services versus internal IT will be in rough shape once they build private clouds and adopt a hybrid setup,”

“And just avoiding cloud won’t be an answer, if enterprises don’t want a stark IT cost delta between them and startups.”

Jonathan Feldman, author of the study, explains a little more about the confusion in calculating ROI:

While there’s an air of inevitability around cloud computing, the ROI calculation has stayed in flux. A lot depends on whether we’re talking SaaS, PaaS or IaaS; some are easier to wrap your arms around than others. Because of SaaS’s very granular cost methodology, it’s actually pretty straightforward to calculate investment and who benefits, and thus peg return on investment. For example, especially for commoditized enterprise applications like email, it’s fairly trivial to figure out how much personnel, storage, servers, software and licenses cost to come up with a per-seat price for in-house email. Then you can compare apples to apples.

Here’s some findings from InformationWeeks’s report:

* 82% of our survey respondents have or expect a formal mandate or a preference to evaluate cloud computing as an option for any new IT services or systems.

* 60% are concerned or very concerned over the potential for runaway costs if cloud services scale up inappropriately, whether due to error, mismanagement or an attack such as DoS.

* 31% say it’s highly likely they will comprehensively evaluate ROI for the expected lifespan of a cloud computing project; 54% of those likely to evaluate their return on investment will use a three- to five-year time period for comparison.

* 27% report incorporating time savings for business unit employees or IT staff has a high likelihood of being included in an ROI study regarding the business value of cloud computing.

The survey information is based on responses from 374 participants in InformationWeek’s Cloud ROI IT survey for 2012. Hopefully these results shed a little light on subject for those who are making decisions about the right ways to invest in cloud technology.

The latest attempt comes from Experian Hitwise. “We are constantly asked: ‘What’s the ROI with advertising on Facebook?’ and until now that has always been a difficult question to qualify precisely,” says the firm’s Research Director in the UK, Robin Goad. “Leveraging our unique data sets we now have an answer: for retailers, each new fan acquired on Facebook is worth 20 additional visits to your website over the course of a year.”

How much is a Facebook fan worth? Tell us what you think.

“Our data shows that for the top retailers, even if they have no Facebook fans they can still expect to receive on average 62,000 visits from Facebook each month,” says Goad, plugging a new service the firm is offering, called Facebook Fan Acquisition and Analysis. “Within retail each new fan acquired will drive an additional 20 visits to a retailer’s websites, which in turn will generate extra sales both online and offline.”

“The figure of 1 fan = 20 extra visits to a website uses a unique methodology that combines Hitwise data with data from Techlightenment,” he says. “We took the top 100 retailers ranked in the Hitwise Shopping and Classifieds category and benchmarked visits to those websites against the number of fans those brands had on their Facebook page. We then also looked at the propensity for people to search for those retail brands after a visit to Facebook using our Search Sequence tool.”

A study (about a year ago) from Syncapse found that people who are Facebook fans, on average, spend $71.84 more per year on brands they are fans of than those who are not fans. In addition to that, they’re 28% more likely than non-fans to continue using that brand. Michael Scissons, the CEO of Syncapse, talked about the study on the Fox Business Network:

He says a Facebook fan is worth $136.38, taking into account factors like spend, loyalty, recommendations, earned media value, and cost offset for fan acquisition.

Back in February, a report released by ChompOn (which just partnered with Loopt its interesting new u-Deals offering), proclaimed that a Facebook Share was worth $14, while a Facebook “Like” was worth $8. That’s compared to a tweet being worth $5 and a Twitter follow being worth $2.

“For shares and tweets, we were able to directly attribute sales to the original action, so we simply took the total revenue attributed to each action and divided it by the total number of shares/tweets,” the firm said. “For likes and follows, we had to estimate attribution by looking at our traffic references and subtracting out purchases made through shares/tweets as well as purchases made through direct traffic.”

Last year, a study from Virtue found that Facebook fans are valued at $3.60 each in earned media for brands. The study was debated, but interesting nonetheless. “Despite the formula flaws, I do think it’s a good start to something many marketers are looking for – i.e. what’s the return on investing budget and human capital on a Facebook fan page?” wrote Yahoo Sr. Manager of Community Marketing Michael Brito in an article we ran about the study. “In fact, working on the brand side for many years, this question arises daily.  And, the reality is that we may never know the true value of a fan because human behavior changes all the time and technology isn’t quite there yet; not to mention the possible privacy implications.  I do feel that calculating fan value needs to involve more than just impressions.”

Brito took the formula used to come up with that valuation, and ran it for some major brands at the time. Based on this, Coca-Cola fans were wroth $0.96 a piece. YouTube fans were worth $1.92, Adidas fans were worth $2.40. NBA fans were worth a whopping $8.22. The formula used went like this:

1M impressions x 2 posts x 30 days = 60M impressions
60M impressions / 1000 x $5 CPM = $300,000
$300,000 x 12 months = $3.6M
$3.6M / 1M fans = $3.60

Feel free to poke all the holes you want in any of these studies. Augie Ray at Forrester Research once wrote on “why the question of Facebook fan valuation is problematic”:

• Assumptions:  The methodologies for estimating the value of a Facebook fan rely on a host of assumptions, but every audience, brand and program is unique. For example, the value of a fan for big-ticket items cannot be the same as a fan for lower-consideration items.
• All fans are not equal:  Every individual has a unique social graph and a unique voice.  I might be considered influential on topics of social media and marketing, but my opinion on floor mops might hold little influence within my set of friends and followers. One’s value as an influencer varies from category to category.
• Acquisition matters:  How a fan is acquired makes a difference.  A fan that organically “likes” a brand has more potential value than one that is encouraged to click the “like” button in exchange for a coupon or some Farmville bucks.
• Cause and effect:  Which came first, the chicken or the egg?   Do Facebook fans spend more, or do people who spend more become fans?  If the former, then Facebook fans are generating new value, but if the latter is true then Facebook fandom merely reflects existing value rather than creating new value for brands.

Of course Facebook has continued to grow tremendously since most of these even came out, and user behavior has also changed (strictly in the sense that you can’t assume that everybody is using Facebook exactly the same way they were using it a year ago) so even if it was dead on, it’s possible that things have changed.

The “Filter Bubble” is worth considering. This is a concept we discussed in an article earlier this week, based on a TED talk given by Eli Pariser. Basically, this is about the content we consume becoming more filtered because it’s being tailored to us on a personalized level by the sites we use – including (and especially) by Facebook. Pariser quoted Facebook CEO Mark Zuckerberg as saying, “A squirrel dying in front of your house may be more relevant to your interests right now than people dying in Africa.”

Zuckerberg’s point is that Facebook wants to give you the information most relevant to you. It does this by not showing you everything from all of your friends and Pages in the news feed. In terms of Facebook fans for a page, it’s worth considering that all of your messages might not find their way to all of your fans, simply because Facebook may filter some of them out of their news feeds. You can’t expect all of your fans to go to your page on their own on a regular basis.

There are ways to improve your chances of getting in the news feed. In another recent article, we discussed “EdgeRnak,” which is the basis for Facebook’s News Feed algorithm. A report from Buddy Media, which has built a business out of creating Facebook tools for businesses, and counts many major brands among its clients, provided these tips to keep audiences engaged. Posts with higher engagement are more likely to appear in the News Feed:

1. Ask questions
2. Post games and trivia
3. Interact with fan engagement
4. Incorporate wall sapplets (polls, coupons, etc.)
5. Incorporate relevant photos
6. Relate to current events
7. Incorporate videos
8. Post content for time-sensitive campaigns
9. Include links within posts
10. Be explicit in your posts

In social media in general, you might say you get back what you put in. Earlier this month, we ran an article from Brian Solis, who said, “Social media is as effective as its design. The ability to deliver against brand lift, ROI, or an established set of business and operational metrics and KPIs is all in the design. I believe you can not measure what it is you do not, or do not know, to value.”

He pointed to a study from Vocus and MarketingSherpa, which looked at the effectiveness of various social media marketing tactics, finding that effectiveness very much reflects the degree of difficulty for different strategies. In other words, it’s probably not going to be as effective if it’s really easy, but if it takes more effort, it’s likely to work better. Here’s a graph from the study that illustrates this:

Solis offered the following tips:

1. Start by understanding who you’re trying to reach and what it is they value

2. Design programs that meet the needs of each segment

3. Dissect the keywords and clickpaths of your desirable segments and develop a thoughtful SMO program

4. SMO is only as effective as the content and destinations its meant to enhance. Develop content and click paths that matter and deliver value on both sides of the transaction.

5. Identify the individuals and organizations that influence your markets. Learn what it is they value and develop engagement programs that offer tangible value (what’s in it for them and their audiences).

6. #Engage

In reality, it’s hard to say with any confidence that every Facebook fan you have is worth a set amount of money to your business. People may even forget that they even “like” your brand over time, if it’s not appearing in their News Feed frequently. That said, it does seem pretty clear that there is value to be had in Facebook fans if you’re willing to engage them and give them reasons to value you. Value isn’t a one-way street.

Maybe you should look at the brands you “like”. Why do you like them? What’s in it for you? If you have a good reason for “liking” a Page, they’re probably doing something right. Are you doing the same things right as a reflection of your own brand? Do enough things right, and the value of “liking” your page will go up for the consumer, which in turn is bound to make that consumer more valuable to your business.

What’s a Facebook fan worth to you? Let us know in the comments.

I read a review about Engage once that read, “Brian Solis takes the fun out of social media.” The author’s point was that the book took an academic approach when the industry could benefit from something that focused on best practices, case studies, and actionable takeaways.

Shortly thereafter, I participated in a day-long event at a leading global consumer brand. Following my presentation, the person, a representative from a leading social network, took the stage and started her presentation by slighting the general theme of my discussion. She simply said, “Don’t over think social media. It’s supposed to be fun!”

Between the review, others like it and that on stage remark, I was starting to think that maybe I was beating the wrong drum. While I appreciate their perspective and their ideas, there are those of us who must march to the beat of our own drummer. This is why my work focuses on how to bridge the gap between customers and businesses, nothing less, nothing more. I focus on accountability, change, innovation and co-creation. It is not easy nor is it supposed to be when your mission is value, starting with the end in mind and working backwards from there.

The truth is that the customer gap existed prior to social media and successfully closing it takes more than basic conversational or content-driven strategies in Twitter, Facebook and other social network. The path to engagement is strenuous, uncharted, and anything but easy. Everything begins with understanding the magnitude of the gap and what it is that people want, are missing or could benefit from in order to bring both ends toward the middle.

No matter how hard we try, we just can’t build a customer-centric organization if we do not know what it is people value. Social media are your keys to unlocking the 5I’s of engagement to develop more informed and meaningful programs:

1. Intelligence – Learn about needs, wants, values, challenges
2. Insight – Find the “aha’s” to identify gaps
3. Ideation – Inspire new ideas for engagement, communication, new products/services, change
4. Interaction – Engage…don’t just publish, bring your mission to life
5. Influence – Influence behavior and in the process, become an influencer

Social media is as effective as its design. The ability to deliver against brand lift, ROI, or an established set of business and operational metrics and KPIs is all in the design. I believe you can not measure what it is you do not, or do not know, to value. As part of a recent study sponsored by Vocus, MarketingSherpa discovered that a majority of social media programs focused on programs that were deemed “fast and easy.” Sound familiar? Indeed, those programs that focus on social media programs that are easy are less effective than those that require a deeper investment of time, understanding and resources.

MarketingSherpa combined three questions about social marketing tactics: The effectiveness to achieve objectives, the degree of difficulty to implement each tactic, and the percentage of organizations using them. Their findings across the board is that “fast and easy” trumps effectiveness.

The tactics with the lowest degree of difficulty and corresponding level of effectiveness include…

- Social sharing buttons in email

- Social sharing buttons on web sites

- Tweeting

- Multimedia creation

- Social advertising

The balance shifts however toward potency as the degree of difficulty escalates. Here we see the following programs carry greater reward for consumers and businesses alike, but as such, you get what you pay for.

- Blogging

- Engagement in social networks

- SMO (Social Media Optimization)

- Blogger and influencer relations

Social media doesn’t have to be void of “fun.” It must offer value and usefulness to be successful.

In the end, the reality is that you get out of social media what you invest in it. But at the same time, experimenting with social media is not anything to discredit. The difference between today’s media and the the networks of yore is nothing less than the democratization of information, from creation to consumption to sharing and the equalization of influence.  The marketing landscape has been reset and thus requires a shift from a casual approach to genuine leadership.

1. Start by understanding who you’re trying to reach and what it is they value

2. Design programs that meet the needs of each segment

3. Dissect the keywords and clickpaths of your desirable segments and develop a thoughtful SMO program

4. SMO is only as effective as the content and destinations its meant to enhance. Develop content and click paths that matter and deliver value on both sides of the transaction.

5. Identify the individuals and organizations that influence your markets. Learn what it is they value and develop engagement programs that offer tangible value (what’s in it for them and their audiences).

6. #Engage

Originally published on BrianSolis.com

This stemmed from a quip Gary had made to an event attendee who was asking a few times about the ROI of social media, to which Gary replied, “What’s the ROI of your mother?”

A throwaway quip, but one I thought was indicative of why so many people are confused (or afraid) when it comes to using social media for business. I said as much in the comments, and Chris Theisen raised an interesting point with his question: “Do companies actually measure whether each employee has a positive ROI on the company?”.

If they don’t, then they should.

What’s the point in running a business and employing the folks you need if you’re not measuring their impact? Questions you should be asking (and measuring) include:

• Does John the sales guy bring in enough sales to cover his costs? Great, he may be bringing in $100,000 worth of sales, but if they’re to 100 different customers and I need to hire more customer service advisors to handle their queries, John’s value immediately diminishes.

• Does Karen the customer service advisor upset my customers? She may be awesome in the office, but if she’s caused 10 customers to leave in the space of twelve months, and they each spend $5,000 per year, her salary of $30,000 per year is now actually $80,000 per year.

• Does Peter the marketing guy piss off fellow team members and lower their morale because he thinks he’s “all that”? If so, does that stop them doing their job properly and cost me sales, or quality service for my customers? Does it make my employees want to leave, costing me more money to train new hires (not to mention losing the team spirit that had been fostered before Peter’s arrival)?

These are just three examples of where you could start looking, and measuring the impact each employee has on your business. There are many more, and some that are unique to individual businesses and industries – but they’re good starter points, and a pointer for a full organizational development analysis. This can then tell you how to make sure your employees feel as valued by you as they are valuable to you.

If you’re not already measuring the ROI of your employees, then are you really measuring the success of your business?

image: TruthOut.org

Originally published at dannybrown

"A year ago, businesses were uncertain about social media," says Stelzner. "Now it’s here to stay and companies are rapidly adopting social media marketing. According to his findings, the majority of marketers surveyed (about 1,900) have either just begun using social media or have only been using it for a few months:

"Measuring the return on investment for social media is the hottest question on marketers minds right now," Stelzner tells WebProNews. "Most marketers are seeing great value with their social media campaigns, but they just cannot figure out how to measure their results." Here are the top ten questions businesses have about social media marketing, based on the analysis of 1,356 open-ended responses:

Top Ten Questions

1. How do I measure social media return on investment?
2. What are the social media marketing best practices?
3. How do I best manage my time with social media?
4. How do I reach my target markets with social media?
5. How do I generate traffic and leads using social media?
6. How do I implement social media tactics?
7. What are the latest social media trends?
8. How do I get started?
9. How do I integrate my social media activities?
10. How do I evaluate the advantages and disadvantages of each platform?

One thing worth noting is that last year, the top question was related to tactics, but now it’s ROI. Perhaps businesses have learned some effective tactics in a year’s time, and have realized that these vary depending on needs and goals. Another significant change is that a year ago, one of the top questions was "Does social media marketing work?" and this isn’t even on the list anymore. It’s become abundantly clear over the past year that if you figure out how to do it right, it works. Brands have confirmed this time and time again.

Stelzner notes that his survey indicates marketing interest has fallen off significantly, with 81% either indicating they will not use MySpace or will decrease their use of it. "Another hot finding is that 81% of marketers will actually be increasing their use of blogs," he adds. "That came as a surprise to us."

It is indeed a bit surprising that so many would indicate an increase in blog use, but that is simply because their is this false notion out there that social networks are replacing blogs, and as we’ve discussed on numerous occasions, it’s just not the case.

Stelzner’s extensive report can be viewed here. It’s full of interesting stats and graphical information.

For your CEO and CFO to take social media campaigns seriously, you need to be able to demonstrate a direct measurable impact that either reduces costs (say in reduced customer service heads) or increases sales. At the moment, most social campaigns are doing neither.

Both Dell and Sony have both stated that they have generated real sales from social media program, but these are definitely exceptions.

But the majority of marketers don’t even measure ROI at a simple level let alone try and attribute sales. It’s not that there aren’t any tools to do so, or that there isn’t a formula for calculating ROI; it’s just that links to actual sales from social media programs are often tenuous. And where you have tenuous links, then ROI becomes very subjective and only as good as the assumptions that go into the formula. In my experience, CFOs don’t like subjective!

There are lots of tools becoming available to help you measure sentiment, comments and click through, but all of these are essentially measuring influence, not measuring what really counts. So perhaps the bigger question should be, “How do we turn fans into paying customers?”

Social media marketing is still a long way from reliably generating revenue. Generally these programs most often start with a ‘Broadcast’ stage where the approach is to use blogs and social pages to recruit fans and push a corporate message. The goal here is most often to build large follower bases and communicate with customers and prospects, and educate them about your products and services.

Some sites are delivering service as customers seek to get specific answers, to connect with the brand and get service, or just be heard and share their thoughts and experiences. Many brands struggle to deal with this stream, especially in the B2C space where the stream can potentially become an overwhelming torrent.

More often than not this demands dedicated headcount, and your CFO may well be asking where the savings or increased sales are.

This is where many brands are now: Their social media marketing has established a good fan following, but it’s costing more than they expected to service the requests and moderate the community. There are few attributable sales that can be put against all this effort.

Linking Ecommerce and Social Media

To convert fans into paying customers though requires more. In fact, it needs integration between ecommerce sites and social media sites so that the data can be linked and fans identified while on the ecommerce site. While your sites are disconnected, all your fans are anonymous; you have no idea whether they are a fan or not, so you can’t market to them in a relevant way. This type of integration is deeper than the commonly seen ‘Friend us on Facebook’ or ‘Follow us on Twitter’ hyperlinks which you see on many ecommerce sites.

What’s needed is to allow customers to log in to their social network accounts on your ecommerce site. Over time this will become commonplace and will surpass many registration processes. When this happens, you can then associate browsing behavior, purchases and abandoned shopping carts with the individual fan.

You May Ask ‘Why Would a Fan Sign in on my Site?’

The answer is simple. The number one reason why consumers friend a brand on a social network is to receive special offers and promotions. So by putting up a simple logo offering promotions via social networks, you’re giving customers a reason to share with you.

Once they are identified, then a whole spectrum of online marketing campaigns become possible for the first time. For example, you might choose to follow up abandoned shopping carts using their social network. Or you might want to run member-get-member promotions to encourage your customers to encourage their friends to buy. This is where the CEO and CFO will start getting interested: Now your campaigns can directly drive sales.

For your CEO and CFO to take social media campaigns seriously, you need to be able to demonstrate a direct measurable impact that either reduces costs (say in reduced customer service heads) or increases sales. At the moment, most social campaigns are doing neither.

Both Dell and Sony have both stated that they have generated real sales from social media program, but these are definitely exceptions.

But the majority of marketers don’t even measure ROI at a simple level let alone try and attribute sales. It’s not that there aren’t any tools to do so, or that there isn’t a formula for calculating ROI; it’s just that links to actual sales from social media programs are often tenuous. And where you have tenuous links, then ROI becomes very subjective and only as good as the assumptions that go into the formula. In my experience, CFOs don’t like subjective!

There are lots of tools becoming available to help you measure sentiment, comments and click through, but all of these are essentially measuring influence, not measuring what really counts. So perhaps the bigger question should be, “How do we turn fans into paying customers?”

Social media marketing is still a long way from reliably generating revenue. Generally these programs most often start with a ‘Broadcast’ stage where the approach is to use blogs and social pages to recruit fans and push a corporate message. The goal here is most often to build large follower bases and communicate with customers and prospects, and educate them about your products and services.

Some sites are delivering service as customers seek to get specific answers, to connect with the brand and get service, or just be heard and share their thoughts and experiences. Many brands struggle to deal with this stream, especially in the B2C space where the stream can potentially become an overwhelming torrent.

More often than not this demands dedicated headcount, and your CFO may well be asking where the savings or increased sales are.

This is where many brands are now: Their social media marketing has established a good fan following, but it’s costing more than they expected to service the requests and moderate the community. There are few attributable sales that can be put against all this effort.

Linking Ecommerce and Social Media

To convert fans into paying customers though requires more. In fact, it needs integration between ecommerce sites and social media sites so that the data can be linked and fans identified while on the ecommerce site. While your sites are disconnected, all your fans are anonymous; you have no idea whether they are a fan or not, so you can’t market to them in a relevant way. This type of integration is deeper than the commonly seen ‘Friend us on Facebook’ or ‘Follow us on Twitter’ hyperlinks which you see on many ecommerce sites.

What’s needed is to allow customers to log in to their social network accounts on your ecommerce site. Over time this will become commonplace and will surpass many registration processes. When this happens, you can then associate browsing behavior, purchases and abandoned shopping carts with the individual fan.

You May Ask ‘Why Would a Fan Sign in on my Site?’

The answer is simple. The number one reason why consumers friend a brand on a social network is to receive special offers and promotions. So by putting up a simple logo offering promotions via social networks, you’re giving customers a reason to share with you.

Once they are identified, then a whole spectrum of online marketing campaigns become possible for the first time. For example, you might choose to follow up abandoned shopping carts using their social network. Or you might want to run member-get-member promotions to encourage your customers to encourage their friends to buy. This is where the CEO and CFO will start getting interested: Now your campaigns can directly drive sales.

For your CEO and CFO to take social media campaigns seriously, you need to be able to demonstrate a direct measurable impact that either reduces costs (say in reduced customer service heads) or increases sales. At the moment, most social campaigns are doing neither.

Both Dell and Sony have both stated that they have generated real sales from social media program, but these are definitely exceptions.

But the majority of marketers don’t even measure ROI at a simple level let alone try and attribute sales. It’s not that there aren’t any tools to do so, or that there isn’t a formula for calculating ROI; it’s just that links to actual sales from social media programs are often tenuous. And where you have tenuous links, then ROI becomes very subjective and only as good as the assumptions that go into the formula. In my experience, CFOs don’t like subjective!

There are lots of tools becoming available to help you measure sentiment, comments and click through, but all of these are essentially measuring influence, not measuring what really counts. So perhaps the bigger question should be, “How do we turn fans into paying customers?”

Social media marketing is still a long way from reliably generating revenue. Generally these programs most often start with a ‘Broadcast’ stage where the approach is to use blogs and social pages to recruit fans and push a corporate message. The goal here is most often to build large follower bases and communicate with customers and prospects, and educate them about your products and services.

Some sites are delivering service as customers seek to get specific answers, to connect with the brand and get service, or just be heard and share their thoughts and experiences. Many brands struggle to deal with this stream, especially in the B2C space where the stream can potentially become an overwhelming torrent.

More often than not this demands dedicated headcount, and your CFO may well be asking where the savings or increased sales are.

This is where many brands are now: Their social media marketing has established a good fan following, but it’s costing more than they expected to service the requests and moderate the community. There are few attributable sales that can be put against all this effort.

Linking Ecommerce and Social Media

To convert fans into paying customers though requires more. In fact, it needs integration between ecommerce sites and social media sites so that the data can be linked and fans identified while on the ecommerce site. While your sites are disconnected, all your fans are anonymous; you have no idea whether they are a fan or not, so you can’t market to them in a relevant way. This type of integration is deeper than the commonly seen ‘Friend us on Facebook’ or ‘Follow us on Twitter’ hyperlinks which you see on many ecommerce sites.

What’s needed is to allow customers to log in to their social network accounts on your ecommerce site. Over time this will become commonplace and will surpass many registration processes. When this happens, you can then associate browsing behavior, purchases and abandoned shopping carts with the individual fan.

You May Ask ‘Why Would a Fan Sign in on my Site?’

The answer is simple. The number one reason why consumers friend a brand on a social network is to receive special offers and promotions. So by putting up a simple logo offering promotions via social networks, you’re giving customers a reason to share with you.

Once they are identified, then a whole spectrum of online marketing campaigns become possible for the first time. For example, you might choose to follow up abandoned shopping carts using their social network. Or you might want to run member-get-member promotions to encourage your customers to encourage their friends to buy. This is where the CEO and CFO will start getting interested: Now your campaigns can directly drive sales.

For your CEO and CFO to take social media campaigns seriously, you need to be able to demonstrate a direct measurable impact that either reduces costs (say in reduced customer service heads) or increases sales. At the moment, most social campaigns are doing neither.

Both Dell and Sony have both stated that they have generated real sales from social media program, but these are definitely exceptions.

But the majority of marketers don’t even measure ROI at a simple level let alone try and attribute sales. It’s not that there aren’t any tools to do so, or that there isn’t a formula for calculating ROI; it’s just that links to actual sales from social media programs are often tenuous. And where you have tenuous links, then ROI becomes very subjective and only as good as the assumptions that go into the formula. In my experience, CFOs don’t like subjective!

There are lots of tools becoming available to help you measure sentiment, comments and click through, but all of these are essentially measuring influence, not measuring what really counts. So perhaps the bigger question should be, “How do we turn fans into paying customers?”

Social media marketing is still a long way from reliably generating revenue. Generally these programs most often start with a ‘Broadcast’ stage where the approach is to use blogs and social pages to recruit fans and push a corporate message. The goal here is most often to build large follower bases and communicate with customers and prospects, and educate them about your products and services.

Some sites are delivering service as customers seek to get specific answers, to connect with the brand and get service, or just be heard and share their thoughts and experiences. Many brands struggle to deal with this stream, especially in the B2C space where the stream can potentially become an overwhelming torrent.

More often than not this demands dedicated headcount, and your CFO may well be asking where the savings or increased sales are.

This is where many brands are now: Their social media marketing has established a good fan following, but it’s costing more than they expected to service the requests and moderate the community. There are few attributable sales that can be put against all this effort.

Linking Ecommerce and Social Media

To convert fans into paying customers though requires more. In fact, it needs integration between ecommerce sites and social media sites so that the data can be linked and fans identified while on the ecommerce site. While your sites are disconnected, all your fans are anonymous; you have no idea whether they are a fan or not, so you can’t market to them in a relevant way. This type of integration is deeper than the commonly seen ‘Friend us on Facebook’ or ‘Follow us on Twitter’ hyperlinks which you see on many ecommerce sites.

What’s needed is to allow customers to log in to their social network accounts on your ecommerce site. Over time this will become commonplace and will surpass many registration processes. When this happens, you can then associate browsing behavior, purchases and abandoned shopping carts with the individual fan.

You May Ask ‘Why Would a Fan Sign in on my Site?’

The answer is simple. The number one reason why consumers friend a brand on a social network is to receive special offers and promotions. So by putting up a simple logo offering promotions via social networks, you’re giving customers a reason to share with you.

Once they are identified, then a whole spectrum of online marketing campaigns become possible for the first time. For example, you might choose to follow up abandoned shopping carts using their social network. Or you might want to run member-get-member promotions to encourage your customers to encourage their friends to buy. This is where the CEO and CFO will start getting interested: Now your campaigns can directly drive sales.