Measuring the ROI of Social CRM

Written by Scott NesbittFebruary 1, 2011

Return on investment (ROI). Three very simple words. But those are three words that can send a chill through even the most hardened corporate warrior. But ROI is something that the folks running the show demand. They want to see results for their money.

Let's be honest: saying implementing social CRM is a way to create and sustain a conversation with customers isn't going to cut it. The goal of implementing isn't to adopt cool new technology. It's to bolster the bottom line.

But measuring the ROI of social CRM isn't as simple as it sounds. It can be done, but it's not as cut and dry as many people want it to be.

The problem

Social CRM and other social technologies are fairly new. There are no universally-accepted ways of measuring that ROI. It's difficult to definitively pinpoint how social CRM impacts the bottom line. That elusiveness can be frustrating to the powers that sign the checks.

Admittedly, you can look at traditional measures like the number of sales leads that social CRM generates, the cost per lead, and the conversion rates of those leads. Or you can track how many of your customers came to you through social media channels. By doing that, you can get a decent view of the revenue that social CRM generates but you don't get the full picture.

Why not? There are other drivers that are more difficult to quantify. And that brings us to a very important point about the ROI of social CRM: a number of experts and analysts advise that you look beyond simple financial measures and metrics to find that elusive ROI.

What to look for

Social CRM, and social media in general, isn't always an obvious revenue driver. Sure, some companies (like Dell) sell a few million dollars worth of merchandise via Twitter each year but most companies can't point to social CRM and say This earned or saved us so-many dollars in the last 12 months.

Again, it's possible to look at ROI from the viewpoint of money earned and the internal costs of running and maintaining a social CRM system. But, again, there's more to ROI than that.

You need to take other factors into account as well. Some of those factors are intangibles like increased customer loyalty and retention through better communication. Anyone wanting to measure the ROI of social CRM also needs to look at the effect of social CRM on the company as a whole.

Has the use of social media driven support costs down because customers and prospects have been finding the help that they need from online channels instead of inundating an often-beleaguered support team? Have customers been more engaged since starting a social media campaign? Have click-throughs, registrations, and responses to calls to action increased? 

You can answer a number of those questions by using a good social CRM analytics tool. The biggest measure of ROI, though, is how effective your overall social CRM strategy has been in strengthening your brand and building trust and loyalty.

Summing up

Measuring the ROI of social CRM is still a bit of a moving target. Taking that measurement can be complex and, in some cases, might not be as compelling as a simple matter of dollars and cents. 

Measuring the ROI of social CRM involves looking at qualitative metrics like sales or money saved and at quantitative metrics like customer satisfaction and trust. Until there's a magical (or, at least mathematical) way of accurately measure the ROI of social CRM, a mix of metrics is your best bet for discovering how effective -- cost or otherwise -- you social CRM implementation is.

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