What Working at a Social Media Company Taught Me about ROI

What Working at a Social Media Company Taught Me about ROI

Image credit: Quka | Shutterstock.com
  • 111Shares
FEBRUARY 16, 2017

For the past four years, myself and three other marketers have met frequently to talk shop. We’ve celebrated a variety of milestones together — promotions, an engagement, our children’s birthdays. What had originally begun as an opportunity to learn from other professionals, has grown into a valuable friendship.

While we’re all marketers, we each come from different industries. In the winter of 2014, I worked at a B2B software company. At the time, the other men and woman were involved in manufacturing, recruiting and higher education. On paper, our backgrounds were similar. As senior leaders, each of us had experience in recruiting and building cross-functional teams, implementing strategy, growing and retaining markets. One of the only significant differences we encountered was how each of our organizations approached social media marketing.

Related: 10 Laws of Social Media Marketing

One week, over a drink, hummus and chips, Maureen began to tell us about a new initiative that was being proposed at the university where she worked. They had planned to launch a specific Twitter handle targeted at freshmen and transfer students. The goal was to help new students become more acclimated and increase involvement in extracurricular activities during their first semester. Through personalized blog content, a weekly Twitter chat and contests the marketing team hoped to both inform and retain students.

“Are you guys doing anything to educate your customers?” Maureen asked.

The table grew silent. Myself and the men in manufacturing and recruiting shook our heads.


At the time, the B2B software company I worked at saw social as one of two things: an extension of its existing customer care efforts or an advertising channel. Whether it was a response to a negative inquiry or an announcement about an offer, everything we published was reactive or promotional. We weren’t proactively doing enough to retain customers or encourage brand loyalty. Looking back, this was a huge oversight that caused our ROI to suffer.

Social doesn’t have an ROI problem; it has an attribution problem.

Shortly after that meeting, I left the software company I was at and became the chief marketing officer at Sprout Social. Still, Maureen’s question stuck with me. One of the first questions I asked our marketing team was, “What are we doing to educate our customers?” Unlike myself and the three other marketers from my meetup, the team had an answer. I knew I had a lot to learn.

Related: Why Every Marketing Channel Won’t Work for Your Business

Working at a social media company taught me that social doesn’t have an ROI problem; it has an attribution problem. Rather than a direct pipeline to profits, marketers need to think of social as a building block that has the power to support, inform and accelerate nearly every aspect of your business.

To help uncover ROI, we focus on three analytics that illustrate social’s impact beyond marketing–product development, customer retention and referrals. So, how do we do that?

Social provides an engaged focus group for research and development.

Social democratizes and diversifies the feedback loop for brands. It widens your focus group from a small subset of people who have the time and willingness to give feedback to a large group of engaged customers who are invested in your brand.

While social is a scalable, cost-effective way to collect demographic data, that feedback is wasted unless brands learn to apply that insight to their business. A Kalypso study on “Social Media and Product Innovation” revealed that while 70 percent of brands surveyed intend to use social for research and development, only 33 percent have a plan in place that allows them to apply those learnings. Furthermore, if there isn’t a solidified feedback funnel, the social media team loses its opportunity for attribution. Which makes it even harder for them to prove social’s organizational value.

Quantifying social’s impact on R&D isn’t as difficult as you might think. At Sprout Social, our team tags all inbound social messages that contain product ideas or feedback. We’re then able to run a report that aggregates those tagged messages and provides meaningful and actionable customer data to our product team. From there, our engineers can develop a product that is tailored for our user’s needs and addresses their pain points. And we all know that a better product leads to larger profits.

Related: How to Target the Right Audience in 5 Simple Steps

Social is the front line for customer retention.

Maureen’s question reiterated that CMOs aren’t paying enough attention to retention. A recent study from Duke University corroborated that CMOs are more likely to focus their resources on customer acquisition vs. retention. Proving these efforts are misguided, Harvard Business Review has cited that it’s five to 25 times more costly to acquire new customers than to retain existing ones.

Throughout my time at Sprout, I’ve learned that social is a front line to customer retention. It provides a personality to a faceless brand. The two-way conversation that social provides allows even moderately engaged customers to feel like they have a direct line of contact to your business. As a result, brands that use social media to interact with existing customers generate a higher Net Promoter score by an average of 33 points and increase customer spending by 20 percent to 40 percent.

But how can you translate that value into a measurable impact on your business? Frankly, it requires breaking down departmental silos and encouraging collaboration across internal teams — two actions that are proven to be extremely difficult for even the most agile companies.

Your sales and marketing teams should work to collaborate and track increased retention among customers who engage with your brand on social. Sure, it’s not easy, but strategizing and mapping out a cross-functional plan with your digital marketing, email, database and sales team will allow you to correlate data and accurately attribute retention to social. From there, you can start to understand the full picture of your efforts and compare those customers with your average retention rates.

Related: Are Your Employees on Social Media? Here Are 4 Reasons They Should Be

Use social as a frictionless referral.

Referrals are one of the oldest forms of marketing, and social casts a wider net on the act of simply telling your friends about a cool new product.  Now you can turn on your smartphone and immediately send a Tweet to Virgin America that shares your thoughts with over 700,000 Twitter followers. Social is one of the most frictionless means of referral. It is scalable for a business and requires minimal work for the consumer. What other medium provides that?

One positive customer experience on social, amplified, could trump your million-dollar ad buy for the Super Bowl. It’s a real-time, human-driven platform that can invoke the interest of a global audience or international media outlet in a matter of minutes. It’s the best medium we’ve ever had for engaging with customers and, in many ways, it’s still in its infancy stages. That’s why organizations that are still using social as an extension of their traditional advertising tactics come across as stale and, quite frankly, lazy.

With the simple additions of UTM codes and by taking advantage of advanced tracking, your brand can quickly and easily launch and measure a social referral program that benefits your business and its customers. Unlike email, phone or direct mail marketing, Facebook, Twitter and Instagram enable a brand’s consumer base to become a massive word of mouth machine. And, since word-of-mouth is the primary factor behind 20 percent to 50 percent of all purchasing decisions, business shouldn’t be ignoring social’s impact.

It’s the journey that counts.

Prior to joining a social media company, I typically tried to attribute ROI metrics to only those individual tasks that could effectively be measured — reach, lead generation or traffic. Sprout has taught me that organizations need to understand that social marketing impacts everything from brand awareness all the way through product development. That’s why it’s critical to involve your entire organization in listening and engaging with your audience. Because, regardless of what business you’re in, it’s the customer journey that will have the most positive impact on your bottom line.