ROE – previously Return On Equity – has had no clear definition. For purposes of this post we will say ROE is Return On Engagement. Engagement is easily seen, almost tangible, certainly obvious to anyone paying attention. A good example of engagement is @RichardAtDell. What Richard does is answer queries, point people to helpful resources, guide them through self-help options and in general discusses what Dell’s customers want to discuss. But is it measurable? Today, no.
InvestorWords defines it like this: Return on Investment. A measure of a corporation’s profitability, equal to a fiscal year’s income divided by common stock and preferred stock equity plus long-term debt. ROI measures how effectively the firm uses its capital to generate profit; the higher the ROI, the better.
Clear returns and what’s trackable
Today, the corporate world is trying to justify social media campaigns the only way they know how, by using traditional models based on ROI. They are trying to put their new social media teams under the blanket of ROI and finding it lacking. There is no clear metric to measure the ROI in the engagement of a social media team. Buzz, while certainly trackable, isn’t bringing clear returns on investment. Not short term, and that’s all we have right now.
How do we find a clear indication of value, making ROE a profit bearing venture?
There are innumerable tools we’d like to think are good indicators. The problem is, you can take 3 different services all asserting themselves as the tool to calculate how well your social media campaign is doing, and you will get 3 very different responses.
Growth, traffic patterns, and no defined analysis
Hits on a blog might be indicative of ROI, but quantifying that is difficult. No two blogs offer the exact same things to the exact same audience. Certainly you can watch growth patterns, traffic patterns, and infer where there is growth, value is building. But that, too, is only one piece of a very large puzzle that we have no defined analysis to work with. There is still argument as to how possible it is to get an accurate picture without longterm studies, something we simply don’t have.
Going back to ROE, as I stated before, the corporate climate is still intent on finding a clear link between adding a social media team and ROI. While the engagement part is easy to see, the ROI of it is not.
Both small business, and women in small business are taking the old business model and molding a new one. They use personal communication. They’re ripe to show big corporations not only where the value lies, but that the real value, though not tangible by old measures, will win, and win big.
The old monetary vision of ROI is being replaced.
We are in the process of changing the dialogue, changing the value structure altogether.
Currency isn’t strictly about money anymore. Your currency today is the trust placed in you. If people trust you, they follow you. The more you are followed, the more likely you are to be heard, and so it goes.
Ultimately it doesn’t matter why it exists, ROE is where we need to direct our energy as we look to the future for our business plans. Keep an open mind, with social media there is no money back guarantee.
- Terri Holley asks “Do I really value people?” when using social media in business;
- Elaine Gantz Wright looks at taking ROI focus away from justification of hard costs and considers social media’s opportunity costs instead.
Guest contributor Sheryl Breuker is a longtime technology writer for publications like Realtime Publishers, as well as her shared blog at Stardust Global Ventures which also hosts her popular Incidental Interview series where Sheryl, aka The Gabby Geek, interviews authors, media, and tech leaders of today. Owner of Sheryl Breuker Media, she advises individuals, businesses and non-profit organizations around the world on digital media integration to reshape business culture, redesign work processes, and better engage with customers, partners and employees. Sheryl lives in Washington state, together with her partner, son and 2 cats.
Image Old Vault Door by Daniel Leininger, Creative Commons.