Thursday, January 31, 2013

Social Media Measurement, Actionable vs Vanity Metrics

Many companies use the wrong metrics to measure their performance, especially when it comes to social media. I've done many training on Engagement and ROI, and often companies like to focus on what many call, "Vanity Metrics". Pageviews, unique visitors, registered members, conversion rates, email-newsletter open rates, number of Twitter followers, or Facebook likes -- Do you think they are important? Eric Ries, author of The Lean Startup, does not think so.

Vanity Metrics look good, and is easy for a fan to see how popular you are, but there is a question that is hardly asked, "So What?"

These are 4 "Actionable Metrics" to focus on.
  • Relevant revenue. Note the word "relevant," which refers to recurring sales in your core business. Don't count revenue from one-time or stagnant sources.
  • Sales volume. This can be a number like units sold or active subscriptions, something that shows whether or not enough people want to buy what you're selling.
  • Customer retention. Metrics like "new customers" can hide the fact that although you may attract 1,000 new users a month, you're losing 900, which means you're not going to scale.
  • Relevant growth. Too often, companies compound the stupidity of their choice of metrics by creating a metric tracking the growth of vanity metrics. You should be looking for a traceable pattern in which the actions of your existing customers create new customers. That's what Ries calls an "engine of growth."
 These metrics are valuable because they measure success at your core business. To measure the value of your social-media activities, you have to look at the results the company is getting overall and track how social media was involved in moving the needle.

Social media is a big-picture, interdisciplinary concept that covers an evolving set of digital methods through which stakeholders interact. These methods can become major marketing channels, customer-service delivery channels, and new ways of gathering intelligence. Internally, your team can use social technologies to share information, build relationships, and get work done. Much of this is profoundly important, yet intangible. Intangibles are the enemy of actionable metrics.

To use Social Media effectively,  a company has to discover its actionable metrics and act on them instead of the vanity metrics.

-- Robin Low

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