Do you use (or want to use) social media to promote your business but wonder how in the heck you measure its effectiveness to bring in more customers and make more sales?

Here's the thing: For both large and small businesses, effective social media measurement starts with well-defined goals and ends with analyzing the impact of your efforts. That's it, that's the trick!

Whether you are a small, medium or large business, size does not matter when it comes to measuring social media return on investment.

In fact, if you're a 'mom & pop' shop or on the Fortune 500, if you're using social media to improve your business then you are really not that different at all.

The scale might change and one might require more staff to undertake the necessary work, but at its most basic, measuring social media ROI for a large corporation is not much different than a small business.

The Buzz

Currently, the web sphere is abuzz about the use and subsequent power of social media for helping to promote businesses.

But, for some reason, there seems to be more mystery and intrigue surrounding how to measure the results of a social media campaign than there was when Geraldo Rivera was going to open Al Capone's vault.

Many people understand the inherent value of social media, however, they get stuck on how to measure its effectiveness for business growth and increasing sales.

The easiest way to know if your efforts are being effective, or not, is to ask yourself (and be honest) these simple questions, "Are there more customers now than before I started using SM? Is the business selling more product or services?"

Unfortunately, for those who have a boss that they need to answer to, this measurement technique is probably as helpful for your social media career as telling your superior that you saw the Loch Ness Monster on your ride to work.

The truth is, social media has to bring measurable results, and I don't think that quantifying what's working needs to be all that complicated.

5 Step Social Media ROI Method

Today I want to explain the method that I use to measure SM usefulness.

For me, I think the most successful technique for doing this is to break down the benefits, goals, and desired outcomes that YOU hope to obtain down to their least complicated components.

While it might not be technically elaborate, the SM (effectiveness) measurement method that I use is simple, reproducible, and it works. Here is what I do:

Step 1: Goals - what do you want social media to do for your business?

Please note: there should be no skimping here! I know most creative entrepreneurs like to just get on with it, however, in order for measurement to work, you MUST clearly define your goals.

I sometimes get the feeling that people think social media will magically - - produce instant results and be easy. So they decide they don't really have to come up with concrete goals (do they?).

Some common answers to the 'goals' question include; increased brand awareness, sell more product, gain new customers, make the front page of Goolge, etc.

When I got started with social media my business had not been marketed at all, nothing. And had NO online presence. Some of my social media goals were:

• Customers must be able to find us.
• Fill the rooms of our B&B.
• Make enough to pay the mortgage.
• Learn from others and pass on what knowledge I have.
• Rank well in search engines.
• Promote the island in general as a tourist destination.

Step 2: The Plan - How will the goals be achieved?

The social media plan is built upon your goals above. Your plan will be tailored to your business, either large or small, and might include a blog, YouTube video, forum participation and interaction on Twitter and FaceBook.

For more on my specific social media plan have a look at the post How I Use Social Media to Promote My Business or have a look at John's plan.

Step 3: Implementation & Execution - It is now time to put that plan into action.

Seems ignorant to mention this, but strategy wise you can't overlook this step. Consistency is the key! And try not to fall into the trap of thinking, heck I created a Twitter account, Facebook page, and even a blog with one whole entry NOW where's my g-damn customers.

For small to medium businesses, I like to think that it takes a good three to six months of hard work before any benefits are witnessed. If you are in a heavily competitive market you might be looking a one-year before you notice any results. Also, if you work for a large company (i.e. where you have a boss to report to), social media has to be part of the overall business plan and strategy and it must have buy in at all levels. Or else, you are setting yourself up to fail.

Step 4: Measuring results - you have put in the required time and effort, now what?

All right, you have been going gangbusters for months, being helpful on forums and writing killer blog content. When I reached this stage, I'll admit, I was stuck scratching my head. But then I really thought about the question, "What are the measurable results that I can glean from my goals?"

If you are a small biz owner, large corporation, or consultant then you need to spend some time thinking about that question. The answers that I came up with:

• How are people hearing about my business?
• Which of my efforts are bringing the most traffic (blog, forums, etc)?
• Am I attracting the right people, e.g. when they get here are they happy?
• Based on my social media efforts, are we selling more rooms?
• What are the hard sales numbers?

You need to ask: Why are they coming to you? How are they getting there, through which social media avenues? Are you closing a sale?

To find out the majority of the answers to the questions above, I do what I think every business small or large who uses social media should do, I ASK my customers how they heard about us and then I track if they actually make a booking. (I would do the same thing if I was selling a product or service.)

Here is a sample of the spreadsheet that I use to track my social media ROI (please note: the real numbers have been changed to protect the innocent):

You will notice that across the top I have the months listed out and down the side I have my various social media outposts. To come up with the numbers I simply ask my customers how they happened to hear about us. It is not glamorous or sexy work.

But I think this is the KEY!! Whether you are DELL computers or a gourmet bistro, you have to ask your customers how they heard about you.

The typical responses I hear are:

• I found your blog and that led me to your website.
• We typed x,y,z into Google and you popped up.
• You answered my question on XYZ forum and since you were helpful I decided to check you out.
• I read your reviews on TripAdvisor.

Well, you get the point. I think, even larger businesses can do this; it's only six words "How did you hear about us?" And you can add some additional columns for sale or no sale.

How else can you actually measure your effectiveness against your goals? Certainly you can look at Google analytics for traffic measurement, but if you are only doing that, you're only measuring one variable.

Step 4: Revisit/Refine/Redeploy - you've gathered information now it's time to look at what's working and what isn't.

Every couple of months you should review your measured results and determine what you might be doing well, where the majority of your customers are coming from, and where you need to improve.

You need to keep in mind that some elements of social media are just not going to be measurable or that results might take twenty years.

For example, Hugh MacLeod, announced on his blog the other day that he had gotten a book deal. Obvious talent aside, Hugh has been at it for a long time and his success would seem to be measured in sheer tenacity, will, and truly believing in his art and message.

And maybe that's the real trick, belief in what you are doing?

Final TIP! - My business generally succeeds or fails based on customer service. I (we actually) have made the conscious decision to be the best host and customer service person I can be. Don't believe me? (Read this.) Social media or not, if I suck, chances are I would go out of business. The same probably goes for your business.

Do you use social media? What is your method for measuring effectiveness?

Originally published on Mark-Hayward.com

Past Articles by This Author:

• Measuring Social Media ROI: Does size matter?