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How to measure Social CRM ROI

by Harish Kotadia

January 13, 2011

One of the question frequently asked about Social CRM or Social Media is What is the ROI? This is a great question to ask given the need to justify any major investment, especially after the great recession. Unfortunately, many people (and this includes so called “experts” or “thought leaders”) are missing woods for the trees while trying to answer this question.

It is important to remember that Social CRM is the business strategy of engaging customers through Social Media with goal of building trust and brand loyalty (for more on Social CRM definition, see this).

Strategy is a plan of action designed to achieve a particular goal. Social CRM is a plan of action to build Trust and Loyalty. Social CRM is not a “technology”, “system” or “processes”. While executing Social CRM (strategy), Social Media technology (tools) will be used to achieve the goal (building trust and loyalty), but tools are different from plan. It is very important to remember this distinction between strategy, tools and goals.

Social CRM (strategy) ROI depends on how well Social Media technology (tools) is used for achieving the goal (building trust or loyalty). Return on Investment (ROI) is associated with how well the goal has been achieved and resultant business benefits given the investments and not with tools Per se.

In other words, we need to define measurable Social CRM goals and a clear plan of action for achieving them before embarking upon any Social CRM initiative. And remember, ROI is not associated with Social Media as they are the technological tools used to achieve the goal of building trust and loyalty.

In order to measure Social CRM ROI, first step is to define measurable Social CRM goals, then workout an action plan for achieving these goals, execute the plan and quantify the business benefits arising out it. And this forms the basis for calculating Social CRM ROI (and remember, not Social Media ROI).

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