I think we should come up with a new name - maybe we brand somehow within Rosetta . Outside of the name, I like the idea of figuring out the purchase path that originates within Social Media and ends in a transaction of some sort, and then attributing that back to the originating environment. I think to Jay and Roberts point, the actual measurement is difficult because it is just conversations. However, I would also argue that most of our marketing efforts are about conversations. But in essence I agree. I wonder through what we can track as far as infuence is concerned. Are their influenced revenue dollars that we can track back to or through?

However I do think there are ways in which a relationship can be measured within a social network environment to see how the users are interacting in the conversations. This sort of information allows the business to “inspect and adapt” to improve what they offer and indirectly affect ROI. Here are some ways that I think measurement can be used to improve ROI (even if it’s not measurable directly)

Measure chatter, how often are keywords being mentioned; giving an idea of how much something is being talked about and in what context.

Measure the number of new posts relative to reply’s for keywords; gives a measurement on how much users are interacting when talking about products.

Measure purchases of products and correlate that against users that have also purchased products, map this information against friend networks and conversations to analyze how these are affecting purchases.

I feel the point of social commerce from a business perspective is that it allow the company and products to evolve from the input and conversations of the customers that use the products. The real return on investment will be demonstrated by the continuous growth of the community and continued sales.

1. How much money do you make with email?
2. How much money do you make from your phone conversations?
3. How to you measure the ROI on marketing materials, sales brochures, attendance at industry events?
4. How much money do you make on a sales call?
5. How much money do you make from your web site?

The consistent response is similar to a deer staring into the headlights of an oncoming car. Most business people think they are managing by measuring results and for “soft issues” they make up measures to satisfy themselves. Measuring business results has turned into a “counting game” without regard to the quality of the inputs, the relationships and the quality of the business which covers many aspects. (Wonder why we need an economic bailout?)

I find this whole social media ROI discussion rather sophomoric and only reflects the old school management philosophies which need to be transformed in order to survive.

What Can Be Measured?

Stephen Smith writes: “The problem with trying to determine ROI for social media is you are trying to put numeric quantities around human interactions and conversations, which are not quantifiable.”

“To illustrate that point for all our measurement and metric geeks out there, what you are trying to do is assign multiple choice scoring to an essay question. It’s not possible.”

… “Ultimately, the key question to ask when measuring engagement is, ‘Are we getting what we want out of the conversation?’” And, as stubborn as it sounds Mr. CEO, you don’t get money out of a conversation.

“To further the discussion a bit, I sat down with Katie for an episode of SME-TV, which will be added to this post later today.”

“What Katie evangelized a bit in her session was that the conversation (comments on your content) was the best measure of a level of engagement. Avinash Kaushik says much of the same in his discussions on web analytics. This isn’t an end-around the need for ROI, it’s the answer. Or at least a big part of the answer.”

(Side note - Provided this is true, isn’t it sad that most companies haven’t even upgraded the technology used on their websites to enable commenting and conversation. Of course, it’s even more sad that if they had the technology right, they’re still afraid to use it. I digress.)

“When you ask businesses why they are participating in social media, what do they say? If they say, “to make money,” then they will fail because currency in the social web is found in both relationships and content. If they say, “to grow our business,” they’re just saying, “to make money,” in a nicer way. If they say, “to participate in the conversation,” which is the more appropriate reason to be involved in the social web, then why on earth would they not measure success by the value of the conversations they have?”

How and Why Do You Measure Relationships?

Any good sales person will tell you their number one objective is building relationships over time. Yet few if any company bothers to measure the cost of building relationships rather they measure the results of relationships. Measuring the results doesn’t tell you “how to build effective relations” or “which methods create the best relations.”

Relationships come from human experiences, not corporate spin and hyped promises. Human relationships are measured by trust, sincerity and common values. If you want a return on social media then focus on conversations that build lasting relationships based on value exchanged and create great experiences. Why is ROI so important? Because that is all you know how to manage. Get it?

What say you?

I also agree that there is a fear factor around the “what if a customer says something bad” scenario and indeed if the company does not care about it’s customers then this is wholly justified. The companies that will gain from this are the ones that are most transparent in their business and demonstrate not only great products but also great service.

Our company provides social commerce solutions and we are finding that there are two common senarios. Firstly we encounter social networking sites with large memberships that are looking to monetize to help support the site. Secondly we encounter product sellers which have a current e-commerce solution and are now starting to realize that standard selling channels are not sufficient for Generation Y. Both of these are social commerce but both potentially have different views on what is required. The first social networking sites are not always trying to sell home grown products, instead they are trying to become product enablers allowing third parties to sell through the community. The second traditional e-commerce sites are realizing there is power in allowing the customer base to write reviews and recommend products to friends and are now looking at how they can integrate social networking into the e-commerce experience.

Social commerce is just starting to break into the main stream and we are starting to see innovative sites and solutions that will become prevalent as time goes by.

Knowledge management is more specific to enterprises attempting to caputre and create new value from knowledge gained from multiple sources.

Anyhow that is my humble perspective and there is a whole set of conversations around knowledge management, value networks and related discoveries by a whole bunch of people smarter then me

Right on… There’s certainly a LOT of interest from companies that want to enable their sites for social commerce. They’ve seen how how it has benefitted others and they want to capitalize on it! Yet, the biggest challenge I face is that companies, while interested, are also afraid of it (e.g. “What if people talk bad about my product(s)?”).

Hopefully, as more people get educated on the topic, more will jump in and rightfully bring “the social networks (into) commerce sites”.

Great post!

Or do you think knowledge sharing is a poor term?

When businesses learn how to leverage ecommerce” solutions into conversations without being overbearing we will then see economic exchanges facilitated by social technology, i.e. social commerce.

Doc Searls has always said “markets are conversations” and conversations create markets. markets are a place where products, services and knowledge is exchanged. The commerce is the measure of value created and exchanged. Today it is being labeled “social” as a mantra of the times yet with little definitive examples of the value created by all these conversations.

What is the ROI on social media? What is the revenue created by conversations? Answer the later and you’ve answered the former. Is Social Media ROI a measure of social commerce? Is it really that important, read this http://www.relationship-economy.com/?p=2272 and keep the thread going in here. This is really important yet complex.

What say you?