A good bartender earns repeat visitors by remembering the names and drinks of the regulars, engaging new visitors in friendly discussion, and sharing news and insights about the local scene. It’s not all about how many sales he can make in an hour. There is definitely an intangible “return on chatter” that helps create an image, or brand, for the bar.

To see how being a good bartender is a lot like being a good social media marketer, you have to understand the difference between Impact and ROI.

Impact and ROI
As we’ve discussed in previous articles in this series, clear expectations are critical to your measurement efforts. Olivier Blanchard makes the point about ROI being a strictly financial measurement (vs. eyeballs, clicks, awareness, or any other “soft” metric) when he says, “There is no return on awesomeness.”

KD Paine provides some great examples to illustrate the difference between Impact and ROI in her eBook Tales from the Trenches, How Organizations are Measuring Value in Social Media:

Impact: Did your relationships improve? Were your messages communicated? Did you get the exposure you wanted?

ROI: Did sales or revenue or profits increase? Did the right people show up? Did audience behavior change?

How Impact affects ROI
Even as we need to be clear on the difference between Impact and ROI, we also need to understand how they are related. Blanchard provides a great overview of the interrelation in his post about the action-reaction-outcome narrative. The basic concept is this:

$$$ investment -> action ->reaction ->non-financial impact -> $$$ financial impact

The qualitative benefits of social media engagement live under “non-financial impact,” but ultimately support the goal of financial impact, or ROI. This view of the process demonstrates the role social media efforts can play without clouding the waters around defining actual ROI results.

Measuring Impact
Now that you know what you’re measuring and why, you’re probably wondering how you go about the task of collecting and assessing all the relevant data. Five steps to creating a measurement campaign:

1) Establish socially relevant goals and define the related metrics: Get clear on what you hope to achieve and how you hope to achieve it. As Mark Schaefer wrote, the most important question might be “what behavior are you trying to drive?” Then decide how you think you can measure progress. For example, if your goal is to improve your brand’s image among bloggers, your tactic might be a blogger outreach program that involves one-on-one dialog and support. You might then measure your progress by tracking sentiment across the Web using a tool like Radian 6 or Crimson Hexagon.

2) Create benchmarks: Because you have to know where you started.

3) Choose your measurement tools: This topic could easily evolve into another eight-part series, but I’ll just mention three core categories:

>> Listening: From free services like Google alerts and real-time searches on twitter to high-end listening solutions like those mentioned above, there is a tool for each situation.

>> Tracking: Whether through tools like Google Analytics/Feedburner or manually, tracking things like RSS subscribers, downloads, followers, blog comments, RTs, etc. can add to the overall measurement picture. Alone, they are relatively meaningless, but viewed in aggregate against other metrics, useful trends can emerge.

>> Polling: A traditional technique that is made easy and instant with a number of online tools. If you have an existing digital audience, you can do before-and-after polls on things like customer satisfaction, brand awareness, and so forth.

4) Track your activity in a timeline: In order to correlate social media activity to other, perhaps more quantifiable activity, you need to keep track of what you did when. This will allow you to overlay – for instance – blog posts to Web site traffic, or tweets to Webinar registrations.

5) Monitor, analyze, and optimize: It’s important to realize that, unlike most traditional marketing campaigns, social media campaigns do not necessarily have hard end dates. The social Web is a living, breathing, real-time environment that requires constant monitoring and strategic adaptation. Sometimes it’s less about success or failure and more about ongoing improvement.

So let’s get back to the bartender. How do we best measure his success? A financial measure like sales/hour, or a non-financial measure like increases in repeat customers?

Rather than battling it out over which methodology is superior, marketers should focus on using both. Why not be “metric agnostic” and focus on what the data tell us – whether quantitative or qualitative – and leverage it to our best advantage in highly integrated campaigns that aren’t about “social media,” but about great messaging and smart marketing.

Jamie Lee Wallace is a versatile strategist and copywriter with nearly 20 years of varied experience and a passion for working with clients where business, the social Web, and real life intersect. She also has way too much fun blogging at Savvy B2B Marketing with her five Savvy Sisters.

This is the final part of a series examining social media marketing measurement.

Part 2: Social media ROI shock treatment

Part 3: Irresponsible social media measurement research            

Part 4: Social media impact on brand equity                                                        

Part 5: The most important question to ask in social media marketing     

Part 6: A double standard for social media marketing?                   

Part 7: Yes, it IS about the money!                                                          

Part 8: Creating a measurement plan                                                     

Part 9: Measurement is like a bartender                               

Guest writer Jamie Lee Wallace contributes this post on our series of social media marketing measurement.

The fact that I think you should be focused on the quantifiable business benefits of social media marketing seems to put me squarely at odds with many thought leaders right now. This quote from a very respected blogger still haunts me:

“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.”

Another leading observer opined yesterday that his “economy is relationships.”

How is social media marketing any different from holding a company open house for community leaders or hosting a dinner to get to know some potential customers? Are those things about building trust and relationships? Yes, of course! But we also have no problem admitting that the ultimate goal is to burnish our image with these influencers to improve our chance of business success. Why are we so intent on carving out a special little place in the sun — where results don’t matter — for the social web?

>> There are so many free online applications out there that it makes my head spin. Who is doing all of this work and how do they live with no income? And no hope of an income! Do they live with their moms? Maybe we should collectively call all these applications mom-ware.

>> These porn spammers on Twitter. How do they get 4,000 followers without sending a single tweet? HOW? WHY? I demand an explanation.

>> One of my most popular blog posts so far was about the social media team at GE. The page views went through the roof. Here’s why. GE has 350,000 employees. All they have to do is send out ONE email with a link to my blog and ka-pow! So, from now on, I am only writing about things that involve millions of people. My new emphasis is on China, India and those who write social media software apps while living with their moms.

>> Oh, the turd thing. Chris Brogan (the MAN) used “turd” in a blog headline and I thought it was refreshing. So I wanted to do it as soon as I had the chance so that my awesome readers might experience the same thing. Well, how did it go for you?

>> It’s not as hard to work “turd” into a conversation about social media as you might think.

>> I LOVE to see new people reading my blog and sending in their comments. It gets me revved-up to connect with so many cool people. So, THANK YOU for being here! Plus, I make money. I threw the Google ads up there for kicks. So far, I have made $3.12. Will somebody PLEASE click on a damn ad? I’m saving up for a Subway sandwich.

>> The single biggest business opportunity in social media is ANYTHING that will save you time. It’s official: The world has enough content. Thank you all for writing. You may stop now.

>> I’m guessing there is more content created on Twitter in a single day than in the first 2,000 years of recorded history. Wait, no … that is not a guess. I just decided it’s a fact. Now go tweet it out. You will amaze your friends and astound your enemies. Ta-da! It’s my first faux-fact. You can check it out on your mom-ware. Then it would be a mo-faux.

Thanks for stopping by : )

One commentary from Trey Pennington reflects a common obstacle for many of us — a clear management double standard regarding social media versus traditional channels:

I think we’ll all find that measuring ROI for social media isn’t really that challenging … yes, ROI is exclusively a dollar denominated (or percentage) measure. If you’re not measuring dollars back in/dollars out, then you’re not measuring ROI.

That being said, Dave Lahkani makes a good point in his new post: the discussion about social media ROI is an excuse. Because people touting social media keep talking in circles about ROI, executives know they can squash a new idea just by questioning “ROI.” Besides, they sound really smart using an acronym.

Do those same executives debate the ROI of their executive perks? Their bonuses? Conferences? Or, do they really spend that much time pondering the ROI for THEIR favorite media?

I once worked with a large B2B firm that spent 1/2 of it’s entire marketing/advertising/PR/IR budget on display advertising in trade magazines. Even after I showed them a media buyer’s study documenting their target market did not read the trade pubs, they continued the trade flight. Why? Because their head-to-head competitor did. (I wonder if the competitor was doing the same thing!)

Bottom line: we need to merely document the impact engagement through social media has on financial performance and be bold at engaging while we do.

Part 2: Social media ROI shock treatment

Part 3: Irresponsible social media measurement research            

Part 4: Social media impact on brand equity                                                        

Part 5: The most important question to ask in social media marketing     

Part 6: A double standard for social media marketing?                   

Part 7: Yes, it IS about the money!                                                          

Part 8: Creating a measurement plan                                                     

Part 9: Measurement is like a bartender

“A well-known brand can enhance the perceived value of a product. For example, a brand can assure customers of consistent product quality, differentiate the product from competitive offerings, or facilitate customer’s purchase decisions. In many cases, the principle source of a brand’s added value is the set of associations customers hold in memory.”

Part 2: Social media ROI shock treatment

Part 3: Irresponsible social media measurement research            

Part 4: Social media impact on brand equity                                                        

Part 5: The most important question to ask in social media marketing     

Part 6: A double standard for social media marketing?                   

Part 7: Yes, it IS about the money!                                                          

Part 8: Creating a measurement plan                                                     

Part 9: Measurement is like a bartender

One of the hottest articles on the web yesterday was a new study by Wetpaint and Altimeter Group proclaiming that they had cracked the code on social media value measurement. It is also one of the most irresponsible examples of data mis-management and audience manipulation I have observed.

The report trumpets with breathless enthusiasm that “for the first time ever, Wetpaint/Altimeter Group have gone beyond surface case studies to measure the true financial value of social media.”

But what’s this … buried on page 6: “While no one yet has the data to determine direct cause and effect, what we do find is a financial correlation between those who are deeply engaged and those who outperform their peers.”

Wait a minute … At this point I have to ask the report’s authors, Ben Elowitz and Charlene Li, how can you seriously purport to “measure the true financial value of social media,” while admitting that nobody has the data to do so? What are trying to pull on us here?

So WHAT did they do? I give Elowitz/Li props for developing a secret formula to measure social media engagement by 40 criteria. But it just goes downhill from there.

1) They are making their claims based on ONE YEAR of financial data and THREE MONTHS of social media engagement. Is that an appropriate timeframe to discover anything you are claiming to be a trend? You’re trying to make a statistical correlation to financial performance based on limited data during a RECESSION?

2) So, what IS the correlation? Is it a strong statistical correlation? Did you actually apply the correct mathematical tools to this analysis? How would we know? Are you seriously telling me that the social media budget of these companies is having a measurable and material impact on the financial results? You have discerned the unique contribution of Facebook compared to billions of dollars spent on advertising and decades of brand-equity building?

3) Finally, I could make an argument that your “data” provide a conclusion quite the opposite of what you’re trying to spin here. Well-managed companies generally manage EVERYTHING well. Is it any surprise that Coca-Cola and Starbucks have a successful social media effort? I will challenge you that the financial success of these premier brands enabled the creation of the effective social media programs, not the other way around!

Here is the real message from this “break-through study:” Financially-successful companies with important brands invest in deep social media engagement. That is hardly earth-shaking.