Determining Social Media ROI

A few weeks before the Inbound Marketing Summit took place, Chris Penn and I were discussing what he should speak about.  Of that discussion came the decision to do the presentation on how to determine the ROI of social media.  Figuring out social media ROI continues to be a very hot topic not only for the social media geeks but also for big brands that want to determine success measurements of their investment into the space.

Outside of this conversation I had been bugging Chris to analyze my restaurant, Caminito Argentinean Steakhouse, for some time now.  Other case studies have focused on what we’ve done but not tearing apart the metrics.  Chris is a genuis at analysis and analytics.  So, I really wanted him to expand my knowledge and ability Google Analytics and other tools to properly analyze our efforts at the steakhouse and determine our ROI.  For those that don’t know, approximately 1.5 years ago we cut out 80% of our traditional marketing budget and turned our focus to our website, SEO, social media and other digital initiatives as a way to drive sales.  Surprise, surprise, it worked.  Since then we have seen a minimum of 20% increase in sales when comparing the same month the previous year.  But, one thing we never did was break out and track those individual efforts between the website, social media, and other areas we were spending our time online.

As part of his presentation Chris asked if he could use the restaurant as an example and do an analysis of our ROI.  What Chris found, in terms of hard dollars, surprised me and I think it will surprise you too.

You can check out Chris’ presentation, both slides and videos below:

Video

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Slides

As I said, I was surprised at the actual dollar values but I wasn’t surprised at the result that Chris found.  For us, our entire focus has been on SEO.  We have used social media as a tool to augment that but not as a primary vehicle to drive revenue for the restaurant.  For instance, we have made a conscious decision to not set up a Twitter account where offer discounts.  It is something we’re considering doing in the future, but right now we aren’t utilizing social media in that way.

While this presentation gives you some information about my brick and mortar and the decisions that we face and have to make, have you taken these steps to determine the ROI of your efforts on your website, blog, or social media profiles?  If you have done this exercise, did you change anything about the way you spend your time post-analysis?

Note: This is the first post of many highlighting videos from the Inbound Marketing Summit that was held at Gillette Stadium on October 7-8, 2009.  All posts will be tagged ims09 for aggregation purposes.

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