Followers! Likes! Retweets! Value?

In the column, “Your Social Media Strategy Must Go Beyond Twitter Followers and Facebook Likes,” I extolled (thank you, Word-of-the-Day calendar) Dunkin’ Donuts for its exemplary use of Twitter in turning my negative customer experience into a net positive. Even though I probably would have continued to patronize them, let’s instead say that their thoughtful tweet saved them my business – which we’ll estimate at roughly $300 in delicious coffee per year.

As an online marketer and coffee enthusiast, I would then know that the return on engagement (ROE) for that single interaction is extraordinarily high. One prompt reply to my tweet and a direct message couldn’t have cost more than $10 in monitoring and labor (according to my math), which would yield a 3,000 percent ROE for 2012. That’s fantastic efficiency. But would Dunkin’ Donuts know that?

This is the unresolved issue of social media. You can chart the metrics of Facebook likes and Twitter followers six ways to Sunday, but accurately getting a handle on your ROE from social media campaigns? We’re a few years into this “social” thing and that’s still very murky territory. Analytics companies and social media listening companies exist to track activity, but there is still no industry standard on measuring value. Everyone is free to interpret the number of their followers, likes, and retweets in their own way. Many times I’ve seen CMOs able to look at their social media data and make compelling cases for and against the ROE of their social media effort, depending on how they choose (and want) to interpret it.

I know more than a few numbers-obsessed finance people who just can’t wrap their heads around this. Look at it this way: if you own an online coffee mug shop and spent $100 on Google AdWords and sold either $10 or $400 worth of coffee mugs, you’d have a pretty good idea whether the campaign was worth your investment. If you spend $100 on monitoring and maintaining your coffee mug Twitter account and get 15 new followers, two mentions, and a retweet, is that good? Awful? Somewhere in between?

What do you think would happen if Dunkin’ Donuts did away with its Twitter feed? I have no idea what they spend to maintain it, gather data from it, and monitor mentions (like mine), but my guess is that it’s a decent amount because they’re prompt and thoughtful in their tweets and replies. But what if they scrapped it (or never began it in the first place)? Would their bottom line be affected? It’s tough to say, and I’m not even sure Dunkin’ Donuts could be certain their ROE was in the black.

But even with the uncertainty, Dunkin’ Donuts has a Twitter account. Because they have to have a Twitter account. Because Starbucks and Krispy Kreme have Twitter accounts. Because who doesn’t have a Twitter account?

Just to be clear, I am a big fan of social media both from a usability standpoint and as an advertising medium. In addition to the user engagement, social media can have a strong impact on search engine optimization, brand awareness, and now, even paid search.

Many companies need to understand themselves better when it comes to investing time and money in the medium, and to know the reasons why they are executing the strategy they’ve chosen. If they’re concerned with the number of likes on their Facebook page, why is that important? Do they put more stock in a Twitter mention or a retweet, and why? It’s natural to try and extrapolate something – anything – meaningful from social media activity (CNN makes a similar case with Rick Santorum, Twitter, and the Iowa primary). But in my opinion it’s best to approach social media with a healthy skepticism and clear, pre-defined goals for what your campaigns exist to accomplish.

One final question for you: If you were (or are) the CMO at your company, would you have the guts to pull the plug on your company’s social media efforts in the absence of any meaningful business metrics?