It’s safe to say that by this point, credit unions that have a clue regarding the expectations of the marketplace actively engage consumers through social media.
So this article isn’t about the value of social media to your credit union, or do’s and don’ts. We’re way beyond Social Media 101.
Instead, let’s address a burning question—one that has no easy answers and at least two common opinions: How can my credit union measure the return on investment (ROI) of our social media efforts?
The easy answer is that establishing social media accounts is free. Therefore, it’s impossible to calculate a numerical ROI on something that costs nothing.
Simple enough, right? Not exactly.
Sure, you don’t need to spend anything to simply set up the accounts and post content. But all the social media platforms offer products and platforms for advertising, promoting pages and posts, pay-per-click campaigns, etc. If you use any of these fee-based services, it becomes easier to determine a numerical ROI.
But how? First, you need to determine what specific metrics you want to use in ROI calculation. Some questions to answer include:
- Do we measure ROI separately for each individual campaign or for a specific timeframe?
- Should we consider time spent by employees as part of the investment? If so, who’s going to calculate that, and how can we assure accuracy?
- In the case of an advertising campaign related to a loan promotion, should we measure the number of new loans or the loan dollars acquired during the set time period? Or do we measure both? If measuring both, what “weight” will be assigned to each category to help determine ROI?
- If we want to grow membership, do we measure just the number of new members acquired or do we also weigh ratios such as products per member? Do we measure net new members or the quality of those relationships based on the services they use? How long after a new member joins should we attempt to measure ROI?
- If a social media campaign connects with cross-selling, how do we determine the conversion rate based on our recommendations through mobile marketing and social media platforms?
- How will compliance costs factor into the calculations?
As you can probably tell by now, measuring ROI for social media isn’t as simple as it might seem. Many factors must be discussed, debated, and decided upon.
Consider this scenario: You design and launch a social media campaign related to acquiring new members. For the simple ROI calculation, you would divide the number of new members by the dollars spent.
So let’s say you spend $500 on advertising and you acquire 12 members. The simple (and often woefully inaccurate) ROI would be 0.024%.
But this number doesn’t include factors related to cost per member, identification of used services as assets or liabilities, and other data that will help determine whether the accounts are profitable.
Meanwhile, many credit unions use social media as an engagement tool. They want to tell stories, interact with members, create awareness, etc.
They have made the decision to not “sell” via social media. That’s a great strategy as long as you look at the quality of the interactions and leverage them to cross-sell or upsell more benefits and services to those with whom you converse.
Another common question that triggers ROI debate: Does the credit union need a full-time employee dedicated to social media?
There are no simple answers for this one either. It depends how social media and digital strategy fit into your credit union’s strategic plan, and what level of commitment you are willing to make.
It also depends on the feasibility of hiring someone in your price range. Digital media strategists don’t come cheap—at least the great ones don’t. Outsourcing your social media strategizing and efforts might be more cost-effective.
A true digital media strategy is more complex than posting to Facebook every couple of days. You must weigh many factors—including some you probably haven’t even thought about.
There is no “cookie-cutter” version of an effective digital media strategy. Every credit union is different. Therefore, “cut and paste” isn’t good enough.
If you don't have staff members who are knowledgeable about the many nuances and capabilities of social media and digital strategy, consider reaching out to companies that can help you.
Digital media and social interaction aren’t “the future.” They are “the present.” And they’re only going to get bigger. Get serious about it.
SEAN McDONALD is president of Your Full Potential LLC, which provides consulting, strategic planning, and training services to credit unions both nationally and internationally. Visit YFPTips.com for additional information and to schedule a phone consultation.