Social Media Requires New Metrics To Support Retailer Investment


Twitter, Facebook, blogging and other forms of social media are hot topics, even in a recessionary economy.  In fact, The National Retail Federation’s and Forrester Research found that among retailers performing well (“beating expectations,”according to the The State of Retailing Online 2009 study), 12 of the 20 will increase spending in social media marketing this year.

Retailers should take a measured approach to these activities, and ensure that sensible, business-oriented goals are put in place based on the traits of their business.  At the same time, retailers must remember that in a social media world, it’s not “all about them” – it’s actually about the customer first.  In fact, from the customer’s point of view, any social media activities need to deliver value, or those activities will be reviled, or worse, ignored.  Social media metrics, therefore, must support both the business goals of the retailer and, at the same time, meet the needs or current and prospective customers.

According to social media specialist Joseph Cothrel, measurement for online communities can be broadly grouped into the three areas of financial metrics, activity metrics and a grab-bag of “other” metrics.


Financial metrics are a way of connecting social media activities with items that connect directly to either revenue impact or cost savings.  On the revenue side, tracking items such as advertising performance within social environments and conversion rates from social media investments are fundamental.  In addition, cost savings can occur as a result of social media engagement in the areas of customer service and support, as customers begin to help each other when they have questions or issues.

Activity metrics, on the other hand, are a way to observe the customer activity that has precipitated as a result of investment in social media.  Activity metrics are manifold, and can include change in foot traffic or online visitors, increases in registration for incentive programs, mentions of the retailer in online environments, and other similar activities.  For retail in particular, another social media are to measure is online sentiment on blogs, across sites like Twitter and Facebook, and in online review communities such as Yelp.

Other metrics may apply as well.  Some organizations choose to set up “fan” or “follower” destinations on line.  While certainly not advocating growing raw numbers of “fans” or “followers” for the sole purpose of growing those numbers of (typically not engaged) customers, measuring steady, organic growth of those communities can also be viewed as a positive indicator.

Creating a social media plan that is based on metrics can ensure that a retailer’s investment in social media meets both the goals of the organization and its customers.  While each organization’s balance between financial metrics, activity metrics and other metrics will vary, starting with a strong foundation will certainly stack the deck in favor of success, and enable continuous improvement over time.

Christopher Carfi is CEO of Cerado, Inc, a provider of software and services that enable businesses, organizations and associations to better connect and understand their customer and member communities. His blog, The Social Customer Manifesto, is a “Top 25” marketing blog, and has won numerous other awards including “Top CRM Blog” in 2005 and 2007. He is also an active contributor to the ProjectVRM, based at the Berkman Center at Harvard University, which focuses on improving customer-vendor relationships and is creating tools to equip individuals with tools of both independence and engagement.

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