When business people think about anything worth investing in, whether it be dollars or time, they usually only consider the dollar return-on-investment (ROI) amount that the project will produce. Simple metrics can usually be utilized in considering the potential ROI on campaigns, but for more complicated projects where ROI isn't so clear, like social media, it is hard to justify the costs for businesses that don't fully understand them.
While social media isn't always a profitable channel by the conventional metrics of investment vs. sales, there are a few less-tangible impacts that make social media incredibly worthwhile.
Customer Service and Customer Loyalty
It's definitely true that the media will eat you up if you're a big company that did something wrong and isn't being accountable and responsible for your stakeholders who were affected. But as a small business, if you get a few angry people shouting, the media won't care. Even still though, it will be incredibly important for you to manage your social media image because angry people are still angry, and they are often very vocal people who can negatively impact your image, especially with those who see bad things being said about your brand and see your failure to respond appropriately.
This is also an opportunity to win over a customer and gain respect from those who see how you have responded to your best ability and have successfully "put out the flames" rather than neglecting it, letting it erupt into a wildfire, and watching your business burn to the ground (figuratively, of course). Also, with those people you interact with, you engage them on a more personal level increasing their loyalty to the business, which can mean more sales from a customer who'll be returning more often or from their friends who they'll talk to about their positive experience with you.
Instant Feedback for Your Business
Since you will have built a sizable community, you can leverage that network to crowdsource feedback allowing you to better optimize your experience for your customers. This is great because you are actually getting feedback from qualified users who are excited about your business and product and would be more than happy to help you in building a better experience for them because people love to be heard and want specific things from a business before they'll convert to a customer, and if they can express those needs to a business that's all ears, they're happy to because helping you build a better business that will fulfill their needs is better than them waiting until another business comes along that's ready and able to.
Plus, when you can crowdsource your own feedback, you save tons of money on expensive usability projects and surveys of random people who won't provide qualified feedback because they may not always be within your demographic.
Multiple Touch Points Improve Sales
So, while your Analytics isn't telling you that Twitter and Facebook are sending in 200 sales a month, that's OK, because the likelihood is that with all the different touch points people will have had with your brand (seeing your story in the local newspaper, googling your name and seeing a product review on a blog, talking to a friend who's had an experience with your product, @replying you on Twitter and receiving an @reply back, and commenting on your Facebook wall and receiving a genuine response), they're more likely to convert somewhere further down the sales funnel. So while Twitter and Facebook aren't the "last source" before conversion, they're a source leading to conversions.
The Added Viral Co-Efficient
Social media has become a landscape of sharing, tweeting, posting and more. But what's beautiful is all these small communities and networks that have amazing potential to reach scores of people you never dreamed of reaching, so being active in social media can make it a lot easier for you and your stakeholders to spread and share your information, and then connect with a new audience who wouldn't have interacted with your brand otherwise.
Danny Wong is the Social Media Guru for and Co-founder of Blank Label Group, which has launched startups Blank Label, Thread Tradition, and RE:custom.