My ROI from social networking

A few years back I did what any self-respecting web professional would do and set out to experiment with this brave new world of social networking.

There had been no bigger tsunami of hype than that dedicated to this online phenomenon. And by this stage billions were being made by its founders, though as yet, the movie of the same name was but a twinkle in the eye of its creator.

Of course I had no choice in the matter. How could I advise my smaller business clients on the pros and cons of the medium if I hadn’t mastered it, or at least attempted it, myself?

So three years later, I thought it was about time I also practiced what I preached and reviewed my results from my efforts.

What benefits have I derived from my hours of posting, liking and friending? And would I be able to show how this investment impacted the bottom line?

Let’s look under the cover and see.

My online business profile

So what did I do and how did I go about it?

Before we start to look at my results, its critical to understand my business profile.

Mine is a small professional services business that makes most of its revenue from “hourly rate” work, creating and implementing websites and web marketing services.

Given it is in the high growth, high development web industry, I am in an industry that is “connection-friendly” in that I can provide lots of information and hopefully insights into the world of web marketing, which should attract reasonable new connections and “friends”.

I also write for a number of popular online publications, which should provide a steady source of connections from those who like what I write.

Despite these connection magnets, given that I make a living from “billable hours”, my professional mission is to maximise the number of billable hours in a week. This fact alone makes me “time poor” – not a great attribute for social networking, which is notoriously time consuming.

I began my social networking journey with a personal page on Facebook some three years ago and started on both LinkedIn and Twitter around the same time. I also dabbled in Foursquare and a business page on Facebook, but not enough to make any serious inroads.

Results to date

Now, let’s check out my Key Performance Indicators, new business, enquiries and connections.

The new business I can attribute to social networking comes to… (drum roll) … nothing at all. I can safely say that my three years of posting, commenting, connecting and tweeting has come to nothing when it comes to new business.

Not really a result to brag about.

The next best result, enquiries, come to less than a handful. A few have picked up on one of my comments or connections, but none has gone on to do any business with me.

The remaining KPIs at least show some movement.

Friends and connections grow steadily

I now have a steadily growing 282 followers on Twitter and 250 connections on LinkedIn.

While my Facebook page is personal as distinct from professional, I occasionally discuss work related topics there too, which, like your personal network, can help friends understand what you do and so increase the chances of referral. I have 150 friends on Facebook.

Another important measure is Group Membership because this can put you in touch with important stakeholders and prospects in groups that you can source business from.

I currently belong to 42 LinkedIn Groups which probably number an average of 1,000 members each. So that’s 42,000 people I can communicate with readily.

These numbers are modest compared to those that have accumulated up to tens of thousands of friends and connections, but it is as much as I have time to generate.

So really, my ROI in measurable terms is several hundred direct and several thousand indirect connections that I can communicate to readily.

The bottom line – ROI

So what has been my investment in this stellar achievement? Given the ongoing nature of social networking, it would probably come to around two hours a week. Given its been around three years, that’s 104 hours a year for 312 hours in total.

Because I typically charge $80 an hour, that’s an investment of $25,600 of my time all told.

That is one expensive list of connections.

So if after three years, all I have to show as far as ROI is concerned is a bunch of useful but ultimately loss making connections that hasn’t yet generated any business, why bother?

As I pointed out earlier, my social networking activity is not typical of most small business because I need to do it to be able to gain first-hand experience which I can pass on to my clients.

Therefore, it is kind of an R & D investment for me, which I get back in fees charged to clients for planning and managing their own social networking strategies.

But without this indirect return on investment, the time spent would be difficult to justify indeed.

But all business are different…

While this single case study is not a good advertisement for social networking, it doesn’t mean that other businesses won’t benefit from investing in the medium.

Businesses with more disposable time to both experiment and perfect their online activities could well get quite different results. As could those that naturally attract more interest such as fashion, the arts, sport and so on. Or even those with a younger and more social networking savvy audience or market.

But if someone who works in the industry, has some good connection “hooks” and is prepared to invest as much as I have can’t make a single direct sale over three years or so, it doesn’t auger well for many small business operators who don’t have these attributes.

They may well be better off investing in another promotional technique which is less time consuming and essentially more proven in its effectiveness.

Have you had a more successful return on your social networking investment? Tell us about your achievements below.

In addition to being a leading eBusiness educator to the smaller business sector, Craig Reardon is the founder and director of independent web services firm The E Team which was established to address the special website and web marketing needs of SMEs in Melbourne and beyond.