Image via Hans under CC0 1.0

3 Steps to Proving the ROI of Social Customer Service

Being asked to prove return on investment (ROI) is something every social media professional is familiar with. But not every organization is able to attribute financial transactions directly to social media.

Businesses without an ecommerce presence, for example, benefit from social media in ways that are less directly tied to revenue but equally as valuable. And if your primary use case for social media is providing customer service, then the idea of “ROI” is typically more about cost savings than it is about attributing a direct increase in revenue from social activity.

Regardless, it’s important to quantifiably prove the value of your work. In this post, we’ll break down one way of measuring the ROI of social customer service.

1. Know your objectives

Customer service is a broad concept, so you need to narrow down clear objectives for exactly what you’re aiming to achieve on social. For example, you may want to:

  • Improve your customer satisfaction or net promoter score (NPS)
  • Improve your first response time or average response time
  • Decrease your average handling time of customer service issues
  • Deflect inbound requests from other channels

Once you’ve defined exactly what your social customer service objectives are, you’ll be better equipped to prove whether or not you’re achieving success.

You’ll need specific metrics and calculations to prove the ROI of these different objectives, but we’re going to focus on one specific objective: deflecting inbound requests to other channels. The hypothesis here is that using social media to quickly resolve issues for your customers prevents those requests from coming into more costly customer service channels like phone or email, thus saving your business money.

2. Collect key data points

To quantifiably measure how much money social customer service is saving your business, you’ll need to know the following things:

A: The number of requests resolved on social media. If you’re using a tool like Hootsuite, this can easily be tracked by tagging inbound and outbound messages that are customer service requests.

B: The average cost of resolving a request via phone, email, or live chat. You need to know the average cost of handling a request through these other channels in order to measure how much you’re saving by using social media to resolve those requests instead.

C: The cost of your investment in social media. Finally, you’ll need to know how much your social customer service efforts are costing your business. This should include the cost of tools and platforms you use, the time spent by employees responsible for social media, and any budget you have allocated to social media advertising.

3. Calculate ROI

Let’s start by filling in the blanks with some numbers for the sake of this example. (Note: I’ve chosen to use very basic numbers here to make this as simple as possible.) We’ll be measuring ROI over the course of one month in this example, but the same math can be used to calculate ROI annually—just make sure you use metrics over a consistent period of time.

A: The number of requests resolved on social media: 100/month.

B: The cost of handling a customer service request via phone: $20/request.

The next step is to calculate how much it would have cost your business to handle those 100 requests by phone, instead of social media. So we’re going to multiple the number of requests resolved on social (A) by the average cost of a request resolved via phone (B).

100 X 20 = $2,000

While being able to proudly claim that social media is saving your business thousands of dollars a month would be great, we’re overlooking an important factor in this equation: the cost of your investment in social media.

Determine how long your team spends each month resolving issues on social media and use their hourly rate to calculate how much it cost to resolve those 100 issues. Then, add that number to the monthly cost of any tools and platforms you use. For this example, we’ll say that these add up to $500.

C: The cost of your investment in social: $500/month.

In this example, the ROI of your social customer service efforts (in terms of cost savings) could be stated as $1,500.

This is, of course, only one example of how you can prove the value of social customer service. No matter how you’re using social to support your customers, your framework for proving ROI needs to include:

  1. An understanding of your true investment in social
  2. Objectives that are aligned with larger business outcomes
  3. Benchmarks that set the bar for success
  4. Goals that specify how and when you’ll achieve success
  5. Metrics that help measure whether you’re achieving your goals and objectives
  6. Analysis that translates hard numbers into actionable insights

Use Hootsuite Impact and get plain-language reports of your social data to see exactly what’s driving results for your business—and where you can boost your social media ROI.

Learn More