Return on Engagement - ROE
One of the original variations on ROI is return on engagement (ROE), which measures the effect your organization’s social media activities have on engagement rates. It assumes that engagement with content leads to greater awareness, which then leads to higher likelihood of consideration, which then leads to greater likelihood to buy.
he math behind Return on Engagement ROE tends to vary, which is one of its primary issues, but it is calculated primarily by understanding the effect a community manager has on talking to someone after that person has mentioned the brand online. For example, if your company’s community manager reaches out to someone who has made a complaint about the brand and is able to rectify that complaint, then a potential Return on Engagement ROE calculation might be the time it took to make the contact and resolve the issue.
Another way ROE can be calculated is by looking at the percentage of engaged users within the community. This calculation varies by social media network. Here is how it is calculated for Facebook, Twitter, and YouTube:
It's The number of -engaged users- is calculated by adding the real number of likes on a post, the actual number of comments on a post, and the number of shares on a post, and then dividing that sum by the number of fans (or likes).
The number of engaged Twitter users is calculated by adding the number of replies to the number of retweets and dividing it by the number of followers.
There are a couple ways to calculate engaged YouTube users. The first is to add the number of comments, the number of ratings, and the number of likes, and then divide that sum by the number of views of a particular video. Another variation is to add those same engagement metrics and divide the sum by the number of subscribers.
Knowing the number of engaged users and capturing the instances in which the community manager for your company improves or helps your customers are both valuable. However, it is very difficult to capture the financial effect, especially when looking at just the number of engaged users. The following are some of the other issues with Return on Engagement:
We have highlighted a couple different ways Return on Engagement can be calculated in this chapter, and there are likely many others that we have not covered here. When you are reporting results to upper management, it is imperative that the math be clear and defend-able.
Although both of the methodologies we have outlined here are defend-able, the effect on the organization is not clear.
Determining whether engaged users equal sales
The fact that 25% of your fans on Facebook or followers on Twitter are engaged with your content does not necessarily translate into sales. To make that sort of correlation, you would need to do a lot of work on the back end to track your fans’ or followers’ activity. (We present more on this concept in the upcoming pages.)
Focusing on the wrong part of the funnel
Return on Engagement is not a substitute for ROI because it isn’t meant to capture sales. ROE is an appropriate calculation if you are focusing on creating brand awareness and being more actively considered before a buyer makes a purchase.
Return on Engagement is a fine metric if you are trying to understand how an audience reacts to your content online. It is not, however, a method to track the financial performance of your social or digital media campaigns.