An Exploratory Study of Metrics Used to Measure the Impacts of Social Media Utilization on Business Performance

Introduction

In recent years, many firms have started using social media to enhance their business (Ferrell & Ferrell, 2012). In an IBM global study of Chief Executive Officers (CEOs) conducted in 2012, 15% of the 226 mid-market CEOs were using social media as a key tool for engaging customers. Moreover, 50% of the 15% who were already using social media expected to make a significant shift from traditional media to social media to reach more customers within three to five years (IBM, 2012). Interacting with customers on brand pages of social media sites enables companies to: identify their customers’ needs regarding products or services, as in the case of AT&T; increase traffic to their online web-store (Adidas being an example); drive in-store sales (Diageo being an example); and build awareness of a new brand (for example, Kia Soul). In addition, some firms are evolving brand pages into brand communities wherein customers and others can share their interest and knowledge about a particular brand with each other (Zaglia, 2013). Companies can maintain relationships with customers and potential customers within brand communities, and provide incentives to fans/customers that support the brand community (Laroche, Habibi, Richard, & Sankaranarayanan, 2012).These activities increase customer loyalty (Sherry Jr., 1983). Moreover, purchasing decisions result from visits to social media brand pages (Jooa, Kima, & Yang, 2011).

A business can expect to experience various improvements in its performance from utilizing social media. However, results can vary from one company to the next. The 2012 Social Media Marketing Industry Report (Stelzner, 2012), which was based on a survey conducted with 3,813 participants, mostly from the United States, found that one of the top 10 social media questions posed by marketers was how to measure the effect of social media on their businesses. Before identifying a solution to this practical issue, we must first investigate the common metrics used for measuring the impacts of social media utilization on businesses, and then identify the specific metrics that are useful for measuring the effects of social media on business performance. This article attempts to provide some clarifications on this issue. Quantitative content analysis of 126 publicly available case studies, including both successes and failures, was carried out to identify the outcomes, benefits, and aspects of business performance that can potentially be realized from the use of social media in advertising.