Economists have long used a combination of lagging and leading indicators to come up with an accurate picture of the economy. As the name implies, a lagging indicator provides a quantitative measure over a period of time. It is a great tool for looking back at a period of time and measuring an outcome. A leading indicator is more of short-term measure of success that offers some predictive insight into future outcomes.
For example, in the world of economy, things like the average prime rate charged by banks and the length of unemployment are lagging indicators. They are a clear sign on whether or not the economy is expanding or contracting. For leading indicators, economists turn to metrics like stock market performance and building permits to get an early look at what might be on the horizon.
Combining leading and lagging indicators is not a perfect measurement equation, but it does provide a fairly complete picture.
However, when it comes to business, and particularly social media, most measurement equations tend to look only at lagging indicators. Of course, the most obvious offender is the dreaded ROI. ROI is the definition of a lagging indicator. It measures the amount your investment returned over a specific period of time. It measures campaigns.
ROI is a great measurement, and one that shouldn’t be discarded—but it also shouldn’t be the sole measure of performance. If ROI is the only measure you are using to judge the performance of your social media efforts, how do you know mid-stream that something isn’t working? How do you adjust your strategies and tactics when it becomes evident that something isn’t working? The answer is simple—you can’t. Measuring only ROI gives a good indication on success or failure. But it doesn’t allow you to change course before a problem derails your entire social media effort.
Moving forward, you should look to augment ROI with leading indicators to provide a complete picture of your social media efforts. Notice that I said ‘augment ‘in the previous sentence and not replace. You may find some social media wingnuts out there suggesting you rid yourselves of ROI all together. I am not that naïve. However, I do realize that ROI is an imperfect measure and requires additional insight to provide the most complete picture possible.
What leading indicators are you using to measure social media success?