Basics of Social Media ROI

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Basics of Social Media ROI

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By: satishece (48 month(s) ago)

Very good presentation and very valuable http://www.freshdls.com

By: Hilarious (49 month(s) ago)

great presentation

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Enough with the Social Media BS. Give me the realz . Social Fresh Conference // 24 August 2009

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SOCIAL MEDIA IS NOT FREE.

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1. It takes people.

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2. It takes technology.

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3. It takes time.

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… all of which are limited resources. We have… rocks.

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These resources = 100% of your budget Head Count Advertising E-Marketing Inbound Call Center Each resource has a specific cost Sales Dept. Public Relations Marketing I.T. Accounting Each resource yields specific results

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These resources generate 100% of your business Head Count Advertising E-Marketing Inbound Call Center Sales Dept. Public Relations Marketing I.T. Accounting Losing even 1% of your budget’s efficiency could seriously ruin your day.

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Okay fine. But if I’m going to take a chance on this social media thing, it had better make good business sense! Why should I allocate resources to it?

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Reason #1: It will result in a cost reduction. Maybe in customer service? You mentioned something about business intelligence and market research? Reason #2: It will generate more revenue. I want more transactions, more net new customers, more customer loyalty, etc.

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Now go figure out what Program you have to cut to fund this Social Media thing. Remember that our bonuses are on the line.

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Which buckets do we empty to fill this new one? Understand that a new Social Media program’s funding doesn’t appear out of thin air.:

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Business Justification SAY HELLO TO: R.O.I.

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R . O . I . RETURN ON INVESTMENT

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THE R.O.I. EQUATION Investment Expectation of return

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ROI = COST OF INVESTMENT (GAIN FROM INVESTMENT - COST OF INVESTMENT) THE R.O.I. EQUATION

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Truth about R.O.I. ROI is a business metric, not a media metric. ROI is 100% media-agnostic. Only measuring digital or social won’t get you anywhere.

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Reason #1: COST REDUCTION Reason #2: REVENUE GENERATION Remember what Mr. Bossman said…

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Okay, hotshot, You have your Social Media doohickey. Now I’d better see some real results! Or else… I shrank my PR budget by 20% and my outbound call budget by 40%. Now I can afford a team of social media Rock stars. Can I get a hellz yeah?

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Woohoo ! I have a job!!!

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Dudes, we are ON THIS!!! Let’s start engagin ’!!! I call dibs on the Corporate blog.

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One Month Later… ACCOUNTING Cool.

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Oh my! Look at all the new visitors to our website! and all of our FaceBook friends! Hot Damn, we even have comments on the blog! What about our Twitternets ?

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This rocks! I never had it so good!!!

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Three Months Later… ACCOUNTING Cool.

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Monitoring to base… Monitoring to base… Our Google Analytics are through the roof! Even our social mentions are wicked good! We have liftoff! Yeah but… What about the P&L?

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Measuring media really rocks my world.

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Six Months Later… ACCOUNTING Anything? Nope. Nada.

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What kind of mood is The old man in today? Not good. He doesn’t care how many visitors the website gets, or how many eyeballs we estimate we’ve reached unless it means we’re selling more stuff.

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But why? Our website is getting mad hits, Jack! And we have 3,000 followers on Twitter now! I’m sorry, son. If your Social Media program is generating revenue, we aren’t seeing it. We need to allocate resources where we can make money. It’s just business.

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Darn it. This media measurement stuff isn’t working. We need to start tying this stuff to actual Business performance. Where to start? Let’s see… At the beginning?

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Things happen in sequence.

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Non-financial impact is not ROI (yet).

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Types of non-financial impact Website Visitors Click- throughs Visitors to a brick & mortar store Positive press Positive WOM Negative press Negative WOM Customer complaints Employment applications Retweets FaceBook friends Blog comments Social mention YouTube views Twitter followers Impressions Delivered emails Coupons distributed

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Non-financial impact = potential.

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ROI = actualized potential.

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Reason #1: COST REDUCTION Reason #2: REVENUE GENERATION Remember what Mr. Bossman said…

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I need proof that what we’re doing is actually working. Start with proof of concept.

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Step 1: Establish a baseline 8% YoY Growth

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Baselines illustrate deltas (changes) Is something happening here?

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Step 2: Create Activity Timelines

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Step 2: Create Activity Timelines

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Step 2: Create Activity Timelines

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Step 3: Look at Sales Revenue

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Step 3: Also look at # of transactions

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Step 3: Also measure net new customers

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Transaction data should be specific F.R.Y. FREQUENCY, REACH, YIELD How often customers transact. (transactions per month) How many customers you are reaching. (net new customers) How much they spend. ($ per transaction)

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The latest numbers indicate that our YoY sales $ are up 60%. Our individual transactions have doubled, as have our transacting customers. Something’s working! Groovy! Let’s figure out what.

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Step 4: Measure transactional precursors

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Step 4: Measure transactional precursors

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Step 4: Measure transactional precursors

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We overlaid all of our timelines and noticed that since our social media activities began, our website visits are up, our social mentions are also up, and everyone seems to love us. So is there a discernable pattern in this?

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Step 5: Overlay all timelines activities transactions social data web data loyalty metrics etc.

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Step 6: Look for patterns Before After Impact Impact Impact No Impact Uncertain Impact

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Step 7: Prove relationships Before After How was this group Touched by SM?

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How long will all this analysis take? It’s all a process of elimination, really. Isolating patterns, quantifying deltas, proving ad- hocs … Then all we have to do is figure out what the cost savings and revenue gains are, and plug them into the equation.

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ROI = COST OF INVESTMENT (GAIN FROM INVESTMENT - COST OF INVESTMENT) THE R.O.I. EQUATION

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THE R.O.I. EQUATION Investment Expectation of return

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Oh wow. This R.O.I. thing wasn’t at all about measuring media, impressions and eyeballs!

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First things first: Prove that Social Media works ACCOUNTING All things remaining the same… We may have proof of concept. Hot damn!

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So it turns out that our Social Media program is impacting every aspect of our business except traffic in our brick and mortar stores. Can you get on that? Yeah. We need to find out why we aren’t having an effect there. Kthxbye . Then use what you know to make it work better.

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Dudes, we are ON THIS!!! Let’s start engagin ’!!! I’ll start crafting some wicked blog posts. More store traffic. Roger that.

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Finally, someone with some real metrics for me to sink my teeth into! Good job, Sparky! You done gewd !

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So I guess Social Media is going to stick around a little while longer after all, isn’t it? Yessir . Looks like our budget is safe for now.

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Drinks for Everybody!

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Olivier Blanchard Principal, BrandBuilder Marketing 864.630.7398 www.thebrandbuildermarketing.com @ thebrandbuilder (on Twitter) www.smroi.net

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Slideography Slide # Source 3, 9, 10, 11, 18-31, 37, 38, 48, 52, 56, 59-65 4 6 UFO (TV series) http://ufoseries.com/ http://www.minnpost.com/stories/2008/06/18/2282/this_doesnt_compute_as_more_women_enter_scientific_fields_their_numbers_in_computer_science_are_declining Kim Jong Il puppet, from “Team America” http://blogs.rockymountainnews.com/bridget/kimjongil.jpg