DreamGrow Social Media

How To Measure Social Media ROI

The number one thing about ROI is that it is measured in dollars (or in euros or any other currency you might prefer). Wikipedia tells us that:

In finance, rate of return (ROR), also known as return on investment (ROI), rate of profit or sometimes just return, is the ratio of money gained or lost (whether realized or unrealized) on an investment relative to the amount of money invested.

This means that whatever non-monetary goals we might achieve, we have to translate them into dollars. The basic business metrics you should measure are:

• Number of transactions
• Number of customers
• Number of new customers
• Revenue
• Profit

Get these numbers tracked before you do anything else. You probably already have a specialist for this job, she’s called accountant. But the thing is, that for most of us, our social media activities influence these metrics only indirectly. Some of our social marketing goals may be:

• Website visitors
• Leads
• Brand awareness
• Newsletter sign-ups
• Facebook fans
• Blog comments
• Social mentions
• Visitor satisfaction index

Now, the trick is to find the connections between social results and dollars earned. Start with the simplest of correlations. Here are just a few examples:

How is the number of your monthly website visitors related to revenue. Segment that and tie website visits to revenue from online and offline segments. Secment yet again and find the most effective online revenue drivers. What you want to know is if site traffic increases X% then revenue goes up how much?

Find out if the customers who are your Facebook fans make purchases more often. Check if the Facebook fans are making larger transactions than average. What you want to know is if your Facebook’s fan-base grows X% then what’s the corresponding increase in frequency of transactions.

Start to monitor the social chatter and tie the number of mention on the internet to changes in sales volume. Segment that and find out what channels have the most impact on the bottom line.

If your sales are mostly online then it is easier to measure all those metrics. When you are operating offline then you have to conduct customer surveys and ask specific questions to figure out why they are doing business with you. You can also implement various incentives to track people from online to offline. For example we have done this for our client by giving Facebook fans special deals that can be used offline and then measuring the results of those activities.

After you have collected these data for some time, you will be able to make pretty good predictions how different social media activities influence you cash flow. A word of caution, don’t stop experimenting. Use 5-10% of your marketing budget for experiments and you will be ahead of the pack.

And, of course, make note of your spending on customer acquisition and establish a base-line. Include all marketing spending. Make note of how much is spent on different channels online and off. Separate the parts that are hard to measure (new logo, upgrading content management system, etc.).

ROI is about the R. Return. No return, no ROI or more precisely negative ROI (ROI = (return – investment) / investment.). One million Facebook fans won’t make any difference if you don’t know how to turn them into paying customers. From our post Social Media ROI Will Become Important:

Consistency, predictability and repeatability are important when dealing with ROI. Experiment with small budgets. Weed out money losers and channel the funds to profitable activities.

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Image credit foxumon

Slidecast: B2B Lead Genration Using Social Media

Great presentation with audio. This slidecast is a brief summary of many B2B Social Media lead generation presentations from Kipp Bodnar. The slides are copy light as that is his presentation style.

The important takeaways are:

• Inbound B2B marketing is lead generation
• Leverage your own blog as a way to optimize calls to action
• Take Facebook Fan Pages to the next level with custom offers and lead generation opportunities.
• Social media can help improve tradeshow ROI

And remember you really have to sell stuff to make money!

Social Media New Business Formula

A formula for generating ad agency new business through social media. This presentation concentrates on ad agencies but can be use for mos t B2B marketers.

Focus!

This post is serves as a mental note to myself. To concentrate and not to do too many things at the same time.

Yesterday I talked to a friend who tries to get an online shop up and running. They have done this for a year now and don’t seem to have much success with it. So we met to discuss what might be the problem and how to get this thing started.

The first thing that hit me when looking at the site was that I didn’t understand where I was and what shop was it. Different unrelated categories and not much choice in individual categories. You could buy a standard windshield wiper and a average decorative candle, but you couldn’t dig in and browse hundreds of candles or windshield wipers.

The rational behind selection was that if they come for windshield wipers and see a nice candle they might buy that, too. They other point the brought up was that their shop was for everybody. I does not work this way.

Most people shop for convenience, selection or price. That shop tries to offer selection but is too shallow. The prices are OK but not spectacular and the convenience is similar to most other e-commerce sites.

In the world of limited resources you have to make a choice. What is that you do? Block everything else. This way you can be the most convenient, have the best selection or price.

I have had my share of doing too many things at the same time. When you have a lot of ideas then there are always distractions. You feel that you should do this and that and a bit of third and fourth thing. You can’t sustain that. Select one thing and be the best at it.

Being the best is a good way to differentiate yourself but it is not required. You can be just different. Your clients should be able to say “I buy from them because they X”. If you make green balls and your competitor makes red balls then you are not better just different. If someone asks, your clients can say they bought from you because you make green balls.

The successful people around me have been initially concentrated on one thing. Yes, some of them do a lot of things but that’s because the first one thing is already paying dividends.

If you are good at something concentrate and give it you full focus. There’s always a new shiny object on the horizon that seems to demand your time and attention.

Resist!

So, decide what is this one thing you might really shine in and do that. (I’ll try to remember that, too)

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Image credits Sachin Ghodke

Social Media Weekend: Facebook vs Twitter, Sports, Olympics, Ski Resorts, Retailers

Olympics’ Social Rings. TV may still be the big marketing vehicle around the Olympics, but sponsors use social media to build buzz and get fans involved.

“People are blogging with their phones and taking photos with them,” says David Steel, svp of strategic marketing, Samsung Electronics America. “The timing seems perfect to have a program oriented around mobile social networking.”

A Third of Adults Now Post to Sites Like Facebook, Twitter Once a Week. The ranks of these networkers, dubbed “conversationalists” in a report released today by Forrester Research, have grown in the past couple of years. They’re mostly women, and they aren’t only young people — 70% of the adults in this category are 30 and older.

Ski Resorts and Snow Reports and Social Media: A match made in heaven? The Top 10 North American Ski Resorts Utilizing Social Media.

Retailers Lure Moms with Social Media, Free Stuff. The study found that women with children at home are more likely to use Facebook (60.3%), MySpace (42.4%) and Twitter (16.5%) than average adults (50.2%, 34.4%, 15.0%, respectively). Moreover, 15.3% maintain their own blog.

Study Reveals Facebook Better Than Twitter for Marketers. Can’t say that it surprises me. Facebook encourages users to aggregate external content on Facebook to be viewed within the network, while Twitter encourages users to link externally, viewing content outside of the network.

Led by Facebook, Twitter, Global Time Spent on Social Media Sites up 82% Year over Year.

People in the U.S. continue to spend more time on social networking and blog sites as well, with total minutes increasing 210% year-over-year and the average time per person increasing 143% year-over-year in December 2009.

Customer interaction becomes social

In our post about social media trends for 2010 we suggested that more and more customer interaction will take place on social networks. Here’s why.

You are endlessly transferred from a robot to automatic response to answering machine. Push 1 for billing, push 2 for tech support… This may ruin your day even if you started out quite OK.

Personal touch makes business sense. If you feel that the person that you are communicating with is someone live, who understands your needs, then you are much more forgiving and open to compromise. Personal touch can fix a potentially explosive situation.

This means that bringing the support staff out from behind the anonymous company logo will give you more satisfied customers and sh*t will hit the fan a lot less often. This does not mean that you have to give in every time there’s a complaint. By simply listening and showing a human face will get you a result that answering machine never could.

When creating our clients’ strategies we usually interview their customers. This has given us invaluable insight how to improve the communication of fix a web site. But one of the most important things I have learned from those sessions is how grateful people are when they see that you are there just for them and you really try to understand them.

Social media will help to scale that personal touch. When a brand is answering somebody else’s problem in a human and authentic way then this act will improve my opinion of that brand. Every touchpoint and channel should be personal and open, increasing the brand value. Social media is the tool that helps you do that.

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Image credit Sanja Gjenero

Social Media ROI Will Become Important

As we predicted 2010 is the year when a lot of money will be invested in social media. When serious money starts to pour in then the guys upstairs want to see some results. Until now people have experimented with low budgets and without very specific goals. The bigger budgets will bring an need to show return.

Return on investment is very simple. You put something in – the investment, you get something out – the return, and later should be higher that the former.

ROI = (return – investment) / investment.

Now the question is what is social media ROI. The trick in the investment side is not to leave anything out. If you spend half of your time managing communities on social networking sites then half of your salary should be considered as an investment in your social media efforts. We estimate that close to two thirds of social media budgets may be used in-house. Social media expenditures can be any of the following:

• advertising
• content creation
• IT
• public relations
• discounts
• call center
• payroll
• R&D
• etc

If we do stuff in the right way we are going to see some results. These results are not yet ROI. You should call something a return if you can attach a dollar sign to it. Some of the results you might see are:

• web site visitors
• followers
• newsletter sign-ups
• RSS readers
• retweets
• blog comments
• WOM
• mentions in press
• RFPs
• share of voice

Some of these result are relevant to your business. Select the results that apply and set concrete goals what you want to achieve. Make sure that you note the existing levels of that metric so you can attribute the change to your activities. For instance if you have 10,000 monthly visitors to the company web site, then mark it down as a starting point.

Now you have to find out how to tie these results to actual monetary business value. How much money comes in because of your activities. For example you may have 1,000 Facebook fans and get 100 visitors per month from your Facebook fan page. 25 of those visitors make a purchase that gives you 500 dollars of profit. Now you know that if the quality of fans is constant each additional fan will generate 50 cents of profit per month. You could use up to 49 cents per month acquiring more fans through advertising or other activities and still have a positive ROI. Consistency, predictability and repeatability are important when dealing with ROI. Experiment with small budgets. Weed out money losers and channel the funds to profitable activities.

As soon as you can show positive ROI bosses will get really happy, invite you to dinner, pat on your back and give you a rise (don’t forget to include some of that rise in the investment part of the ROI formula). Budgets will grow even further.

Social Media Will Penetrate Corporate Firewalls

Few weeks ago we posted our predictions for the 2010 social media scene. Now we will try to explain these trends in a little bit more detail.

Some of our corporate customers don’t have access to Facebook or any other social media in their offices. The reason is mostly that the important IT people think that Facebook and other social media channels are endless sources of exploits, phishing, spam and other evil things I don’t even dare to say.

My own view is a bit lighter and I believe that if the security framework is sound then social nets don’t pose much of a threat. But whatever the security people might think the pressure to open up communications will grow.

Direct communication with customers in sales, real-time support services, social media integration into CRM systems and other benefits will gradually help social media to reach behind the mighty corporate firewall.

Of course, there might be some negative effects. For example productivity may suffer because of the time that people use for personal social media activity. On the other hand this personal interaction might be seen as “being human” and actually help the brand to be more authentic.

A Simple Social Media Platform

Yesterday when I was running on treadmill I let my mind wander how all this data that is generated in the equipment could be used to improve my exercise, services offered and the overall wellbeing of everyone involved.

The data from the equipment and scales should be sent to a server where I can access it. I would be able to track my progress set goals and share my achievements with friends. Posting to Twitter and Facebook will make my experience more social and I would be less likely to quit exercising. A special Facebook application can handle the competition with other member of the club. This will tie the users to the brand’s fan page and application on Facebook.

On the other hand the owners of the fitness club could get incredibly valuable data about how people behave, what are the motivating circumstances and what patterns indicate that somebody is going to quit. This will enable them to customize their offers to meet the individual needs of each client.

In the end people would exercise more, socialize more, be more healthy and happy. I would really, really love this in my gym. The overall happiness index would go up a few notches.

Of course, this platform could be used for other things than just fitness club, but it’s a good example. Here is a picture to get a better understanding how this should work.

B2B Business Case for Social Media

Almost all business buyers use social media. On the other hand the same people are not convinced that they should use social media for B2B communication. The problem is in the lack of knowledge and experience. Christina Kerley has put together a presentation that helps to fill in some blanks and pave the road for the social media adoption in B2B. The 10 key benefits from the presentation are:

1. Social media extends branding
2. You can expand your reach
3. Tap into relevant communities
4. Influence the influencers and get positive word-of-mouth
5. Boost your thought leadership position
6. Cut marketing costs
7. Get faster sales by sharing more information and having two way communication with the buyer
8. Stand out! Be the first!
9. Decrease complexity of decisions by helping and guiding
10. Strengthen CRM efforts