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Social Media ROI:Yes You Social Media ROI:Yes You Can! Can! Paul Gillin, Author The New Influencers Secrets of Social Media Marketing Social Marketing to the Business Customer

Calculating Social Media ROI

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Anything that can be measured can be used to calculate ROI, and that includes social media. Many people say the ROI of social marketing can’t be measured, but I beg to differ. Here are some guidelines for measuring the value of a visitor, a community and even a tweet!

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Page 1: Calculating Social Media ROI

Social Media ROI:Yes You Can!Social Media ROI:Yes You Can!

Paul Gillin, Author

The New Influencers

Secrets of Social Media Marketing

Social Marketing to the Business Customer

Page 2: Calculating Social Media ROI

Page 2

It’s Simple, KnuckleheadIt’s Simple, Knucklehead

ROI = COST OF INVESTMENT

(GAIN FROM INVESTMENT - COST OF INVESTMENT)

Page 3: Calculating Social Media ROI

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Return on InvestmentOr

Risk of Inaction?

Page 4: Calculating Social Media ROI

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Types Of Financial ImpactTypes Of Financial Impact

A. Revenue B. Costs Avoided

Anything that leads to A or B,But only if you can directly

equate its value to an action

Page 5: Calculating Social Media ROI

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What You NeedWhat You Need

Cost savings Efficiency

◦ Cost per message communicated◦ Cost per new lead/customer acquired

Productivity: ◦ Increase in employee engagement/morale◦ Lower turnover/recruitment costs

Engagement: ◦ Ratio of posts to comments◦ % of repeat visitors◦ % of 5+ min visitors◦ % of registrations

Trust:◦ Improvement in relationship

/reputation scores with customers and communities (Loyalty/Retention)

Thought leadership: ◦ Share of quotes◦ Share of opportunities

Message penetration◦ Positioning on key issues◦ Improvement in

favorable/unfavorable ratio

Page 6: Calculating Social Media ROI

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These are NOT ROIThese are NOT ROI

Website Visitors

Click-throughs

Store visits

Press coverage

“Buzz”

Employment applications

Retweets

FaceBook friends

Blog comments

Video views

Twitter followers

Impressions

Friends

Coupons distributed

But if you can quantify their financial impact, you have ROI!

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Reconsider Customer SegmentsReconsider Customer Segments

How Best Buy segments its customers

High

Low

High Low

Lea

ding

-Ed

ge T

echn

olo

gy

Price Sensitivity

Enthusiasts

Online Aficianados

Practicals

Ambivalent Aspirers

Deal Drivers

Who are your high-value customers?

Page 8: Calculating Social Media ROI

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Start With the BusinessStart With the Business

Business Goal

Measurement

Tactics Tools

Generate 30% More

Leads

Publish Six New White Papers

Initiate Monthly Webcasts

Sponsor Microsite on TechTarget

Build Targeted Twitter List (500)

Dedicated Monthly E-mail Blast

Promote To Trade Publications

List in Tech Directories

Hire Tech Freelancers

List Rentals Create CoTweet

Account Increase PR

Budget Hire E-mail

Marketing Firm Initiate Blogger

Relations Program

Increase Webcast/White Paper Reg’s by 60%

Increase Traffic to WP Landing Pages 120%

Increase 800-Number Calls by 80%

Review and ReviseReview and ReviseReview and ReviseReview and Revise

Page 9: Calculating Social Media ROI

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7 Steps to Social Media ROI 7 Steps to Social Media ROI

1. Define the “R” – What are expected results?2. Define the “I” -- What’s the investment?3. Understand audiences and what motivates

them 4. Choose metrics5. Choose benchmarks 6. Pick a tool and undertake research7. Analyze results, glean insight, take action,

measure again

Source: KD Paine & Partners

Page 10: Calculating Social Media ROI

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7 Steps to Social Media ROI 7 Steps to Social Media ROI

The Perfect KPI…• Gets you where you want to go• Is actionable• Continuously improves your processes• Is there when you need it• Should be developed for:

• Your own properties• Different tactics• Other influential sites

Source: KD Paine & Partners

Page 11: Calculating Social Media ROI

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Stagger ActivitiesStagger Activities

White Paper Promotion Timeline

 

Task Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Home page link                        

E-mail newsletter                        

E-mail blast                        

Blog promotion                        

Twitter messaging                        

                         

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Look for ImpactLook for Impact

Page 13: Calculating Social Media ROI

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Basic Business MetricsBasic Business Metrics

Lifetime Value of a Customer = (Longevity * Revenue) * Margin

Conversion Rate = New Customers/ Visits or Leads

Value of a Lead/Visitor = Visitor * Conversion Rate * Lifetime Value

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OK, Let’s Make it RealOK, Let’s Make it Real

Typical customer Curly spends $10,000/year with you

Curly is with you for five years

Your profit margin is 10%

Lifetime value of Curly is($10,000 * 5) * .1 = $5,000

Page 15: Calculating Social Media ROI

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CRM EssentialsCRM Essentials

Must be used by everyone who touches the customer

Must document online, offline and landline communications

Must span the engagement lifecycle

Must enable segmentation and grouping

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Web AnalyticsWeb Analytics

Must track individual visitors

Must document paths to desired destinations

Must identify referring sources

You must use them

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Applying ROI: Value of a VisitorApplying ROI: Value of a Visitor

Monthly Visitors 10,000Conversion Rate .5%Lifetime Value $5,000Calculation (10,000 * .005 * 5)/10,000Value of a Visitor $25

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Value of a BlogValue of a Blog

Monthly Search Traffic 3,000Estimated Traffic w/Blog 4,000Value of a Visitor $25Monthly Value of a Blog $25,000Monthly Blog Expense $6,000ROI ($25,000-$6,000)/$6,000 316%

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Value of TwitterValue of Twitter

You send 50 tweets a month… Generating 1,000 visitors to

your website… 2% of whom become leads… 5% of whom become

customers.

Therefore, the value of a tweet is:

(1,000 * .02 * .05 * 5000)/50 = $100

Page 20: Calculating Social Media ROI

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Value of a CommunityValue of a Community

You want to launch a customer support forum to reduce your costs of telephone supportEstimated admin costs: ½ FTE yr 1, ¼ FTE yr 2 1/10 FTE yr 3Estimated savings: 1 FTE yr 1, 1.5 FTE yr 2, 2 FTE yr 3

Year Item Annual Cumulative

1

Forum Administrative costs $ 35,000 $ 35,000

Savings $ 70,000 $ 70,000

ROI 100% 100%

2

Forum Administrative costs $ 17,500 $ 52,500

Savings $ 105,000 $ 175,000

ROI 500% 233%

3

Forum Administrative costs $ 7,000 $ 59,500

Savings $ 140,000 $ 315,000

ROI 1900% 429%

Page 21: Calculating Social Media ROI

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Measuring the ImmeasurableMeasuring the Immeasurable

Lift Studies

Store visits

Headline Counts

Employment applications

Speaking Invitations

Net Promoter Score Coupons redeemed

If You Can Measure It, You Can Calculate Its ROI

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Thank you!Thank you!

Paul Gillin

508-656-0734

[email protected]

Site: gillin.com

Blog: paulgillin.com

Twitter: pgillin

Free bi-weekly newsletter; sign up at gillin.com