Every now and then I hear that it is hard to find out what is the ROI in doing social media. Honestly I find such statement to full of baloney? The old adage “there is no such thing as a free lunch” comes to mind… why would a business take the time and money and do social media without knowing what the ROI is ?
Sadly most business think about social media is all about awareness… The problem with awareness is how do you know, what is working? And how do you know that because of a social media campaign people are coming and buying and how many more people are they bringing based on the experience they had on your website, your store, etc. Awareness is nice to have, but that awareness needs to mean something.
Before starting a social media campaign … understand what outcome you want to drive i.e. define success
Just like when you take on any new business venture there is a success criteria that you have in mind. You may not hit the target in a straight shot manner but you want to minimize the variance between you want to be versus where you get to … (which is why I have always wondered my christopher columbus is called a great discoverer because he was way off the mark on reaching India but that is a blog for a different day) . The same concept applies when you start a social media campaign… what is the outcome that you want to drive ? Is it to Maximize buyers of your product and services? Is it to minimize the time to discover you product and services or is it to make sure that influential people are talking about your product or service … So know the outcome you want to drive … and please let it not be “awareness”. Here are some examples of how can you calculate some elements of Social media ROI.
Net Promoter Score
When you start a social media campaign, the ideal state is to know the economical value of each of the followers you gain on twitter or have an additional like on your Facebook page. In order to understand Net Promoter Score.
Start with the baseline on where you are at before the campaign. Know when the campaign ends … please do not keep a campaign running for long time otherwise it is a useless process
My example of calculating a Net promoter score is as follows :
An additional follower on Twitter brings in 5 additional followers (amplification factor of 5)
NPS = Net increase in sales / Net growth of Twitter follower based on the campaign
Now you can know the amplification factor and you know the economic value of each follower
When you run a social media campaign, it is best to run a campaign with a special URL. Why a special URL ? Well thanks to the wonders of the web we have entered a new world of behavioral segmentation instead of the age old demographic segmentation. The web allows for great flexibility to learn and know exactly what potential clients are doing when they get to your site. When you run a social campaign have a customized URL and have your website instrumented with your favorite analytics tools. With your customized URL you can validate if you see increase in purchases based on the social media campaign.
Net increase traffic = Traffic after campaign – Traffic before campaign
% of Buying versus visiting = # of Purchases/ #Net Increase in traffic
A good barometer would be at least 10 % of visits generated are actually buying … but if your visits are just 10 people from the whole campaign …then there is something that is generally wrong with your site.
How many users are returning ?? This question is usually looked over as we are usually smitten by net new transactions versus existing ones. Remember the existing clients are the ones that got you here and yes those new clients that you acquired via the campaign if they return to the site and purchase more, well that is good too. Thanks to Cookie technology on the web, marketers and technologists know whether you are new visitor or returning visitor. In this case you want to look at
% Returning visitors = #Returning visitors/ Net increase in total traffic
% Purchases made by Returning visitors = # of Purchases/ #Returning visitors
if the Returning visitors percentage is high (i.e. over 50%) that means the most responsive group to your campaign has been your existing client base .. which is a good thing … but then you have to ask yourself the following questions
Are these clients bringing new clients ? ( Going back to our NPS discussion)
What are the additional things are they buying ?
What is the average size of purchase for returning clients ?
These are the kind of questions that will help you develop and maintain a social media program and increase investment in social media outreach programs
Earned Media Value
If you end up using an agency to do your work… then it makes sense to hold them accountable for the work they are delivering. Thanks to Web analytics we can hold them accountable if there is a white paper campaign based on the business goal you have identified then make sure you have elements in place for the right attribution of such efforts and have identified the right KPI. Don’t just stop at looking the #of downloads or the # of Shares of your content … look how that actually impacted the overall sales or whether or not the link back actually helped your ranking on Google’s SERP results.. these things matter. You can also look at overall sentiment data as well such as
# of Negative Mentions/ # of Positive Mentions (High percentage means you have brand problem)
If you are resolving issues via Social media as in support then you want to look at things like
Avg. time to resolve an issue
# of complaints received/ # complaints resolved
Frequency of contact with the client on the complaint
These are just some examples of Earned Media Value. You are building a presence for your brand and with your community.
Cost of fan acquisition
This is also an overlooked element on social media campaign. People tend to forget that social media is an investment and it does not come free. There is work involved and the cost is not just promotional material cost. The cost of fan acquisition includes the following elements
- Cost of the team involved in Social media outreach (Companies that do this wrong have a common pool of social media “experts” or have one person dedicated to an entire brand). Remember with social media you reap what you sow.
- Time spent on researching the topic before developing the campaign ( there are ways to calculate this .. such as Looking at the hourly rate of the person hired and amount of hours spent on research)
- Then obviously campaign development
- Campaign execution and testing
On the last point of iteration… believe me you will be iterating a lot during the campaign. Although a lot of might be assuming that a social campaign can be time bound and it can be, but social program do not finish as the next social outreach starts as the prior one ends… all of this is all series a iteration.
This blog is by no means exhaustive… but it is a list of things that have worked for me. If you have any additional ideas and thoughts please feel free to share. I have value your opinion good or bad.
Don’t forget if you do social media with a goal and purpose in mind… you can have a lot of fun.