how to calculate the r.o.i. of social media media activity
DESCRIPTION
FOrget all that other BS you've heard about Social Media ROI! This presentation sets out a proven method of calculating FINANCIAL R.O.I. in a way that can be reported at board/C-suite level.TRANSCRIPT
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DEMONSTRATING SOCIAL MEDIA ROI
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ROI =
(Final value – starting value)
starting value
What is R.O.I.?
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5x
20 x 5 x3 (or 300%)
Now with carrots
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Examples of non-financial outcomes
• Increase in website visitors and/or time spent on the website
• Change in the ratio of positive/negative brand mentions• Increase in Twitter followers or Facebook fans• Increase in requests for product information• A 20% increase in subscriptions to the e-newsletter• A 200% increase in YouTube video downloads• 15 comments on the latest blog post
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Examples of financial outcomes
• A 15% reduction in customer service costs by shifting a portion of customer service activity to Twitter
• A 12% increase in online sales during a Facebook campaign
• A decrease in cost per impression from £2.55 per person per mention of brand to £1.22 by leveraging social media channels
• £500,000 in sales attributed to new customers acquired through Facebook.
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Gary Vaynerchucktv.winelibrary.tv
Twitter$15,000 on direct marketing
= 200 customers
$7,500 on bill board advertising= 300 customers
$0 (except time) on Twitter= 1,800 customers
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Return rate for products with reviews
= 20% lower
Petco.com pet supplier
Reviews
Return rate for products with 25+ reviews
= 45% lower
…saving on shipping, restocking, and customer service costs
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Customers who went to the website via a Facebook page
= 30% more sales than those who went straight to
website
Ford ExplorerFacebook
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Sales directly attributable to links on Twitter in 2009
= $3,000,000
Dell ComputersTwitter
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Blog about HSBC mis-selling + Twitter syndication
= national media coverage
Nick Bamford, IFA Informed Choice
Blog, Twitter
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Sequence of events between Initial investment and gain
Investment (£) Action Reaction Nonfinanci
al impactFinancial
impact (£)
Tweets, RTs,
comments, ‘likes’,
downloads
Brand awareness,
Product sentiment
online reputation,
loyalty, share of voice,
Strategy and tactics (ie.campaig
n)
More customers, spending
more, more often (financial
ROI)
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Sequence of events between Initial investment and gain
Investment (£) Action Reaction Nonfinanci
al impactFinancial
impact (£)
This is great but it’s not where financial
impact lives
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Sequence of events between Initial investment and gain
Investment (£) Action Reaction Nonfinanci
al impactFinancial
impact (£)
This is great but it’s not where financial
impact lives
It’s here!!!
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Start with “why?”
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Enhance branding/awareness
Protect reputation
Enhance public relations Improve loyalty/retentionBuild community
Enhance customer serviceFacilitate research & development
Drive sales and leads
Start with “why?”
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Showing a return
• Overall objectives – what do you want to achieve?• Identify metrics• Set an intelligent measurable goal• Activity• Measure – the ‘return’ is successful achievement of
the goal
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Showing a financial return: FRY (© Microsoft)
• Frequency (increase in frequency of transaction by customers)
• Reach (net increase in customers) • Yield (increase in how much customers spend)
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Sequence of events between Initial investment and gain
Investment (£) Action Reaction Nonfinanci
al impactFinancial
impact (£)
Tweets, RTs,
comments, ‘likes’,
downloads
Brand awareness,
Product sentiment
online reputation,
loyalty, share of voice,
Strategy and tactics (ie.campaig
n)
More customers, spending
more, more often (financial
ROI)
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Step 1: Create Activity Timelines
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Sequence of events between Initial investment and gain
Investment (£) Action Reaction Nonfinanci
al impactFinancial
impact (£)
Tweets, RTs,
comments, ‘likes’,
downloads
Brand awareness,
Product sentiment
online reputation,
loyalty, share of voice,
Strategy and tactics (ie.campaig
n)
More customers, spending
more, more often (financial
ROI)
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Step 2: Social media reactions
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Sequence of events between Initial investment and gain
Investment (£) Action Reaction Nonfinanci
al impactFinancial
impact (£)
Tweets, RTs,
comments, ‘likes’,
downloads
Brand awareness,
Product sentiment
online reputation,
loyalty, share of voice,
Strategy and tactics (ie.campaig
n)
More customers, spending
more, more often (financial
ROI)
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Step 3: Measure transactional precursors
Loyalty
Trust
Awareness
Sentiment
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Sequence of events between Initial investment and gain
Investment (£) Action Reaction Nonfinanci
al impactFinancial
impact (£)
Tweets, RTs,
comments, ‘likes’,
downloads
Brand awareness,
Product sentiment
online reputation,
loyalty, share of voice,
Strategy and tactics (ie.campaig
n)
More customers, spending
more, more often (financial
ROI)
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Step 4: Look at Sales (or another FRY outcome)
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Step 5: Overlay all timelines
activities
transactions
social data
web data
loyalty metricsetc.
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QUESTIONS