social media roi model

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1 Evolution of Communication LLC. © 2010 - Proprietary and Confidential, for use by intended client only The Social Media ROI Model by: Jeff Mello Founder, Evolution of Communication

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This presentation details why a Social Media ROI Model is needed over the Traditional ROI Model, how to set up the model, and also introduces the concept of Engagement Value.

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Page 1: Social Media ROI Model

1

Evolution of Communication LLC. © 2010 - Proprietary and Confidential, for use by intended

client only

The Social Media ROI Model

Presented by: Jeff Mello Founder, Evolution of Communication

Page 2: Social Media ROI Model

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Evolution of Communication LLC. © 2010 - Proprietary and Confidential, for use by intended

client only

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The ultimate goal of a company is to earn a profit.

Profits are earned by creating more revenue than expenses.

Page 3: Social Media ROI Model

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Evolution of Communication LLC. © 2010 - Proprietary and Confidential, for use by intended

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Companies don’t like to waste money so there needs to be a measurement system in place to determine

their Return on Investment (ROI)

Page 4: Social Media ROI Model

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Evolution of Communication LLC. © 2010 - Proprietary and Confidential, for use by intended

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The Traditional Advertising ROI Model will not work as a social media measurement tool since it’s not designed to track the cause and affect of social media efforts on

multiple departments within a company.

Page 5: Social Media ROI Model

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Evolution of Communication LLC. © 2010 - Proprietary and Confidential, for use by intended

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The Traditional Advertising ROI Model is very linear and focuses primarily on the Sales Department…

ROI= Profits-Traditional Advertising InvestmentTraditional Advertising Investment

Page 6: Social Media ROI Model

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Evolution of Communication LLC. © 2010 - Proprietary and Confidential, for use by intended

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The Social Media ROI Model is a multi-dimensional measurement system to track how revenues are increased or expenses are decreased in multiple

departments within a company.

Page 7: Social Media ROI Model

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Evolution of Communication LLC. © 2010 - Proprietary and Confidential, for use by intended

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The Social Media ROI Model

Track how each department’s revenue or expenses are affected by social media

ROI

Page 8: Social Media ROI Model

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Evolution of Communication LLC. © 2010 - Proprietary and Confidential, for use by intended

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Data Collection

Collect company data from the last year to establish an average to be used for comparison once the social media strategy begins

Valuable Data:1. Sales figures from the last year2. Website/Blog Traffic information3. Customer acquisition models (Sales Funnel)4. Conversion ratios5. Monthly expense for each department6. Monetary value placed on a new customer7. Monetary value placed on an existing customer8. The Traditional Media metrics currently being used9. Consumer sentiment

Page 9: Social Media ROI Model

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Evolution of Communication LLC. © 2010 - Proprietary and Confidential, for use by intended

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Data Analysis

The important part in data analysis is understanding the cause and affect your social media efforts have on increasing company profits.

Examples by Department:

• Sales- Sales numbers don’t lie. Are they going up, down, or staying the same?• Customer/Product Support- Are customers turning to your company’s social

media channels for support and therefore decreasing your call center volume? Opportunity for a decrease in call center expenses.

• Marketing/PR- How are you able to get your company’s product or service message out to consumers through these social media channels? How is that message being received?

• Corporate Communications- How does your messaging affect your corporate image amongst employees, stakeholders, influencers, and consumers? Does this image bolster your company credibility and potentially lead to increased sales, new employees, increased brand value, etc.? Perception is reality!

• HR/Recruitment- Increased job candidates being funneled through social media has the potential to decrease job fair expenses or other expenses associated with corporate recruitment.

• Research/Product Development- Are you listening to your consumer’s feedback about your product or service? Are you making improvements based on this information?

• CRM- Are you engaging with your customers continuously to keep them in your sales funnel?

Page 10: Social Media ROI Model

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Evolution of Communication LLC. © 2010 - Proprietary and Confidential, for use by intended

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What is your Engagement Value?

Page 11: Social Media ROI Model

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Evolution of Communication LLC. © 2010 - Proprietary and Confidential, for use by intended

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What is your Engagement Value?

Most companies spend most of their effort trying to gain new customers and neglect the ones they have.

Remember the Pareto Principle better known as the 80/20 rule as applied to business…80% of your company revenue will come from 20% of your customers! Keeping the Pareto Principle in mind you can quickly see how valuable engaging with an existing customer is to your company’s profits.

Page 12: Social Media ROI Model

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Evolution of Communication LLC. © 2010 - Proprietary and Confidential, for use by intended

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What is your Engagement Value?

Social Media does an incredible job at allowing your company to stay engaged with existing customers but

what is the value of that engagement?

Page 13: Social Media ROI Model

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Evolution of Communication LLC. © 2010 - Proprietary and Confidential, for use by intended

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What is your Engagement Value?

Engagement Value- The value derived from utilizing social media to engage with your company’s existing customers and prevent them from switching to a competitor.Example: • Your customer spends on average $1,200 per year. (Customer’s

Monthly Value=$100)• Through your social media efforts you successfully handle 50 customer

support issues in one month.• In theory you have saved $5,000 in business by engaging with your

customers and solving their issues. (Engagement Value)

Page 14: Social Media ROI Model

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Evolution of Communication LLC. © 2010 - Proprietary and Confidential, for use by intended

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Expect What You Inspect!

Page 15: Social Media ROI Model

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Evolution of Communication LLC. © 2010 - Proprietary and Confidential, for use by intended

client only

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Execution

You have all the pieces needed to implement your Social Media ROI Model so now it’s time to execute.

• Collect the company data• Establish the baseline numbers to be used for comparisons in measuring the effectiveness

of your Social Media efforts• Create the tracking forms by department• Study the incoming data• Pinpoint the correlation between desired departmental goals and your social media efforts• Make sure your social media efforts are achieving the desired goals• Adjust social media efforts where needed• Report findings and necessary changes needed to original social media plan

Page 16: Social Media ROI Model

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Evolution of Communication LLC. © 2010 - Proprietary and Confidential, for use by intended

client only

Listen, Learn, and Engage

For more details on Evolution of Communication please contact:

Jeff MelloFounder, Evolution of Communication

p: 404-579-0911e: [email protected]

w: http://evolutionofcommunication.comf: http://www.facebook.com/evolutionofcommunication

t: @eoc_jeff