The ROI“Return on Investment”

of Social Media

Maria McGowanInternet & Marketing SpecialistGreater Halifax Partnership @mariamcgowan @greater_halifax

It’s all over the mapIndustry measurements are “suspect”- Geoff Livingstone

…yet, measuring Social Media is “challenging”- Jeremiah Owyang

It doesn’t have to be

In 2011, here’s the focus

It’s not just aboutFacebook likes or followers on Twitter

For example• Shares• Mentions (positive, negative or neutral)• Blog comments• Retweets• @mentions• email opens and click through rates• “likes” of a Facebook page

But they’re good for measuring “engagement”

… That kind of stuff

It’s really about

• Lowered cost of new customer acquisition• Reduction in average customer serving

costs• Increasing customer satisfaction

Some people think

“Show me the ROI or all this is a waste of time”

Here’s what you can do

Social Media ObjectivesYou must measure social media against yoursocial media objectives

What are they?- awareness?- lead generation?- more relationships?

3 categories of measurement

Quantitative MetricsQualitative Metrics

ROI Metrics

#1 Quantitative MetricsThese metrics are data-intensive andnumber-oriented.

3 categories of measurement

Success Metrics Goal

monthly sales directly linked to Twitter $ monthly sales

new customers directly linked to Twitter

$ monthly sales directly linked to Twitter

Capitalizing on Twitter’s real-time nature for exclusive, limited – customer / limited-period offers

Good example

#2 Qualitative MetricsThese metrics that have an emotional componentto them.

Here’s a campaign to increase Satisfaction

Success Metrics Goal

Amount of positive comments sent to customers per week within a given time

Amount of positive conversations about your organization or company per week

Amount of conversations that started from the comment

Amount of good suggestions that your company hadn’t thought of

Amount of suggestions collected per month and amount that you actually implement

3 categories of measurement

Good exampleUsers who are part of this network feel that they have some role in the decision making process of the company and it makes them feel a part of it.

#3 ROI MetricsIn the world of social media, all roads shouldlead to ROI.

Conversion rates

Success Metrics Goal

% of people you converted from a prospect to a customer on your e-commerce site

Increased customers

How many people you converted from a prospect to a client on your B2B site

Increased clients

3 categories of measurement

Here’s how 5Fortune 500 companies use

Social Media

BrandingCreate buzz

180 million + total upload views on YouTube channel and sales increased 27% in six months (Nielson).

Drive people to their landing page then Dell caneasily track their prospects' behaviour.

E-Commerce

In 2009, $6.5 million in revenue from Twitter

a tool to do simple,anecdotal research.

Research

Hey PodCampers, can you think of more?

It costs 3-5 times as much to acquire a new customer as itdoes to keep a current one.

Customer Retention

Don’t sell online? Use social media to drive prospects to awebsite where they can download a whitepaper, listen to apodcast, or watch a video.

Lead Generation

Once you've captured the prospect's contact information, you can re-market to them via email, direct mail, etc

Let’s do some math

Customer Lifetime Value (CLV)

It’s the most important formula in social media

CLV is the amount of revenue a customer will

bring to your company over the course of his/her

lifetime with your brand.

Customer Lifetime Value (CLV)

Example: Cable TV provider knows that a typicalcustomer spends $80 per month and thatthe average customer stays with thecompany for three years.

$80 x 12 months x 3 years = $2,880 (CLV)

Customer Lifetime Value (CLV)Once you know the CLV, you can decide howmuch $ you'd like to invest to acquire acustomer (allowable cost per sale)

Many people use 10% of their CLV as astarting point.

In the cable TV example, the CLV is $2,880 and10% of that is $288 (allowable cost per sale)

Applying ACPS to Social Media$288 is what it takes to get 1 customer.

Let’s say you want to run a Social Mediacampaign to get 100 customers

$288 x 100 = $ 28,800 campaign budget

Create:

Landing page?Mobile application?Monthly e-newsletter with cable TV tips to stay infront of prospects and new customers?

What $28,000 can get you

Design landing pages on your website to capture prospects and help convert them into paying customers. The landing pages would be designed specifically around the social media campaign, and you would need Google Analytics etc installedto track traffic and conversions.

The key point is that all of your social media programs(Facebook, Twitter, YouTube, etc.) should drive people to thelanding page on your website where you can convert them fromtire kickers (prospects) to paying customers.

Test, test, test…

The ROI

Pay off? More engagement with your customers.

…listening, feedback, interactive, brand strength, and measurability!

Thanks!

Maria McGowanInternet & Marketing SpecialistGreater Halifax Partnership @mariamcgowan @greater_halifax