The ROI of Social Media

The ROI“Return on Investment” of Social Media
Maria McGowan
Internet & Marketing Specialist
Greater Halifax Partnership
@mariamcgowan
@greater_halifax

It’s all over the map
Industry 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 about
Facebook likes or followers on Twitter

But they’re good for measuring “engagement”
For example
Shares
Mentions (positive, negative or neutral)
Blog comments
Retweets
@mentions
email opens and click through rates
“likes” of a Facebook page
… 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 Objectives
You must measure social media against your
social media objectives
What are they?
- awareness?
- lead generation?
- more relationships?

3 categories of measurement
Quantitative Metrics
Qualitative Metrics
ROI Metrics

#1 Quantitative Metrics
These metrics are data-intensive and
number-oriented.

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

#2 Qualitative Metrics
These metrics that have an emotional component
to them.
Here’s a campaign to increase Satisfaction

Good example
Users 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 Metrics
In the world of social media, all roads should
lead to ROI.
Conversion rates

Here’s how 5Fortune 500 companies use Social Media

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

E-Commerce
Drive people to their landing page then Dell can
easily track their prospects' behaviour.
In 2009, $6.5 million in revenue from Twitter

Research
a tool to do simple,
anecdotal research.
Hey PodCampers, can you think of more?

Customer Retention
It costs 3-5 times as much to acquire a new customer as it
does to keep a current one.

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

Example:
Cable TV provider knows that a typical
customer spends $80 per month and that
the average customer stays with the
company for three years.
$80 x 12 months x 3 years = $2,880 (CLV)

Once you know the CLV, you can decide how
much $ you'd like to invest to acquire a
customer (allowable cost per sale)
Many people use 10% of their CLV as a
starting point.
In the cable TV example, the CLV is $2,880 and
10% 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 Media
campaign to get 100 customers
$288 x 100 = $ 28,800 campaign budget

What $28,000 can get you
Create:
Landing page?
Mobile application?
Monthly e-newsletter with cable TV tips to stay in
front of prospects and new customers?

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 installed
to track traffic and conversions.
The key point is that all of your social media programs
(Facebook, Twitter, YouTube, etc.) should drive people to the
landing page on your website where you can convert them from
tire 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 McGowan
Internet & Marketing Specialist
Greater Halifax Partnership
@mariamcgowan
@greater_halifax

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The ROI of Social Media

by Greater Halifax Partnership on Jan 23, 2011

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The ROI of Social Media — Presentation Transcript