How to calculate the ROI of social media activities

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Forget all that other BS you've read about social media ROI, this gives a proper metthod

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How to calculate the ROI of social media activities

  1. 1. SESSION FOUR FCP/OBI training August 2013
  2. 2. ROI = (Final value – starting value) starting value What is R.O.I.?
  3. 3. 5x 20 x 5 x 3 (or 300%) Now with carrots
  4. 4. 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
  5. 5. 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.
  6. 6. Gary Vaynerchuck tv.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
  7. 7. 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
  8. 8. Customers who went to the website via a Facebook page = 30% more sales than those who went straight to website Ford Explorer Facebook
  9. 9. Sales directly attributable to links on Twitter in 2009 = $3,000,000 Dell Computers Twitter
  10. 10. Blog about HSBC mis-selling + Twitter syndication = national media coverage Nick Bamford, IFA Informed Choice Blog, Twitter
  11. 11. Sequence of events between Initial investment and gain Investment (£) Action Reaction Nonfinancial impact Financial impact (£) Tweets, RTs, comments, ‘li kes’, downlo ads Brand awareness, Product sentiment online reputation, loyalty, share of voice, Strategy and tactics (ie.campaign) More customers, spen ding more, more often (financial ROI)
  12. 12. Sequence of events between Initial investment and gain Investment (£) Action Reaction Nonfinancial impact Financial impact (£) This is great but it’s not where financial impact lives
  13. 13. Sequence of events between Initial investment and gain Investment (£) Action Reaction Nonfinancial impact Financial impact (£) This is great but it’s not where financial impact lives It’s here!!!
  14. 14. Start with “why?”
  15. 15. Enhance branding/awareness Protect reputation Enhance public relations Improve loyalty/retention Build community Enhance customer service Facilitate research & development Drive sales and leads Start with “why?”
  16. 16. 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
  17. 17. 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)
  18. 18. Sequence of events between Initial investment and gain Investment (£) Action Reaction Nonfinancial impact Financial impact (£) Tweets, RTs, comments, ‘li kes’, downlo ads Brand awareness, Product sentiment online reputation, loyalty, share of voice, Strategy and tactics (ie.campaign) More customers, spen ding more, more often (financial ROI)
  19. 19. Step 1: Create Activity Timelines
  20. 20. Sequence of events between Initial investment and gain Investment (£) Action Reaction Nonfinancial impact Financial impact (£) Tweets, RTs, comments, ‘li kes’, downlo ads Brand awareness, Product sentiment online reputation, loyalty, share of voice, Strategy and tactics (ie.campaign) More customers, spen ding more, more often (financial ROI)
  21. 21. Step 2: Social media reactions
  22. 22. Sequence of events between Initial investment and gain Investment (£) Action Reaction Nonfinancial impact Financial impact (£) Tweets, RTs, comments, ‘li kes’, downlo ads Brand awareness, Product sentiment online reputation, loyalty, share of voice, Strategy and tactics (ie.campaign) More customers, spen ding more, more often (financial ROI)
  23. 23. Step 3: Measure transactional precursors Loyalty Trust Awareness Sentiment
  24. 24. Sequence of events between Initial investment and gain Investment (£) Action Reaction Nonfinancial impact Financial impact (£) Tweets, RTs, comments, ‘li kes’, downlo ads Brand awareness, Product sentiment online reputation, loyalty, share of voice, Strategy and tactics (ie.campaign) More customers, spen ding more, more often (financial ROI)
  25. 25. Step 4: Look at Sales (or another FRY outcome)
  26. 26. Step 5: Overlay all timelines activities transactions social data web data loyalty metrics etc.
  27. 27. QUESTIONS

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