Enough with                           the Social Media BS.                            Give me the realz.Social Fresh Confe...
SOCIAL MEDIA IS NOT FREE.
1. It takes people.
2. It takes technology.
3. It takes time.
We have… rocks.… all of which are limited resources.
These resources                                         =                                       100%                      ...
These resources                                     generate                                      100%                    ...
Okay fine. But if    I’m going to take a chance    on this social media thing,it had better make good business   sense! Wh...
Reason #1: It will result in a cost reduction.    Maybe in customer service?                                              ...
Now go figure out what    Program you have to cutto fund this Social Media thing. Remember that our bonuses        are on ...
Understand that a new                        Social Media program’s                        funding doesn’t appear         ...
SAY HELLO TO:Business Justification    R.O.I.
.        .        .RETURN       ON   INVESTMENT
THE R.O.I. EQUATIONInvestment            Expectation of return
THE R.O.I. EQUATION        (GAIN FROM INVESTMENT - COST OF INVESTMENT)ROI =                    COST OF INVESTMENT
Truth about R.O.I.     ROI is a business metric,      not a media metric.    ROI is 100% media-agnostic.Only measuring dig...
Reason #1:          Reason #2:  COST REDUCTION   REVENUE GENERATIONRemember what Mr. Bossman said…
I shrank my PR budget by 20% and my outbound call budget by 40%.Now I can afford a team of social media   Rock stars. Can ...
Woohoo!I have a job!!!
Dudes, we are         I call dibs on the      ON THIS!!!           Corporate blog.Let’s start engagin’!!!
Cool.                           ACCOUNTING        One Month Later…
What about our                                    Twitternets?  Oh my! Look at all the new    visitors to our website!and ...
This rocks!I never had it so     good!!!
Cool.                              ACCOUNTING        Three Months Later…
Yeah but…                                     What about                                      the P&L?       Monitoring to...
Measuring media really rocks my      world.
Nope.Anything?                                             Nada.                                ACCOUNTING            Six ...
What kind of mood isThe old man in today?                              Not good.                  He doesn’t care how many...
But why?                        I’m sorry, son.   Our website is getting       If your Social Media program      mad hits,...
Darn it.This media measurement   stuff isn’t working.                              We need to start                       ...
Things happen in sequence.
Non-financial impact is not ROI (yet).
Types of non-financial impactWebsite Visitors                      Customer complaints                     Impressions    ...
Non-financial impact = potential.
ROI = actualized potential.
Reason #1:          Reason #2:  COST REDUCTION   REVENUE GENERATIONRemember what Mr. Bossman said…
I need proof that what we’re doingis actually working.      Start with proof of concept.
Step 1: Establish a baseline 8% YoY Growth
Baselines illustrate deltas (changes)                  Is something happening here?
Step 2: Create Activity Timelines
Step 2: Create Activity Timelines
Step 2: Create Activity Timelines
Step 3: Look at Sales Revenue
Step 3: Also look at # of transactions
Step 3: Also measure net new customers
Transaction data should be specific         F.R.Y.           FREQUENCY, REACH, YIELDHow often customers transact. (transac...
The latest numbers indicate     that our YoY sales $ are up 60%.Our individual transactions have doubled,   as have our tr...
Step 4: Measure transactional precursors
Step 4: Measure transactional precursors
Step 4: Measure transactional precursors
We overlaid all of our timelines and noticed that since our social mediaactivities began, our website visits are up,   our...
Step 5: Overlay all timelines       activities       social data       web data       transactions       loyalty metrics  ...
Step 6: Look for patterns  Uncertain Impact                 Impact                                Impact                  ...
Step 7: Prove relationships               How was this group               Touched by SM?     Before   After
How long will all thisanalysis take?      It’s all a process                 of elimination, really.                  Isol...
THE R.O.I. EQUATION        (GAIN FROM INVESTMENT - COST OF INVESTMENT)ROI =                    COST OF INVESTMENT
THE R.O.I. EQUATIONInvestment            Expectation of return
Oh wow. This R.O.I. thingwasn’t at all aboutmeasuring media, impressions and    eyeballs!
All things  remaining the     same…                  We may have   Hot damn!   ACCOUNTING                   proof of      ...
So it turns out that our     Social Media program is impacting    every aspect of our business except   traffic in our bri...
More store traffic.                       Roger that.    Dudes, we are                          I’ll start crafting some  ...
Finally, someone with somereal metrics for me to sink my teeth into!   Good job, Sparky! You done gewd!
So I guess Social Mediais going to stick around a little while       longer after all, isn’t it?                          ...
Drinks forEverybody!
Olivier Blanchard   Principal, BrandBuilder Marketing                       864.630.7398www.thebrandbuildermarketing.com  ...
SlideographySlide #                    Source 3, 9, 10, 11, 18-31,   UFO (TV series) 37, 38, 48, 52, 56,    http://ufoseri...
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basicsofsocialmediaroi

  1. 1. Enough with the Social Media BS. Give me the realz.Social Fresh Conference // 24 August 2009
  2. 2. SOCIAL MEDIA IS NOT FREE.
  3. 3. 1. It takes people.
  4. 4. 2. It takes technology.
  5. 5. 3. It takes time.
  6. 6. We have… rocks.… all of which are limited resources.
  7. 7. These resources = 100% of your budget E-Marketing Each resource Head Count Advertising has a specific costInbound Call Center I.T. Each resource Marketing Sales Dept. yields specific resultsPublic Relations Accounting
  8. 8. These resources generate 100% of your business E-Marketing Losing even 1% Head Count Advertising of your budget’s efficiencyInbound Call Center I.T. could seriously ruin Marketing your day. Sales Dept.Public Relations Accounting
  9. 9. Okay fine. But if I’m going to take a chance on this social media thing,it had better make good business sense! Why should I allocate resources to it?
  10. 10. Reason #1: It will result in a cost reduction. Maybe in customer service? Reason #2:You mentioned something about It will generate more revenue. business intelligence and I want more transactions, market research? more net new customers, more customer loyalty, etc.
  11. 11. Now go figure out what Program you have to cutto fund this Social Media thing. Remember that our bonuses are on the line.
  12. 12. Understand that a new Social Media program’s funding doesn’t appear out of thin air.:Which buckets do we emptyto fill this new one?
  13. 13. SAY HELLO TO:Business Justification R.O.I.
  14. 14. . . .RETURN ON INVESTMENT
  15. 15. THE R.O.I. EQUATIONInvestment Expectation of return
  16. 16. THE R.O.I. EQUATION (GAIN FROM INVESTMENT - COST OF INVESTMENT)ROI = COST OF INVESTMENT
  17. 17. Truth about R.O.I. ROI is a business metric, not a media metric. ROI is 100% media-agnostic.Only measuring digital or social won’t get you anywhere.
  18. 18. Reason #1: Reason #2: COST REDUCTION REVENUE GENERATIONRemember what Mr. Bossman said…
  19. 19. I shrank my PR budget by 20% and my outbound call budget by 40%.Now I can afford a team of social media Rock stars. Can I get a hellz yeah? Okay, hotshot, You have your Social Media doohickey. Now I’d better see some real results! Or else…
  20. 20. Woohoo!I have a job!!!
  21. 21. Dudes, we are I call dibs on the ON THIS!!! Corporate blog.Let’s start engagin’!!!
  22. 22. Cool. ACCOUNTING One Month Later…
  23. 23. What about our Twitternets? Oh my! Look at all the new visitors to our website!and all of our FaceBook friends! Hot Damn, we even have comments on the blog!
  24. 24. This rocks!I never had it so good!!!
  25. 25. Cool. ACCOUNTING Three Months Later…
  26. 26. Yeah but… What about the P&L? Monitoring to base… Monitoring to base… Our Google Analytics are throughthe roof! Even our social mentions are wicked good! We have liftoff!
  27. 27. Measuring media really rocks my world.
  28. 28. Nope.Anything? Nada. ACCOUNTING Six Months Later…
  29. 29. What kind of mood isThe old man in today? Not good. He doesn’t care how many visitors the website gets, or how many eyeballs we estimate we’ve reached unless it means we’re selling more stuff.
  30. 30. But why? I’m sorry, son. Our website is getting If your Social Media program mad hits, Jack! is generating revenue, we aren’tAnd we have 3,000 followers seeing it. We need to allocate on Twitter now! resources where we can make money. It’s just business.
  31. 31. Darn it.This media measurement stuff isn’t working. We need to start tying this stuff to actual Business performance. Where to start? Let’s see… At the beginning?
  32. 32. Things happen in sequence.
  33. 33. Non-financial impact is not ROI (yet).
  34. 34. Types of non-financial impactWebsite Visitors Customer complaints Impressions Positive press Click-throughs YouTube viewsRetweets Coupons distributed Visitors to a brick & mortar store Positive WOM Delivered emails Negative pressNegative WOM Employment applications Blog comments FaceBook friends Social mention Twitter followers
  35. 35. Non-financial impact = potential.
  36. 36. ROI = actualized potential.
  37. 37. Reason #1: Reason #2: COST REDUCTION REVENUE GENERATIONRemember what Mr. Bossman said…
  38. 38. I need proof that what we’re doingis actually working. Start with proof of concept.
  39. 39. Step 1: Establish a baseline 8% YoY Growth
  40. 40. Baselines illustrate deltas (changes) Is something happening here?
  41. 41. Step 2: Create Activity Timelines
  42. 42. Step 2: Create Activity Timelines
  43. 43. Step 2: Create Activity Timelines
  44. 44. Step 3: Look at Sales Revenue
  45. 45. Step 3: Also look at # of transactions
  46. 46. Step 3: Also measure net new customers
  47. 47. Transaction data should be specific F.R.Y. FREQUENCY, REACH, YIELDHow often customers transact. (transactions per month)How many customers you are reaching. (net new customers)How much they spend. ($ per transaction)
  48. 48. The latest numbers indicate that our YoY sales $ are up 60%.Our individual transactions have doubled, as have our transacting customers. Something’s working! Groovy! Let’s figure out what.
  49. 49. Step 4: Measure transactional precursors
  50. 50. Step 4: Measure transactional precursors
  51. 51. Step 4: Measure transactional precursors
  52. 52. We overlaid all of our timelines and noticed that since our social mediaactivities began, our website visits are up, our social mentions are also up, and everyone seems to love us. So is there a discernable pattern in this?
  53. 53. Step 5: Overlay all timelines activities social data web data transactions loyalty metrics etc.
  54. 54. Step 6: Look for patterns Uncertain Impact Impact Impact Impact No Impact Before After
  55. 55. Step 7: Prove relationships How was this group Touched by SM? Before After
  56. 56. How long will all thisanalysis take? It’s all a process of elimination, really. Isolating patterns, quantifying deltas, proving ad-hocs… Then all we have to do is figure out what the cost savings and revenue gains are, and plug them into the equation.
  57. 57. THE R.O.I. EQUATION (GAIN FROM INVESTMENT - COST OF INVESTMENT)ROI = COST OF INVESTMENT
  58. 58. THE R.O.I. EQUATIONInvestment Expectation of return
  59. 59. Oh wow. This R.O.I. thingwasn’t at all aboutmeasuring media, impressions and eyeballs!
  60. 60. All things remaining the same… We may have Hot damn! ACCOUNTING proof of concept.First things first: Prove that Social Media works
  61. 61. So it turns out that our Social Media program is impacting every aspect of our business except traffic in our brick and mortar stores. Can you get on that? Yeah. We need to find out why we aren’t having an effect there. Kthxbye.Then use what you know to make it work better.
  62. 62. More store traffic. Roger that. Dudes, we are I’ll start crafting some ON THIS!!! wicked blog posts.Let’s start engagin’!!!
  63. 63. Finally, someone with somereal metrics for me to sink my teeth into! Good job, Sparky! You done gewd!
  64. 64. So I guess Social Mediais going to stick around a little while longer after all, isn’t it? Yessir. Looks like our budget is safe for now.
  65. 65. Drinks forEverybody!
  66. 66. Olivier Blanchard Principal, BrandBuilder Marketing 864.630.7398www.thebrandbuildermarketing.com @thebrandbuilder (on Twitter) www.smroi.net
  67. 67. SlideographySlide # Source 3, 9, 10, 11, 18-31, UFO (TV series) 37, 38, 48, 52, 56, http://ufoseries.com/ 59-65 4 http://www.minnpost.com/stories/2008/06/18/2282/this_doesnt_compute_as_more_wo men_enter_scientific_fields_their_numbers_in_computer_science_are_declining 6 Kim Jong Il puppet, from “Team America” http://blogs.rockymountainnews.com/bridget/kimjongil.jpg

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