Your SlideShare is downloading. ×
0
Social Media ROI: The Real Value of Social
Social Media ROI: The Real Value of Social
Social Media ROI: The Real Value of Social
Social Media ROI: The Real Value of Social
Social Media ROI: The Real Value of Social
Social Media ROI: The Real Value of Social
Social Media ROI: The Real Value of Social
Social Media ROI: The Real Value of Social
Social Media ROI: The Real Value of Social
Social Media ROI: The Real Value of Social
Social Media ROI: The Real Value of Social
Social Media ROI: The Real Value of Social
Social Media ROI: The Real Value of Social
Social Media ROI: The Real Value of Social
Social Media ROI: The Real Value of Social
Social Media ROI: The Real Value of Social
Social Media ROI: The Real Value of Social
Social Media ROI: The Real Value of Social
Social Media ROI: The Real Value of Social
Social Media ROI: The Real Value of Social
Social Media ROI: The Real Value of Social
Social Media ROI: The Real Value of Social
Social Media ROI: The Real Value of Social
Social Media ROI: The Real Value of Social
Social Media ROI: The Real Value of Social
Social Media ROI: The Real Value of Social
Social Media ROI: The Real Value of Social
Social Media ROI: The Real Value of Social
Social Media ROI: The Real Value of Social
Social Media ROI: The Real Value of Social
Social Media ROI: The Real Value of Social
Social Media ROI: The Real Value of Social
Social Media ROI: The Real Value of Social
Social Media ROI: The Real Value of Social
Social Media ROI: The Real Value of Social
Social Media ROI: The Real Value of Social
Social Media ROI: The Real Value of Social
Social Media ROI: The Real Value of Social
Social Media ROI: The Real Value of Social
Social Media ROI: The Real Value of Social
Social Media ROI: The Real Value of Social
Social Media ROI: The Real Value of Social
Social Media ROI: The Real Value of Social
Social Media ROI: The Real Value of Social
Social Media ROI: The Real Value of Social
Social Media ROI: The Real Value of Social
Social Media ROI: The Real Value of Social
Social Media ROI: The Real Value of Social
Social Media ROI: The Real Value of Social
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×
Saving this for later? Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime – even offline.
Text the download link to your phone
Standard text messaging rates apply

Social Media ROI: The Real Value of Social

4,503

Published on

Presentation given at Michigan State University Social Media Executive Seminar on the calculating the return on social media based on customer lifetime value. …

Presentation given at Michigan State University Social Media Executive Seminar on the calculating the return on social media based on customer lifetime value.

Understand the metrics and value calculations of social ROI

Learn how to quantify social media contributions to the bottom-line

Determine the impact that social media has on sales and other parts of the business, and their interrelatedness

Published in: Technology, Business
1 Comment
9 Likes
Statistics
Notes
No Downloads
Views
Total Views
4,503
On Slideshare
0
From Embeds
0
Number of Embeds
2
Actions
Shares
0
Downloads
176
Comments
1
Likes
9
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide
  • The bottom line is that consumers are not listening anymore. Only 14% of consumers even trust ads. Interruptive marketing has seen its day.Consumers control the online environment so brands need to think about facilitating user-created actions, not just user-generated content. Unlike magazines and TV where brands are speaking AT consumers, the Internet and social web allows for more back and forth interaction.Today, 78% trust peer recommendations and a majority of consumers (74%) rely on social networks to guide purchase decisions. (Gartner, July 2010)Brands not paying attention to what their customers say about them on sites such as Twitter should reconsider that attitude. A recent survey showed that 60% of people have chosen not to buy or use a product or service after reading negative comments about them online.On top of that, according to Forrester, by 2014, 53% of total retail sales (online and offline) will be affected by the Web, as consumers increasingly use the Internet to research products before purchasing. (Forrester, March 2010)
  • Social web has profoundly changed how customers interact with each other and with brands. You can no longer ignore and pretend like it does matter to your business.But what is the role of social media and social businessin your organization?
  • A study by Marketing Leadership Council (MLC), looked into 250 prominent brands and found that measured social media success is actually rare among brands. Only 1 out of 10 brands are seeing significant business results from their social media efforts. So, despite the large number of exciting social media campaigns, very few companies are actually seeing returns. Why is that? Or perhaps a better question: what distinguishes the 11% of brands seeing business results from the rest? And what can we learn from the 11% in terms of the role of social media fits in the organization.
  • What really distinguishes the 11% is a broader view of social media’s potential. More specifically it breaks down to three traits: Strategic focus – social media are used to enhance the brand’s competitive position by creating new value for consumersFirmwide collaboration – (and this is very important) social media has to be managed collaboratively to build and deepen firmwide customer relationshipsExecutive leadership – CMO advocates for social media across the enterprise and actively leads the firm’s efforts
  • So now that we have a better understanding of how social media fits (or should fit) into and across your organization, let examine some of the challenges with measuring ROI.
  • Transcript

    • 1. Social Media ROI:The Real Value of Social<br />Marcel Santilli - @santilli<br />April 20, 2011<br />
    • 2. Placing a monetary value on social<br />2<br />
    • 3. 3<br />50 years ago…<br />Successful businesses took the time to build relationships with customers.<br />
    • 4. Today.<br />Efficiency and growth made companies forget the value of being social.<br />4<br />
    • 5. 1<br />Why social media matters<br />Evolution of communication and interaction<br />Role of social media in the organization<br />Challenges with measuring ROI<br />Framework to measure ROI<br />The “R” and “I” in ROI<br />Recommendations and key takeaways<br />2<br />5<br />3<br />4<br />5<br />6<br />7<br />8<br />9<br />
    • 6. 6<br />500 BILLION.<br />Number of minutes spent on Facebook per month.<br />13% of the time spent online in the US<br />Average user spends 15 hours per month<br />Last year, that was number was 150 billion. <br />
    • 7. 7<br />25 BILLION.<br />Amount of content items shared each month on Facebook.<br />That’s more than 6x last year’s volume<br />
    • 8. 8<br />500 BILLION.<br />The number of peer influence impressions Americans generate per year via social media.<br />62% from Facebook<br />
    • 9. 9<br />27 MILLION.<br />Number of tweets per day on Twitter.<br />That’s 8x last year’s volume.<br />
    • 10. 10<br />… is the second largest search engine in the world.<br />36 HOURS.<br />The amount of video uploaded to YouTube every minute.<br />That’s more than double last year’s volume.<br />
    • 11. 11<br />
    • 12. 1<br />Why social media matters<br />Evolution of communication and interaction<br />Role of social media in the organization<br />Challenges with measuring ROI<br />Framework to measure ROI<br />The “R” and “I” in ROI<br />Recommendations and key takeaways<br />2<br />12<br />3<br />4<br />5<br />6<br />7<br />8<br />9<br />
    • 13. 13<br />1960s<br />Reached more people<br />with undivided attention<br />Fewer ads<br />Today<br />More ads<br />Reach less people<br />paying less attention<br />REACH<br />ADS<br />TARGET AUDIENCE<br />
    • 14. 14<br />14% of consumers trust advertisement <br />78% trust peer recommendations<br />74% rely on social networks to guide purchase decisions<br />
    • 15. 1<br />Why social media matters<br />Evolution of communication and interaction<br />Role of social media in the organization<br />Challenges with measuring ROI<br />Framework to measure ROI<br />The “R” and “I” in ROI<br />Recommendations and key takeaways<br />2<br />15<br />3<br />4<br />5<br />6<br />7<br />8<br />9<br />
    • 16. “Success is rare”<br />16<br />
    • 17. Best in class approach to social media<br />17<br />
    • 18. How social media plugs into the organization<br />18<br />Business Functions<br />Business Processes<br />Customer Service<br />Business Development<br />HR<br />Legal<br />IT<br />Internal Communications<br />Marketing<br />Advertising<br />Customer Support<br />Collaboration<br />Public Relations<br />Measurement<br />Reputation Management<br />Data Analysis<br />Research<br />
    • 19. How social media creates value for the brand<br />19<br />
    • 20. Reshaping the relationship: Nike<br />20<br />
    • 21. Nike Plus Community<br />21<br />
    • 22. OPEN Forum (American Express)<br />22<br />
    • 23. 1<br />Why social media matters<br />Evolution of communication and interaction<br />Role of social media in the organization<br />Challenges with measuring ROI<br />Framework to measure ROI<br />The “R” and “I” in ROI<br />Recommendations and key takeaways<br />2<br />23<br />3<br />4<br />5<br />6<br />7<br />8<br />9<br />
    • 24. Does the marketing funnel still work?<br />24<br />Source: Forrester<br />
    • 25. Challenge with attributing revenue to right touch point<br />25<br />First touch<br />What do we attribute sales to? <br />Last touch<br />
    • 26. How do you measure intangible benefits?<br />26<br />
    • 27. Three biggest challengesBarriers to achieving buy-in on strategic social investments<br />27<br />
    • 28. 28<br />
    • 29. 1<br />Why social media matters<br />Evolution of communication and interaction<br />Role of social media in the organization<br />Challenges with measuring ROI<br />Framework to measure ROI<br />The “R” and “I” in ROI<br />Recommendations and key takeaways<br />2<br />29<br />3<br />4<br />5<br />6<br />7<br />8<br />9<br />
    • 30. Framework<br />30<br />How can social media create customer value?<br />Efficiency<br />Effectiveness<br />Acceleration<br />Enterprise Approach<br />Conversations<br />Business objective:Reduce churn<br />Brand + customer value<br />Unique social experience<br />Customer-centric KPI:Customer satisfaction<br />Customer touch points <br />(supporting social)<br />Social transactional metrics:Sentiment, mentions, etc<br />Customer Experience<br />External factors<br />(peers, competitors, etc)<br />Sales cycle<br />Retention cost<br />Acquisition cost<br />Customer Lifetime value<br />Yield<br />Reach<br /># of Customers Impacted<br />Cost<br />(Tech, people, process)<br />VS<br />Frequency<br />Retention<br />
    • 31. ROI and CLV equations<br />31<br />
    • 32. The investment-return relationship<br />32<br />ROI should be measured here<br />Investment<br />Action<br />Reaction<br />Non-financial impact<br />Financial impact<br />This is very important but ROI doesn’t live here.<br />
    • 33. 33<br />
    • 34. 34<br />Engagement is key<br />Unaware<br />Interested<br />1st time participant<br />Regular participant<br />Passionate participant<br />Awareness & interest<br />Call to action<br />Incentive to return<br />Progressive benefit<br />
    • 35. 1<br />Why social media matters<br />Evolution of communication and interaction<br />Role of social media in the organization<br />Challenges with measuring ROI<br />Framework to measure ROI<br />The “R” and “I” in ROI<br />Recommendations and key takeaways<br />2<br />35<br />3<br />4<br />5<br />6<br />7<br />8<br />9<br />
    • 36. Customer value<br />36<br />Definition: The perceived worth of the set of benefits received by a customer in exchange for the total cost of the offering, taking into consideration available competitive offerings and pricings.<br />
    • 37. Four pillars of profit<br />37<br />
    • 38. From satisfaction to profit<br />38<br />Increasing the customer retention rate by 5% increases the average lifetime value of the firm’s customers by at least 25%<br />- Reichald,The Loyalty Effect, HBS Press.<br />
    • 39. Customer lifetime value (CLV)<br />39<br />
    • 40. CLV sensitivity analysis<br />40<br />1% improvement = 13% increase in CLV<br />
    • 41. Example: Customer acquisition cost<br />41<br />Questions to ask: <br /><ul><li>Are customers impacted by social media cheaper to “acquire”?
    • 42. How does social media impact CLV for these customers?
    • 43. What metrics correlate to business objective? Why or why not?
    • 44. What is the impact of social interactions on KPIs?</li></li></ul><li>The “I” in ROI<br />1. Technology<br /> Infrastructure, software, hosting and professional services<br />2. People<br />Development, strategy and planning, labor hours<br />3. Process-related<br />Training, workflow reengineering<br />42<br />
    • 45. 7 Steps to ROI<br />1. Set enterprise-wide business objectives<br />2. Determine related KPIs and relevant metrics<br />3. Estimate necessary investment (technology, people and process)<br />4. Compare customers impacted by social media against those that were not<br />5. Calculate CLV<br />6. Estimate number of customers impacted in relation to investment<br />7. Show relative ROI<br />43<br />
    • 46. IBM exampleUsing social media internally to surface IBMers’ expertise<br />44<br />Outcome = $100 Billion<br />
    • 47. 1<br />Why social media matters<br />Evolution of communication and interaction<br />Role of social media in the organization<br />Challenges with measuring ROI<br />Framework to measure ROI<br />The “R” and “I” in ROI<br />Recommendations and key takeaways<br />2<br />45<br />3<br />4<br />5<br />6<br />7<br />8<br />
    • 48. Recommendations and key takeaways<br />1. Start with business objectives<br />2. Think of how social media can change the way you do business<br />3. Put social experience at the center <br />4. Focus on creating value for your customer<br />5. Prove ROI through CLV<br />46<br />
    • 49. 47<br />How can social media change the way YOU do business?<br />
    • 50. 48<br />
    • 51. Credit (white papers, research, pictures, blogs, articles, videos, etc)http://www.brandrepublic.com/news/969874/Social-networks-making-people-likely-complain-online/http://www.thestrategyweb.com/social-networks-make-people-more-likely-to-complainhttp://www.adobe.com/engagement/pdfs/Forrester_Adobe_TEI.pdf http://www.techzone360.com/topics/techzone/articles/131154-ibm-social-channelmedia-social-crm-trends.htmhttp://www.theappgap.com/top-5-social-media-myths.htmlhttp://www.realinnovation.com/content/c081103a.asphttp://thebrandstop.wordpress.com/marketing-frameworks/lifetime-value-customer-equity/http://www.slideshare.net/brieuc/whats-the-roi-of-your-mother-a-presentation-about-roi-and-social-mediahttp://pb-hass.deviantart.com/art/mother-and-daughter-24676572http://www.scribd.com/doc/49442666/The-Virtuous-Circle-The-Role-of-Search-and-Social-Media-in-the-Purchase-Pathway-Research-from-GroupM-Searchhttp://www.brandrepublic.com/news/969874/Social-networks-making-people-likely-complain-online/Closing the CMO Leadership Deficit in Social Media, Marketing Leadership Council (July 2010)<br />49<br />

    ×