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Social Media ROI

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How can we measure the ROI of Social Media? So best practices are suggested in this presentation given to a group of Social Media practitioners in list 2011, Johannesburg, South Africa.

How can we measure the ROI of Social Media? So best practices are suggested in this presentation given to a group of Social Media practitioners in list 2011, Johannesburg, South Africa.

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  • The tough part of social media ROI is to tie a hard-rand value to the social media return.
  • The tough part of social media ROI is to tie a hard-rand value to the social media return.you use the ROI number to compare to other social media campaigns and also your TV, print, radio and other campaigns.
  • if you increase your return while keeping your investment the same, then you increase your ROI.Measure the financial efficiency of an investment.Because the ROI formula uses only two inputs – the return and the investment – the ROI formula is an easy way to measure and compare marketing campaigns.
  • Likes are a vehicle not a destination/goal
  • Likes are a vehicle not a destination/goal
  • Brand awareness and customer insights are softer issues, but can still have rand values attached.
  • *develop this more, either remove roi metrics or expand.
  • look at each type of social media return and develop a method for dollar quantification.
  • a combination of methods could give us a more accurate picture.
  • Plug the numbers into an ROI calculation
  • These numbers look good, so how do we present them to management/cfo to allocate budget to Social Media?
  • CLV on patients
  • CLV on patients
  • CLV on patients

Social Media ROI Presentation Transcript

  • 1. SOCIALMEDIA : ROI
  • 2. { } Social Media is like teen sex, everyone wants to do it. No one actually knows how. When finally done, there is surprise its not better. - Avinash Kaushik: Googles analytics evangelist via Twitter 2009
  • 3. SOCIALMEDIA • Post, Listen, Reply, Encourage feedbackMAXIMS • Add Social Media to your existing marketing channels and hope to reach as many people as possible – Wrong! • Search and Social are integrated
  • 4. THE MODERN ONLINE PRESENCE: SIMPLIFIEDTHEWEBSITE SOCIALMEDIASEARCH ENGINEOPTIMISATION
  • 5. The Altimeter Group asked 140 corporatesocial strategists about their 2011 planning Creating ROI Measurements 48.3% Internal Education and Training 37.3% Determining an Organizational Model 34.7%Applying Social Insights to Product Roadmap 34.7% Getting Buy-In from Stakeholders 32.2% Developing a Listening/Monitoring Solution 29.7% Getting Tools and Technologies in Place 26.3% Resources: Increasing budget/headcount 24.6% Policies and Procedures 22.0% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% Source: Survey of Corporate Social Strategists, Altimeter Group, November 2010
  • 6. WHAT IS SOCIAL MEDIA ROI? „Social Media ROI is defined as a measure of the efficiency of a social media marketing campaign‟ - DAG HOLMBOE, 2011
  • 7. THE MILLION DOLLAR QUESTION* …WHAT IS THE ROI OF SOCIAL MEDIA*(AND WHY SHOULD WE MEASURE IT?)
  • 8. WHY SHOULD WE MEASURE IT?1 Compare the efficiency of marketing campaigns;2 Negotiate budgets with your management;3 Analyze and optimize current and future campaigns;4 Financial accountability - as social media becomes mainstream, executives are holding them to the same accountability as other business initiatives, demanding financial returns and ROI on social media investments.
  • 9. THE FINANCIAL ORIGINS OF ROIROI = (return – investment) % investment
  • 10. LET‟S ADAPT IT Social Media ROI =(SM return – SM investment) % SM investment
  • 11. A WORKING EXAMPLELast month, we attributed R50,000 in sales to oursocial media campaign. This is our „social mediareturn‟. Let‟s assume that our investment in oursocial media campaign was R10,000.Using the ROI formula: Social media ROI =(R50,000 – R10,000) / R10,000 % = 400%
  • 12. SOCIAL SOCIAL MEDIA RETURN IS MEDIA THE VALUE THAT YOU DERIVE FROM YOURRETURN? SOCIAL MEDIA CAMPAIGN • Sales • Customer Insights • Net New Customers • Brand Awareness • Etc… • *Not Likes • *Not Followers
  • 13. QUANTIFYING SM RETURN• Sales • Brand Awareness• Net New Customers VS • Customer InsightsHOW DO WE QUANTIFY A RETURN ON THE QUALITATIVE?
  • 14. SM IS A MEANS TO AN END{“We often approach social media like it‟sthe destination rather than the vehicle” - Hal Thomas }A „like‟ or a „follower‟ can be compared to abusiness card handed out at an event.It represents potential, but needs to be actedon.
  • 15. APPROACHINGSOCIALMEDIA ROI
  • 16. BEFOREYOUSTART TAKE A SNAPSHOT
  • 17. THE SNAPSHOT (BENCHMARK • Before you start the clock it is a good idea to benchmark where you‟re at... • Make a note of the numbers (number of Facebook fans, Twitter followers, referrals from social media sites, plus existing website traffic). • Make a note of the less obvious benchmarks (such as SEO rankings and referrals, customer satisfaction scores and other business data). • Make a note of ROI benchmarks. How much are you paying to acquire customers via other marketing channels? How vast is that advertising budget, and how is it being split up? And what proportion is being directed into channels that you cannot accurately measure?
  • 18. UNDERSTAND THE VALUE OF YOUR CAMPAIGN
  • 19. TYPES OFSM ROIMEASUREMENTQUANTITATIVE• Sales, unique visits, page views, followers, demographics, age, bounce rate, length of visit, etc…QUALITATIVE• Metrics that have an emotional component to them. For example, if 75% of the people who mention your product online call it “cheap” and only 25% call it “inexpensive,” that‟s a qualitative metric that has an impact on your business.
  • 20. ESTIMATING SOCIAL MEDIA RETURNHARD NUMBERS ARE NOT ALWAYS AVAILABLE HOW DO WE MEASURE RETURN? THREE STEPS:1.Define your social media goal. 2. Based on the goal, define your social media return. 3. Finally, define how you will tie hard Rands to the social media return.
  • 21. SOCIAL MEDIA ROI ON SALESTHREE STEPS:1. Define the Goal: We want to increase sales.2. Define the Sales that can be attributed to the Social Media campaign (Social Media Return)3. What is the Rand value of those sales?
  • 22. ATTRIBUTING SALES• ANALYTICS• CAMPAIGN ONLY COUPON CODES• FORECASTED VS. ACTUAL SALES FOR THE PERIOD
  • 23. SOCIAL MEDIA ROI ON CONSUMER INSIGHTS THREE STEPS: 1. Define the goal: Generate a high number of high-quality consumer insights from the social media campaign. 2. Define the social media return as the value of these consumer insights 3. Tie in hard Rands to the return by comparing what it would cost to generate the same quantity and quality of consumer insights using a focus group.
  • 24. HOW DO WE ATTACH A RAND VALUE TO CONSUMER INSIGHTSWE COMPARE…We use consumer insights equivalency.Traditional Focus group cost: R5000No. consumer insights generated: 20Ave Cost per consumer insight: R250Count all consumer insights determined to be of equal or higher qualityas the consumer insights from a focus group.Social media ROI = (consumer insights x R250 – cost of SM campaign) cost of SM campaign = ROI %
  • 25. HOW DO WE ATTACH A RAND VALUE TO CUSTOMER SUPPORT CALLSWE COMPARE AGAIN…1. DEFINE THE GOAL2. DEFINE THE SM RETURN3. TIE IN A HARD RAND VALUEALL SUPPORT CENTRES KNOW THE COST OF A SUPPORT CALLSocial media ROI = (Support calls x Ave cost p/call – cost of SM campaign) cost of SM campaign = ROI %
  • 26. HOW DO WE ATTACH A RAND VALUE TOCUSTOMER SUPPORT CALLS WITHOUT A HARD RAND VALUE • Forecast the number of calls without social media with historical data. • Over the period, the number of prevented support calls is the difference between forecasted and actual support calls. This is the social media return.
  • 27. CUSTOMERLIFETIMEVALUE
  • 28. EXPLANATION AND CALCULATION• Customer Lifetime Value (CLV) is the amount of revenue a customer will bring to a company over the course of their lifetime with the brand.• Eg. If you are an Internet Service Provider (ISP), and you know that the average customer stays with you for 3 years and spends R300 p/month. The CLV is R300 x 12 x 3 = R10 800.
  • 29. THE USE OF CLV• How much are you willing to spend to acquire that customer?• 10% of CLV?• If CLV is R10 800 then the company is willing to spend R1080 to acquire a customer.• So with a budget of R500 000, 463 customers should be acquired, bringing in roughly R10,000 000 over the next 3 years.
  • 30. APPLICATION AND CALCULATION • The companies current marketing budget is R3,000 000 p/annum. • From current print and online advertising 2 500 new customers are acquired each year. • So for every R1200 spent, the company gets 1 x new customer. • Let‟s allocate 10% of the annual marketing budget to social media (R300,000) • To allocate budget to Social Media (away from traditional media), 250+ new customers need to be generated from social media.
  • 31. CALCULATIONS TRADITIONAL SOCIAL MEDIAROI = SM return – investment % ROI = SM return – investment % investment investmentBudget = R3,000 000 Budget = R300 000Value of a Customer = R10 800 Value of a Customer = R10 800CLV Spend = 11% CLV Spend = 10%Customer acquisition cost = R1 200 Customer acquisition cost= R1 080Customers acquired = 2500 Customers acquired = 277.77ROI = 27,000 000 – 3,000 000 % ROI = 3,000 000 – 300 000 % 3,000 000 300 000ROI = 800% ROI = 900%
  • 32. CASE STUDY: DENTISTRY PRACTICE • Raise awareness of a recently launched practice. Source: Techcrunch - 2010/07/17
  • 33. CASE STUDY: DENTISTRY PRACTICE • TOOLS: Facebook, Youtube, Twitter, Groupon • PROBLEM: A new practice in a building that houses hundreds of other dentists that have more established practices. • SOLUTION: 70 facebook fans (@ publication on Techcrunch, July 2010), posting Yelp reviews on the page, posting educational dentistry clips on Youtube, a Groupon deal for patient exam and x-ray that attracted 320 new patients!
  • 34. CASE STUDY:DENTISTRYPRACTICEFacebook asAT NOV 2011LANDING PAGE
  • 35. CASE STUDY:DENTISTRYPRACTICEFacebook asAT NOV 2011REVIEWS PAGE
  • 36. CASE STUDY: LOCNVILLE
  • 37. CASE STUDY: LOCNVILLE
  • 38. SOCIAL AND SEARCH• Both Google and Bing have confirmed that their search results are positively affected by social signals, such as tweets, Facebook Like and +1‟s• Google is king because it‟s algorithm measured which websites were “voting” for others by linking to them.• Enter social media, and search engines have taken what people are saying about brands and companies to heart. If people share your content, it‟s probably pretty good.
  • 39. THE LANDING PAGE • A/B Split Testing • Call to Action
  • 40. GREAT TOOLSGOOGLE ANALYTICS• ITS FREE, IT IS A MUST FOR ANY WEBSITE/SOCIAL MEDIA CAMPAIGNHOOTSUITE• BASIC REPORTS FOR FREE; $5.99 FOR A PRO SUBSCRIPTION.• ACCESS TO (INSERT TABLE)SOCIAL MENTION• http://www.socialmention.com/
  • 41. TAKE AWAYSCONCEPTSSocial Media ReturnSocial Media ROICustomer Lifetime ValueBenchmarkingPROCESSESContinuous Improvement (Kaizen)Compare Compare Compare(A/B Split Testing, for landing pages)
  • 42. THANK YOU www.marketsonline.co.za luke@marketsonline.co.za +27 83 301 1408