Calculating Social Media ROI
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Calculating Social Media ROI



Anything that can be measured can be used to calculate ROI, and that includes social media. Many people say the ROI of social marketing can’t be measured, but I beg to differ. Here are some ...

Anything that can be measured can be used to calculate ROI, and that includes social media. Many people say the ROI of social marketing can’t be measured, but I beg to differ. Here are some guidelines for measuring the value of a visitor, a community and even a tweet!



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Calculating Social Media ROI Calculating Social Media ROI Presentation Transcript

  • Social Media ROI:Yes You Can! Paul Gillin, Author The New Influencers Secrets of Social Media Marketing Social Marketing to the Business Customer
  • Return on Investment Or Risk of Inaction? View slide
  • Types Of Financial Impact A. Revenue B. Costs Avoided Anything that leads to A or B, But only if you can directly equate its value to an action View slide
  • What You Need
    • Cost savings
    • Efficiency
      • Cost per message communicated
      • Cost per new lead/customer acquired
    • Productivity:
      • Increase in employee engagement/morale
      • Lower turnover/recruitment costs
    • Engagement:
      • Ratio of posts to comments
      • % of repeat visitors
      • % of 5+ min visitors
      • % of registrations
    • Trust:
      • Improvement in relationship /reputation scores with customers and communities (Loyalty/Retention)
    • Thought leadership:
      • Share of quotes
      • Share of opportunities
    • Message penetration
      • Positioning on key issues
      • Improvement in favorable/unfavorable ratio
  • These are NOT ROI Website Visitors Click-throughs Store visits Press coverage “ Buzz” Employment applications Retweets FaceBook friends Blog comments Video views Twitter followers Impressions Friends Coupons distributed But if you can quantify their financial impact, you have ROI!
  • Reconsider Customer Segments How Best Buy segments its customers High Low High Low Leading-Edge Technology Price Sensitivity Online Aficianados Practicals Ambivalent Aspirers Deal Drivers Who are your high-value customers? Enthusiasts
  • Start With the Business Business Goal Measurement Tactics Tools Generate 30% More Leads
    • Publish Six New White Papers
    • Initiate Monthly Webcasts
    • Sponsor Microsite on TechTarget
    • Build Targeted Twitter List (500)
    • Dedicated Monthly E-mail Blast
    • Promote To Trade Publications
    • List in Tech Directories
    • Hire Tech Freelancers
    • List Rentals
    • Create CoTweet Account
    • Increase PR Budget
    • Hire E-mail Marketing Firm
    • Initiate Blogger Relations Program
    • Increase Webcast/White Paper Reg’s by 60%
    • Increase Traffic to WP Landing Pages 120%
    • Increase 800-Number Calls by 80%
    Review and Revise
  • 7 Steps to Social Media ROI
    • Define the “R” – What are expected results?
    • Define the “I” -- What’s the investment?
    • Understand audiences and what motivates them
    • Choose metrics
    • Choose benchmarks
    • Pick a tool and undertake research
    • Analyze results, glean insight, take action, measure again
    Source: KD Paine & Partners
  • 7 Steps to Social Media ROI
    • The Perfect KPI…
    • Gets you where you want to go
    • Is actionable
    • Continuously improves your processes
    • Is there when you need it
    • Should be developed for:
      • Your own properties
      • Different tactics
      • Other influential sites
    Source: KD Paine & Partners
  • Stagger Activities White Paper Promotion Timeline   Task Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Home page link                         E-mail newsletter                         E-mail blast                         Blog promotion                         Twitter messaging                                                  
  • Look for Impact
  • Basic Business Metrics Lifetime Value of a Customer = (Longevity * Revenue) * Margin Conversion Rate = New Customers/ Visits or Leads Value of a Lead/Visitor = Visitor * Conversion Rate * Lifetime Value
  • OK, Let’s Make it Real Typical customer Curly spends $10,000/year with you Curly is with you for five years Your profit margin is 10% Lifetime value of Curly is ($10,000 * 5) * .1 = $5,000
  • CRM Essentials Must be used by everyone who touches the customer Must document online, offline and landline communications Must span the engagement lifecycle Must enable segmentation and grouping
  • Web Analytics Must track individual visitors Must document paths to desired destinations Must identify referring sources You must use them
  • Applying ROI: Value of a Visitor Monthly Visitors 10,000 Conversion Rate .5% Lifetime Value $5,000 Calculation (10,000 * .005 * 5)/10,000 Value of a Visitor $25
  • Value of a Blog Monthly Search Traffic 3,000 Estimated Traffic w/Blog 4,000 Value of a Visitor $25 Monthly Value of a Blog $25,000 Monthly Blog Expense $6,000 ROI ($25,000-$6,000)/$6,000 316%
  • Value of Twitter
    • You send 50 tweets a month…
    • Generating 1,000 visitors to your website…
    • 2% of whom become leads…
    • 5% of whom become customers.
    • Therefore, the value of a tweet is:
    (1,000 * .02 * .05 * 5000)/50 = $100
  • Value of a Community You want to launch a customer support forum to reduce your costs of telephone support Estimated admin costs: ½ FTE yr 1, ¼ FTE yr 2 1/10 FTE yr 3 Estimated savings: 1 FTE yr 1, 1.5 FTE yr 2, 2 FTE yr 3 Year Item Annual Cumulative 1 Forum Administrative costs $ 35,000 $ 35,000 Savings $ 70,000 $ 70,000 ROI 100% 100% 2 Forum Administrative costs $ 17,500 $ 52,500 Savings $ 105,000 $ 175,000 ROI 500% 233% 3 Forum Administrative costs $ 7,000 $ 59,500 Savings $ 140,000 $ 315,000 ROI 1900% 429%
  • Measuring the Immeasurable Lift Studies Store visits Headline Counts Employment applications Speaking Invitations Net Promoter Score Coupons redeemed If You Can Measure It, You Can Calculate Its ROI
  • Thank you! Paul Gillin 508-656-0734 [email_address] Site: Blog: Twitter: pgillin Free bi-weekly newsletter; sign up at