How do you quantify ROI on social media?


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Social in this instance is really about engaging with prospects, nurturing that relationship, and building up their confidence levels to actually open up their wallet. Even if the nurturing process does not immediately (say, within six months) lead to a sale, the door remains open for future deals, if the company is persistent in its engagement with the prospect. In this respect, ROI is not about hard profits initially. It’s about establishing a relationship and building a level of trust with the prospect that paves the way for future business.

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How do you quantify ROI on social media?

  1. 1. Social Media ROIfor Distributed Teams
  2. 2. Synopsis Much has been written about the return on investment (ROI) of social media. Table of Contents How do you quantify it? Is it measurable? There are those who believe it’s too Synopsis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 difficult to quantify, and then there’s the camp that says, “yes, it’s absolutely Differing Philosophies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 quantifiable and social media is treated no differently than other forms of The Purists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 communication.” The Revisionists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 This paper examines the potential for ROI measurements of social media Key Factors in ROI Calculation . . . . . . . . . . . . . . . . . . . . . . . . 7 usage by distributed teams. Why focus on distributed teams? Today’s Branding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 consumer communicates and engages with a corporate brand. As social Risk Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 evolves and the personal brand becomes more important, we’ll find that Collaboration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 measuring engagement with that personal brand inherently is more difficult Recruiting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 but potentially brings with it much more value. There is plenty of literature Reduction in Customer Churn . . . . . . . . . . . . . . . . . . . . . . . 10 analyzing social media ROI in general terms but fewer examining the issue Customer Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 from a distributed-team standpoint. Nevertheless, there is overlap between Lead Monitoring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 the two and this paper will focus on the points more unique to distributed How to calculate ROI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 teams. Whether those teams are extended field marketing teams, sales Case Studies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 teams, or teams of financial advisors or insurance agents, we’ll look at the Large Financial Institution . . . . . . . . . . . . . . . . . . . . . . . . . 13 scope for ROI as a whole. Regional Financial Institution . . . . . . . . . . . . . . . . . . . . . . . 14 Splenda4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 We’ll take a look at some real-life examples of organizations that have Enhancing ROI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 used social in distributed teams and see how their ROIs were calculated. About Actiance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Increasingly, we’ve begun to see more companies publish their ROI figures, Socialite Engage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 from which lessons can be learned and applied to future social References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 marketing campaigns.2 | Social Media ROI for Distributed Teams 3 | Social Media ROI for Distributed Teams Social Media ROI for Distributed Teams | 3
  3. 3. Differing Philosophies Inevitably, hard figures “accented” with soft intangibles coalesce to arrive Two groups exist when it comes to the measurement of ROI with social at an “ROI” that executives look for in justifying their budget decisions. At media: the Purists and the Revisionists. Here, we’ll take a look at what the end of the day, this paper argues that both camps mentioned above have separates them. their merits and that a combination of the two makes for the most compelling argument in a defensible social media ROI calculation. We’ll also look at The Purists ways to improve ROI in a distributed setting. This group believes that one can calculate a social media ROI through detailed analysis, reasonable assumptions, and solid data. The Purists view Social media may be the latest and greatest, but it has to be evaluated in the social media ROI calculations as no different than those calculations used in context of a holistic marketing strategy. It’s just one facet. Social must be email marketing or other forms of traditional marketing. An adamant purist, supplemented with email marketing, TV, print, and other marketing vehicles Olivier Blanchard, author of Social Media ROI, unequivocally posits that to form a cohesive strategy where the sum is greater than the parts. you can calculate an ROI for social media. In fact, he maintains that ROI measurements are “media-agnostic.”1 According to Blanchard, the problematic, though not impossible, portion of a social media ROI calculation is linking non-financial events (e.g., website visits, mentions, likes, shares, Retweets, etc.) to social media financial impact (e.g., hard numbers). He concedes it is difficult, but with detailed analysis, solid data, and diligence, numbers can be derived. The Revisionists What with so many social media sites these days and so many interaction types (e.g., Shares, Likes, Retweets, Wall posts, Direct Messages, etc.), measuring ROI can be difficult since it takes time to convert a Fan, Follower, or Connection into paying for a product or service, so argue the Revisionists. They would further add that the social connections you make via Facebook, LinkedIn or Twitter should be the focus of any effective marketing strategy. Interactions one has with prospects via social media can shape perceptions, attitudes, and ultimately actions (e.g., a conversion).4 | Social Media ROI for Distributed Teams 5 | Social Media ROI for Distributed Teams Social Media ROI for Distributed Teams | 5
  4. 4. Key Factors in ROI Calculation Social in this instance is really about engaging with prospects, nurturing Calculating ROI depends on several factors, many of which are quantifiable. that relationship, and building up their confidence levels to actually open up There are plenty of tools that can track how many followers, retweets, shares, their wallet. Even if the nurturing process does not immediately (say, within etc., a profile or identity is generating. Additionally, with the proliferation six months) lead to a sale, the door remains open for future deals, if the of mobile and geo-location applications, leveraging social media through company is persistent in its engagement with the prospect. In this respect, distributed environments has never been easier. Greater collaboration and ROI is not about hard profits initially. It’s about establishing a relationship higher employee productivity are just a couple of the benefits stemming from and building a level of trust with the prospect that paves the way for future the advancements in social media technologies that should be factored into business. This measurement also leads us to the reduction of customer any ROI calculation. churn, an important metric in many industries, especially the mobile telecommunications industry. After all, it is much more cost-effective Branding to retain a customer than it is to try and attract a new one. This is one of the factors most often cited by the Revisionists. One of the top intangible benefits of social media is its branding influence. Of course, brand At the very least, the intangible factors of loyalty and trust are strengthened protection and enhancement has varying levels of significance, depending on to the point that the corporate brand has been enhanced and the company’s the industry or individual company. For those organizations where the brand image is imprinted in the prospect’s mind, should another business is of utmost importance, social can be a compelling medium to attract new opportunity surface in the future. customers. You should consider the challenges faced by organizations in the Case in point: Flo the Progressive Girl. measurement of clicks, likes, comments, shares, and ultimately conversions She’s seems to be everywhere – on TV, when those communications and conversations happen not between the Facebook, magazines. It’s part of a corporate social profiles, but between the employee’s individual social concerted effort by Progressive Insurance profiles and the consumer. to raise the brand profile of the company through the “mascot.” Progressive’s also done an effective job at utilizing a mixed-channel strategy regarding social. One can follow her tweets and view “Flotos” from her Facebook fanpage as well as get insurance quotes right from her Facebook page. The net result is over three million Facebook fans, the most of any insurance company.26 | Social Media ROI for Distributed Teams | Social Media Success 7 | Social Media ROI for Distributed Teams Social Media ROI for Distributed Teams | 7
  5. 5. Risk Management exchange of ideas and content by providing analytics to help workers focus The impact of social can also be felt on the public relations (PR) front. If on those pieces of content that have the most impact. The net result of this used properly, social can be a tremendous weapon for putting out PR fires. enhanced collaboration is lower operating costs, higher employer productivity, Perhaps learning from other companies experiences, many organizations and faster time to market. All of these benefits can be translated into hard these days turn to social to quickly address customer service issues or to own numbers for the ROI calculation. Organizations like IBM and Jive provide up to mistakes. social business platforms in order to provide this social functionality at an enterprise level. These tools can be leveraged internally or externally, the The pizza chain, Papa John’s, recently was in the news when an employee latter enabling supply chain partners and customers to also reap benefits. typed a racial slur on the receipt of a customer, which was circulated almost immediately on the social media sites. Effusive apologies were soon Recruiting issued on Papa John’s Facebook and Twitter pages. In this instance, Papa For many industries, finding, hiring, and retaining qualified workers is an John’s utilized social to quickly own up to its mistake (it fired the offending issue. The technology industry is a poster child of this dilemma. For instance, employee) and did not try to make excuses for the employee’s behavior. Had a startup flush with venture capital funding has to scour the landscape for Papa John’s not reacted quickly, customers may have boycotted the chain, the best and brightest. The problem is that there are thousands of other causing massive revenue loss and a tarnished reputation, that would have startups doing the same thing for a limited number of qualified resources required even more financial and human resources to repair. (e.g., developers, QA, product managers). Many organizations that have yet to figure out how to deal with public Employee retention thus becomes increasingly important when startups criticism revert to fixing problems the “old way,” or “behind closed doors.” dangle very competitive compensation packages to poach or lure workers to Several times we’ve heard, “Can you delete that tweet now that we’ve fixed join them. Social media, especially LinkedIn, has emerged as a very effective your problem?” Transparency is the only way to deal with public criticism, resource for finding candidates and posting job listings. If you are a company within the appropriate privacy boundaries, of course. on a high-growth trajectory with several job openings, the power of social cannot be underestimated given its tremendous reach at a relatively low cost. Collaboration Neither can the power that an open social policy can have in your recruiting Many organizations have workforces that are dispersed geographically, message. Generation Y’ers (e.g., those born before 1981) are inherently either in the same country or across the globe. For instance, Facebook and social and have much choice in which organizations they wish to work. We’ve LinkedIn both allow the creation of groups, which makes it much easier for seen that permitting individuals to use social media safely, versus blocking like-minded individuals or colleagues to share information and brainstorm them completely, is a key differentiator for organizations in today’s world of product ideas. Social media engagement platforms expand upon this selective Gen Y’ers.8 | Social Media ROI for Distributed Teams 9 Social Media ROI for Distributed Teams | 9
  6. 6. Employees can easily distribute job postings through their networks with Lead Monitoring the technology available today. To be able to track and see who is sharing or With all the connections, friends, followers, etc., that people tend to have commenting on your job postings gives you clues on who the influencers are nowadays, it’s a veritable treasure trove of potential business leads. The in your network and who might be the useful in helping you fill your open notion of “six degrees of separation” couldn’t be more apropos with respect positions. Recruitment through a trusted network of individuals is more to social media. Instead of utilizing a lead sourcing agency or service, likely to yield results, as some of the major difficulties faced by organizations organizations can bring this in-house and potentially realize some cost in convincing candidates to join their firm are overcome by that trusted savings. Engagement platforms today can track leads and give insights as to relationship. who are the best leads. Moreover, some platforms today enable views from either the aggregate (firm-wide) or individual (specific agents or advisors) to Reduction in Customer Churn better assess leads. Social media can be a fantastic way to retain customers and keep them from jumping to competitors. For instance, companies can utilize social to provide special offers, enhance loyalty, and remain engaged with customers such that they feel an affinity for your brand and service. Customer loyalty programs, such as frequent flyer plans and special discounts for long-time members, is an example of social being used to deepen customer relationships. Calculating hard numbers for customer churn reduction are relatively easy to ascertain. Metrics such as the number of lost customers and average spend per customer can both be included in an ROI calculation. Customer Service The impact of social also is evident in customer service issues. If used appropriately, social can be a powerful tool to enhance a company’s customer service programs. For example, a company might use customer feedback software, such as from Bazaarvoice, to reduce their customer service costs. Bazaarvoice analyzed the return rates on and found that products with reviews had return rates 20% less than those without reviews.3 By reducing the return rates, was able to reduce their shipping and restocking costs.10 | Social Media ROI for Distributed Teams | Social Media Success 11 Social Media ROI for Distributed Teams | 11
  7. 7. How to Calculate ROI Case Studies Once you’ve identified your key benefits, you can start calculating your ROI. Large Financial Institution The following steps, coupled with some sample metrics, can be used to Objective: Sign up new clients quantify the analysis: The wealth management group of the organization earns fees as a percentage of assets under management (AUM). As a result, the bank is constantly trying 1. Assign values to your benefits (“Benefits”) to bring in new business so that it can continue to grow revenues from fees. •• Costs saved by not using a recruiter •• Cost of posting a job on LinkedIn Plan: Leverage LinkedIn to build rapport with prospects and customers •• Number of lost customers An advisor had a woman join his LinkedIn network. He monitored her status •• Average spend per customer updates regularly until a life-changing event happened to her one day, •• Shipping costs as percentage of customers which compelled him to gather additional information. The advisor followed •• Product return rates up with a phone call and found out that she wasn’t doing much in the •• Sales increase due to specific loyalty programs way of financial planning. He continued to utilize LinkedIn to nurture the relationship, provide relevant content while still remaining compliant with 2. Add up costs of social media marketing campaigns (“Investment”) firm and regulatory guidelines, and ultimately persuaded the prospect to •• Salaries of specific social media marketing staff and time spent by open an account with the bank. “other” employees on social outreach •• Cost of social media management applications (e.g., monitoring, Result: More assets brought into the firm to manage listening, compliance, marketing, etc.) •• $200,000 in stock •• Any third-party costs (e.g., marketing agencies, graphics designers) •• $700,000 in 401K rollovers •• $250,000 annuity 3. Divide Benefits by Investment to arrive at ROI (“The ROI”) •• $1,000,000 insurance policy •• Several large trusts set up for the customer ROI ASSIGN ADD UP Value of Benefits VALUES COSTS Divided by Costs of Social Media to your benefits of social media Marketing marketing 12 | Social Media ROI for Distributed Teams 13 | Social Media ROI for Distributed Teams Social Media ROI for Distributed Teams | 13
  8. 8. Regional Financial Institution Splenda4 Objective: Allow financial advisors to compliantly use social media Objective: Build awareness, trial, advocacy, and of course, sales without tarnishing the brand name of the firm Even though SPLENDA® was launched in 2002, many consumers A regional financial institution wishes to let their advisors use Twitter. The had yet to adopt it by mid-2010. Well-entrenched competitors still firm is concerned about protecting the reputation of the company, while still dominated mindshare. giving the advisors some freedom in what they tweet. The firm policy is to pre-approve all tweets, e.g., all tweets must undergo a compliance review McNeil, the makers of SPLENDA®, knew that when consumers tried before being published. SPLENDA® they loved it, recommended it, and continued to use it. So, when they launched SPLENDA® Minis, McNeil wanted to leverage social media as Plan: Allow the advisors access to Twitter under the condition that all part of the launch plan. Through influential recommendations and other types tweets are pre-approved by compliance of social media interactions, their objective could be met. An advisor at this firm tweeted 93 times. One of the tweets the advisor tried to post was about Steve Jobs’ death, along with some investment advice on Plan: Exclusive experience and product education what shareholders should do with Apple stock. The campaign involved 9,200 highly targeted women. By focusing on prospects most likely to buy, SPLENDA® was able to ensure participation by Result: Increased book of business while letting advisors maintain their “influencers,” e.g., those consumers who create and share brand content authenticity of voice more frequently than the average person. From the 93 tweets mentioned above, the advisor landed a $1 million prospect, an excellent conversion rate for the minimal amount of resources Trial was an essential part of this campaign, so all participants received (e.g., financial and time) invested. Regarding the Steve Jobs tweet, the tweet a mailing with product samples to encourage trial and lots of sharing. was held by compliance and never posted to Twitter. Education was also essential. Consumers needed to understand both how SPLENDA® is made and its key points of differentiation to most effectively This case study is a combination of flexibility and compliance. The firm support consideration and adoption. So, participants also received a recipe wanted to build a book of business without stifling the advisors’ authenticity booklet, a product information guide, and tips for spreading the word. of voice. In permitting advisors to express their individuality through their tweets, the firm was still able to manage the brand of the advisor and the Result: Greater reach, more customers acquired, higher sales firm by putting in place pre-review controls to guard against advisors taking About 300,000 “conversations” happened on Facebook, Twitter, and blogs, advantage of an emotional topic (e.g., Steve Jobs’ death). including a lift in the volume of online mentions of SPLENDA® during the campaign period.14 | Social Media ROI for Distributed Teams | Social Media Success Social Media ROI for Distributed Teams | 15 Social Media ROI for Distributed Teams | 15
  9. 9. Enhancing ROI These conversations reinforced the key brand messages (“fraction of the So, we’ve arrived at an ROI number. What can you do to increase this calories and different formats to use anywhere”). Coupled with figure? For starters, you can turn to technology to boost your ROI. Social high-volume trials, the campaign helped to overcome any skepticism empowerment platforms like Socialite Engage can help organizations boost and other barriers to adoption. their ROI by homing in on those metrics that provide actionable insights. From here, it becomes a virtuous circle of continuous improvement: you act In the end, survey data projected strong sales performance from on the insight, which delivers better results, which in turn drives changes in the campaign: behavior. For instance, by focusing on important connections and followers • Over 68,000 net new customers for each of the two products – SPLENDA® that have experienced life-changing events recently, these could represent Granulated and SPLENDA® Minis new business opportunities. Similarly, if someone has “defriended” you, perhaps you’d want to reach out and find out why. • 350,000+ total annual purchases As alluded to earlier, just having a bevy of followers or fans is not enough. Are they the right friends, followers, and connections? What are they doing with the content you are posting? Are you actively engaging with them? Are they actively engaging with you? Are you regularly sending them relevant content that they respond to? Are they retweeting or sharing this content with individuals in their network? Is one of your targets a particular center of influence for you, e.g., one who is so well-connected and well-respected, 350,000 not just in social media circles, but in the area in which you work, or in PURCHASES decisions that they make that s/he has the ability to sway people’s views? Once you’re able to pinpoint this type of data, you can refine your social media marketing campaigns to make them more effective. Being able to distribute content easily across the social networks empowers remote agents and advisors to quickly get relevant content into the hands of their connections, followers, and fans. Furthermore, tracking how each piece of content is resonating within a particular network enables advisors and agents to tweak or refine future marketing efforts based on the data collected from previous campaigns. Through this iterative process, social media ROI can be enhanced.16 | Social Media ROI for Distributed Teams | Social Media Success 17 | Social Media ROI for Distributed Teams Social Media ROI for Distributed Teams | 17
  10. 10. About Actiance Actiance helps organizations manage, secure and ensure compliance across Socialite Engage also: unified communications, collaboration and Web 2.0 applications such as • Aggregates news feed from Facebook, LinkedIn and Twitter blogs, wikis and social networks. Actiance’s award-winning platforms are used • Finds and establishes key connections and tailor your activities to by 9 of the top 10 US banks and 284 FINRA-regulated firms globally. match theirs The Actiance platform allows organizations to gain visibility of applications • Shares pre-approved library and/or tailored content to provide in use, apply usage and content policies, ensure compliance, and gain authenticity of voice valuable insights across the communications and collaboration channels in • Leverages crowdsourced content across teams to improve interaction use. Actiance supports all leading social networks, unified communications, • Fully integrates with compliance controls for content, feature access and and collaboration providers and IM platforms, including Facebook, LinkedIn, record keeping Twitter, Google, Yahoo!, AOL, Skype, Cisco, Microsoft, Jive, and IBM. • Shows engagement, trends and social graph growth through Actiance is headquartered in Belmont, California. For more information, advanced analytics visit or call 1-888-349-3223. • Provides gamification tools that enable central content creators to drive adoption and aggregate results from distributed teams Socialite Engage Socialite Engage helps organizations protect their brand and remain compliant while still allowing their users to maintain their own voice. Users can enhance their relationships with prospects and customers through References the sharing of either pre-approved or customized content and can measure the impact of such content to better refine their engagement efforts. 1 Olivier Blanchard, Social Media ROI, p. 218. For instance, through the tracking of key connections, users can focus on those friends or followers who are particularly important to them. 2 SocialEyes, October 2011, p.5. Users can leverage a pre-populated content library to share information 3 Augie Ray, “The ROI of Social Media Marketing,” Forrester Research, Inc., July 16, 2010, p.5. with their networks or distribute their own content that is routed through a compliance workflow to protect both the individual and the organization. 4 18 | Social Media ROI for Distributed Teams 19 Social Media ROI for Distributed Teams | 19
  11. 11. Worldwide Headquarters EMEA Headquarters1301 Shoreway, Suite 275 400 Thames Valley ParkBelmont, CA 94002 USA Reading, Berkshire, RG6 1PT UK(650) 631-6300 phone +44 (0) 118 963 7469 emea@actiance.comThis document is for informational purposes only. Actiance makes no warranties, express or implied,in this document.Complying with all applicable copyright laws is the responsibility of the user. Without limiting the rightsunder copyright, no part of this document may be reproduced, stored in or introduced into a retrieval system,or transmitted in any form or by any means (electronic, mechanical, photocopying, recording, or otherwise),or for any purpose, without the express written permission of Actiance, Inc.© 2001 - 2012 Actiance, Inc. All rights reserved. Actiance and the Actiance logo are registered trademarksof Actiance, Inc. Actiance Vantage, Unified Security Gateway, Socialite, and Insight are trademarks ofActiance, Inc. All other trademarks are the property of their respective owners.