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By Nichole Kelly
CEO, Social Media Explorer
Calculating ROI to Make
the Business Case for
Social Media Marketing
Everyone’s doing social media marketing, but does anyone know
if it’s worth the investment? The people we marketers report
to—the ones who sign off on budget requests—and we ourselves
want to know how we can measure the return on our investment
in terms of business metrics like leads and sales.
Throughout 2013, pressure will increase on marketers to use
metrics to close the loop between our social efforts and actual
revenue. This eBook describes a methodology for doing that,
explains where social media fits into the traditional sales funnel
familiar to business decision-makers, and offers advice on aligning
social goals and metrics.
Speak the Language of Executives To increase funding, support and therefore effectiveness for your
social media campaigns, you need to place social in the context of the sales funnel and measure results in
terms business executives understand, which are sales, revenue and cost.
Measure Retention Don’t neglect to continue measuring your success with prospects once they’ve
become customers. You’re likely to find that people who come through the social channel remain
customers longer and spend more.
Everyone Can Measure Cost Even if you have trouble measuring results, you can measure what you’re
spending in social channels so you can at least generate a couple of core metrics and make better
decisions about where to spend your time and money.
Narrow Your Objectives Unless you have a huge budget, you need to focus on only one primary goal,
which may be generating awareness, leads, customers or improving customer retention. Knowing what
you’re trying to achieve helps you determine what to measure.
Use Google Analytics and Trackable Links Set up Google Analytics and use custom URL parameters
so you can analyze social data along with your other marketing channels, which enables you to measure
conversion, determine where links are shared, and optimize your content to improve results.
4 Should We Redefine ROI?
4 Placing Social Media in the Context of the Sales Funnel
5 Level 1—Exposure
5 Level 2—Influence
5 Level 3—Engagement
6 Generating High-Funnel Leads
6 Paying Attention to the Retention Side of the Funnel
7 Measuring Results from Social Media Marketing—A Methodology
9 Measuring Cost
9 Tying Sales to Status Updates
10 Case Study: Beachbody
11 Using Trackable Links
12 Accounting for Last Touch Attribution
12 Building Summary Dashboards
13 Final Takeaways
Should We Redefine ROI?
The first question that comes to mind as we begin analyzing ROI for social marketing is, “Why is social
measurement so hard?” I think it’s because we’ve decided to redefine ROI and call it something totally
different. Strictly speaking, ROI is a business metric used to measure the return on just about any
investment. To measure the return on an investment, we need a return—typically expressed in revenue
and sales—and we have to understand our investment. As social marketers, we aren’t exactly sure how
to express our investment or our return, so we’ve decided to add new metrics to the mix, like return on
conversation, return on engagement, or even return on influence.
The problem is that when we redefine ROI in order to suit our needs, it’s not what executives know as the
definition of ROI, so it’s difficult to get them to understand where social media is delivering. Our answer
to that, unfortunately, is to make things worse by speaking in a foreign language and adding more new
metrics, like re-tweets or followers or fans.
But redefining ROI isn’t going to work: We can’t expect executives to speak our language. We need to
start speaking the language they understand, and that’s sales, revenue and cost.
Placing Social Media in the Context of the Sales Funnel
Another issue is that we’re looking for answers in the wrong places. We’re expecting a shiny box that’s
going to deliver our social media ROI, and the problem is that social media is one touchpoint in a multitude
of touchpoints that happen through a prospect or customer life cycle. If we’re looking only at social media,
we’re missing 80 to 90 percent of the picture. In the end, there really is no silver bullet. Instead, we need to
look at the entire path to conversion for social and try to understand and measure the role that social plays
in getting prospects onto that path and guiding them towards becoming customers.
So where does social actually fit into the context of business? This is the secret of being able to explain
social media ROI. The answer lies in aligning social media to the sales funnel. We need to do this because
executives live, eat and breathe the sales funnel. If you can show them where social media fits into the
context of the sales funnel, all their questions disappear and light bulbs go off.
Aligning Social Media Goals to the Sales Funnel
Social media can
add three levels
to the traditional
because it starts
Exposure, Influence and
Engagement metrics all relate
to brand awareness metrics. If
you were to show where they
sit in the sales funnel they would
be at the top of the funnel.
Lead generation is now at
the bottom of your funnel.
Retention is on the back
side of the funnel and shows
ACTION / CONVERSION
When we look at social and the multitude of digital marketing channels it can encompass, we realize we
have an opportunity to start the conversation with consumers much earlier in the sales cycle. When we do
that, we actually add three levels to the sales funnel.
That doesn’t mean we’re making the sales process take longer; it means we’re intercepting potential
buyers much earlier in the sales process, and beating our competition to the punch. When you explain that
to executives, they understand that because we’re reaching prospects earlier than we have before, the
process of converting those leads is going to take longer.
The levels in our sales funnel are:
At the top level of the funnel is Exposure, which is something we’ve been measuring for a long time. We do
this in public relations all the time. It’s about how many eyeballs looking at our content we can generate.
It’s also called Impressions or Reach. Exposure is how big a following you’ve developed, which translates
into how many people have the potential to see your message.
The next level is Influence. When an influencer in your space mentions your brand—whether that influencer
is a customer, a blogger or a media outlet—it generates site traffic for you. A key insight is that influencer-
generated traffic typically converts at a much higher rate than individuals who are led to your site by other
means. And it’s not a five percent difference, it’s a 30 to 60 percent difference.
We move Influence one step along in the funnel because someone who comes to the site from an
influencer is more likely to buy than someone who could have seen our brand, but probably didn’t.
Remember that our total reach is a much bigger number than the number of those who actually see the
messages we put out.
In social media, Engagement is all the metrics you’ve measured in the past; it’s every action that someone
takes to engage with your brand. The difference between Engagement and Exposure is that with
Engagement, an individual is taking a physical action; in Exposure, the individual might have seen your
brand merely by being in a pool of people who could have seen it. Just to underline how complicated
it can be to measure something like Engagement, I can count up to 650 different types of engagement
metrics based on the different social platforms available today. There are a lot of ways to engage in social,
and it’s almost unfair to compare social to channels that don’t have nearly as many ways to engage. That’s
why, when we look at the cost-per-engagement in social, it’s usually very low, because there are so many
ways to engage.
Engagement is something we need to consider as part of the sales process because once someone has
taken the time to engage with our brand—whether they’ve come to our web site or they’re re-tweeting our
messages or commenting on our blog post—we assume we have a higher level of brand awareness with
them and therefore they’re more likely to buy than somebody who may have seen our message at the top
of the funnel.
Generating High-Funnel Leads
From Exposure, Influence and Engagement—which all fall under the umbrella of Brand Awareness—we
move into Lead Generation. With social, we generate what I call high-funnel leads, meaning we’re engaging
with someone who may not have even known they had a problem, but they were doing some research.
We’re getting them before the competition, and we’re starting them down the conversion road earlier than
you can in a traditional sales process. We can break these high-funnel leads into two different categories.
The first is a soft lead. That’s someone who has filled out a form on your web site and provided contact
information. They’ve also opted in to receive additional messages, but they’ve done it in return for a piece
The second is a hard lead. This is someone who has indicated product interest by requesting a demo,
perhaps as the result of attending a webinar. This is someone we’re going to try to transition into a
qualified lead, based on whatever the criteria are for qualification.
Paying Attention to the Retention Side of the Funnel
On the back end is the Retention side of the funnel, which is an area a lot of people forget to measure.
Once someone has come through this funnel and has become a customer, we forget to continue to
measure our success with them.
We find that when people come through the social channel or touch the social channel somewhere along
the way, they tend to remain as customers much longer. And it’s important to measure things like retention
rate, how long they stay customers, and how much they spend.
We can put this into the context of metrics you’re probably familiar with:
• For Exposure, we look at the reach. So, we’re measuring the total fan base, the total number of
followers, e-mail subscribers, etc.; Facebook impressions is another measure we can use.
• For Influence, we look at site traffic generated by influencers. We typically do that by looking at
• For Engagement, we could choose any of a number of metrics; as we said earlier, there are many, many
ways to engage with a brand in social.
• For Action and Conversion, the metric is completing a form or a direct action that’s actually driving a
lead. In some companies that may be a phone call; in others, it may be adding something to a shopping
cart. But there has to be some kind of an action indicating that the prospect is making a decision.
Lead-Gen Technique: Target Your Competitors’ Detractors
You can use NetBase to generate leads by targeting your competitors’ detractors who are complaining
about a product or service in social media. They’re essentially asking for a better product, and if yours fits
the bill, you can engage with them and create a lead. To apply NetBase to the task, simply set up a topic
for each competitor, then filter for negatives, sorted by time. Read more here >
Measuring Results from Social
Media Marketing—A Methodology
You can get a bigger budget for your social marketing if you can demonstrate measurable results. If you
measure what executives really care about, you may be able to get a blank check for your campaigns.
The first question to ask yourself
is, “What exactly am I trying to
achieve?” If you’re using Facebook,
or Twitter, or you have a blog, what
ultimately are you trying to do for
your business? Are you trying to:
• Generate more brand awareness?
• Generate leads?
• Generate customers?
• Keep your customers happy?
• Deliver customer service online?
Now envision that you
are a Twitter Follower or
a Facebook Fan that just
went through all of these
phases in the buying cycle.
We want to see how fast
you move through the
phases, how much you
buy, how often you buy,
and how long you remain
a customer. The ultimate
question is, if we compare
social media leads against
other marketing channels,
would the results be better,
worse or the same?
Putting Measurements Into the Context of the Sales Funnel
how leads that
leads from other
channels in terms
of how soon
how much they
buy, and how
long they remain
Social media can contribute to three key marketing goals. To measure its
contribution accurately, determine what you’re trying to achieve, then use
tools that help you measure social’s contribution to reaching that goal.
Align Goals with Metrics
Fans, followers, subscribers,
Mentions by Influencers
Brand mentions, retweets, clicks,
likes, shares, @replies, DM’s, wall
posts, comments, site visits
Content downloads, lead
generation forms, pitches,
proposals, webinar attendees
Track repeat business and retention
Online sales, phone sales, in-person salesRETENTIONRETENTION
ACTION / CONVERSION
Lead-Gen Technique: Target By Activity
If generating leads is a primary goal, NetBase can help you by determining what activities are associated
with your product, then finding people who are involved with that activity. For a company selling products
and services associated with skiing, for example, you can set up a topic about skiing and build a dashboard
that identifies people who enjoy that activity. Read more here >
You really have to pick. Unless you have a huge budget, you should focus on one of these as your primary
goal. For that reason, I usually consider brand awareness as a side benefit of doing either lead generation
or customer retention. It’s not that I think brand awareness is unimportant; it’s that I’ve struggled to get
executives to support and write blank checks for brand awareness. If we can tie what we’re doing into
lead generation or customer retention and at the same time build brand awareness, then we have a viable
strategy for the executive team, but we’re also doing what we want.
Knowing what you’re trying to achieve is going to help you determine if the content you’re producing
is right, if you’re talking to the right people, and, ultimately, it will tell you exactly what metrics you should
So the three marketing key goals are:
• Brand awareness
• Lead generation
• Customer retention
And here’s what you should measure:
• If brand awareness is your goal, measure reach, impressions, and engagement.
• If it’s lead generation, measure conversions, leads, and sales.
• If it’s customer retention, measure retention rate, cost of service, and revenue. We also like to use Net
Promoter Score because it shows the referral business that can be generated.
I think you’ll agree that those are pretty simple metrics. At the end of the day, it’s not about social media
metrics; it’s about business metrics, and executives measure business in terms of three things: sales,
revenue and cost. So the goal is for you to be able to answer how your social strategy is impacting one of
those three key metrics.
Quite frankly, the thing that 100 percent of us ought to be able to measure is cost—what we’re spending
in the social channels. If you’re measuring that, then you can generate a couple of core metrics.
If we match up cost metrics with the sales funnel, at the top we have cost-per-impression. Under
engagement, we have cost-per-click, or cost-per-site-visitor. We can roll it up into an all-around cost-
per-engagement. We also look at cost-per-inbound link.
Companies that spend a lot of money on search engine optimization should measure a cost-per-
inbound-link so they can compare it across platforms. If someone provides an opt-in e-mail address,
measure how much it is costing you every time you get that opt-in e-mail (cost-per-subscriber).
Ultimately we arrive at a cost-per-lead or cost-per-customer-acquired.
Tying Sales to Status Updates
Is it possible to track which status update generates a sale for your company? The answer is yes, but to
do so, you need to understand the path to conversion.
The ultimate goal of measuring
steps in the conversion process
is to arrive at a cost-per-lead or
The entire path takes place
on your website, so it’s vital
to track prospects on their
journey through your site.
• Social Channel
• Opt-in Form
• Lead Form
Site Visitor Engagement
inbound link Subscriber
Path to Conversion
I’m a loyal
From the social channel, where do we send people? We do a status update. Maybe it’s on Twitter, on
Facebook, or somewhere else. That status update has a link that takes you back to your company web site.
On the site, we have some kind of conversion point we can measure, whether it’s an opt-in form
or a shopping cart. Usually, that opt-in form is either for some kind of informational content or for
decision-making content. (That’s the soft lead versus hard lead distinction.) Then we have a lead form,
meaning that someone’s actually interested in our product or service, and then we actually have the
purchase. This entire channel flow takes place on the website, so it’s vital to track prospects throughout
their journey on your site.
Case Study: Beachbody
Beachbody is a company that sells fitness, weight loss, and muscle-building home-exercise DVDs. They
noticed that purchase habits are shifting from TV to the web, so they needed to shift their focus to
where the conversation was happening, which is on social networks. They created a strategy to engage
customers on several different social channels, and the strategy was tied to a blogger outreach program.
They persuaded influential bloggers to use P90X, an intense home-exercise regimen, then blog about their
results—all of which was shared across Facebook, YouTube, Twitter, and Flickr. This is a common strategy
that lots of companies are using.
They measured success by noting that they got 26,000 mentions and reached over a million people with
a tweet. That’s very high funnel and an impressive exposure metric. It makes for an excellent case study
factoid, but if we look at it in terms of community management versus business objectives, we realize this
is very much a community management metric that isn’t tied to business objectives.
If I were the one analyzing Beachbody results, I’d measure different things. I’d measure cost metrics, that
is, cost deflection metrics. I’d look at click, engagement, site visits, subscribers, and sales.
Lead-Gen Technique: Target By Benefit Sought
People looking for a specific product benefit—either emotional or functional—represent a sales
opportunity. To find them, capture their contact information and, ideally, convert them, you can set up a
topic in NetBase on that benefit and use a Positive Behaviors widget. For example, you can find individuals
looking for gluten-free foods, and even segment that audience by gender to use different marketing
tactics on each group. Read more here >
metrics, like mentions or
individuals reached with
a tweet, aren’t tied to
business objectives. It’s
essential to measure the
costs for actions that lead
Revenue by Influencer
If you’re familiar with Beachbody, they have a community people can join called WOWY. They have a free
community and a paid community. I would look at how many people signed on as free members and at the
number of upgrades to paid membership. I’d want to know if this campaign generated any actual revenue.
Did it generate revenue from the product, as well as the community?
On the back end, I’d look at units sold. How much total revenue was generated? I’d also want to know
Revenue by Influencer, because if I want to do this again, I need that figure so that I know exactly which
influencers I want to reach out to again.
That’s the difference of going from community management metrics to real business metrics.
Using Trackable Links
One essential key to your success is the link you’re sharing in the social channel. Often we share links and
shorten them, but we should be asking if we can do something to make the link more trackable.
Can you leverage Google Analytics to get better data? You can. Keys are setting up goals in Google
Analytics so you can measure conversion, creating separate URLs for each social channel, and adding
unique codes to each URL so you can tell the exact status update where a link was shared.
Lead-Gen Technique: Target By Unmet Need
You can generate leads by identifying individuals who want to solve the problem your product addresses.
You can express that problem in a phrase (like “bad-tasting mouthwash”) or in a word (like “spam”). By
setting that up as a primary term in your NetBase topic, you can target individuals with that unmet need
and use trackable links to determine where they saw your message. Read more here >
Set up goals in Google
Analytics and use trackable
links so you can get better
data and compare results
from such options as pay-
per-click vs. organic search.
The result of adding unique codes is that everyone who clicks the link gets a cookie when they come to
your site—just as Google Analytics has always done with other campaigns—and your social data is now
in the same platform where all your other marketing channels are. So you can see the difference between
pay-per-click and organic search, and you can see social traffic.
Accounting for Last Touch Attribution
Google Analytics, useful as it is, does have a downside, and that’s Last Touch Attribution. What that
means is the campaign that gets credit for a conversion is the last campaign the customer touched before
they convert. This poses a challenge for social because many times social is so high funnel that it’s not
interpreted as the conversion source. Social media tends to bring people to the door, but traditional
marketing tends to convert them.
The way to get around this and see all the campaign history so you can determine if social
participated in a conversion is to add a marketing automation platform that tracks all that information
throughout the process.
Building Summary Dashboards
Once you’ve acquired data, I recommend you create a summary dashboard, like this.
We also build an Executive Dashboard where, under the social media heading, we note the different
channels we’re measuring and include four to six metrics. We fill this in every month and assign a budget
to it. The Executive Dashboard compares channels against each other: public relations against advertising
against events against social media. This doesn’t mean that we’re trying to say that social media is better
than any other marketing platform. In truth, social media is best when used in conjunction with other
marketing platforms. But it allows us to see where social media is delivering the highest value, that is,
which channel it’s supporting the most.
We measure Impressions,
Engagement, and Conversions,
then translate that into a cost-per-
and cost-per-conversion. Now
we can compare against these
channels: public relations, radio, TV,
SEO, and online advertising.
This dashboard places data into three
categories: Exposure Metrics, Engagement
Metrics and Conversion Metrics.
This dashboard enables you to compare
channels at a glance and see where social
contributes the most.
Here’s the umbrella takeaway I’d like to leave you with: I recommend that you set up Google Analytics and
start using custom URL parameters so you can start measuring success, which will help you optimize your
content and work smarter not harder.
Measuring the results you get from social media marketing in terms that business decision-makers
understand will help you get more funding and support for your work, which in turn will enable you to do
more and better social marketing, which can result in greater brand awareness, more leads, more sales and
better customer retention.
VIEW THE ORIGINAL WEBINAR VIDEO
You can watch the entire webinar in its original
format by visiting the NetBase website.
Watch Now >
Set Up Google Analytics
Start Using Custom URL Parameters
and putting it in terms
can demonstrate the
value of social media
marketing to your
For more information, visit: www.netbase.com.
NetBase Solutions, Inc NetBaseInc
About Nichole Kelly
Nichole Kelly is CEO of Social Media Explorer, and author of How to Measure Social Media. Her team helps
companies figure out where social media fits and then helps execute the recommended strategy across
the “right” mix of social media channels. They use a scalable content approach and measure the results to
your bottom line. If you need help developing and implementing an integrated digital marketing strategy,
contact Nichole here.
NetBase delivers the social intelligence that global brands and agencies use to publish, monitor, analyze
and engage with customers in real time. Using a high-precision natural language processing (NLP)
engine, our platform processes billions of social media posts to extract structured insights delivered via
customizable dashboards. Our solutions enable digital marketing, public relations, brand management,
customer service, sales, and product innovation leaders to craft winning strategies faster. Clients include
Coca-Cola, Kraft, HP, ESPN, GfK, McCann Erickson and Taco Bell. NetBase solutions are sold globally by
SAP AG and J.D. Power & Associates.