The ROI of Social Media


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We’re entering a new era of social media marketing — one based on information and
rationalization. It's not just about measuring tweets, re-tweets and followers.

These slides demonstrate a few methods on how to measure your Return of Investment (ROI).

This presentation was delivered by Maria McGowan at PodCamp Halifax in January 2011.

Published in: Education, Business, Technology
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The ROI of Social Media

  1. 1. The ROI“Return on Investment” of Social Media<br />Maria McGowan<br />Internet & Marketing Specialist<br />Greater Halifax Partnership<br /> @mariamcgowan<br /> @greater_halifax<br />
  2. 2. It’s all over the map<br />Industry measurements are “suspect”<br /><ul><li>Geoff Livingstone</li></ul>…yet, measuring Social Media is “challenging”<br /><ul><li>Jeremiah Owyang</li></li></ul><li>It doesn’t have to be<br />
  3. 3. In 2011, here’s the focus<br />
  4. 4. It’s not just about<br />Facebook likes or followers on Twitter<br />
  5. 5. But they’re good for measuring “engagement”<br />For example<br />Shares<br />Mentions (positive, negative or neutral)<br />Blog comments<br />Retweets<br />@mentions<br />email opens and click through rates<br />“likes” of a Facebook page<br />… That kind of stuff<br />
  6. 6. It’s really about<br />Lowered cost of new customer acquisition<br />Reduction in average customer serving costs<br />Increasing customer satisfaction<br />
  7. 7. Some people think<br />“Show me the ROI <br />or all this is a waste of time”<br />
  8. 8. Here’s what you can do<br />
  9. 9. Social Media Objectives<br />You must measure social media against your<br />social media objectives<br />What are they?<br />- awareness?<br />- lead generation?<br />- more relationships?<br />
  10. 10. 3 categories of measurement<br />Quantitative Metrics<br />Qualitative Metrics<br />ROI Metrics<br />
  11. 11. #1 Quantitative Metrics<br />These metrics are data-intensive and<br />number-oriented.<br />3 categories of measurement<br />
  12. 12. Good example<br />Capitalizing on Twitter’s real-time nature for exclusive, limited – customer / limited-period offers <br />
  13. 13. #2 Qualitative Metrics<br />These metrics that have an emotional component<br />to them.<br />Here’s a campaign to increase Satisfaction<br />3 categories of measurement<br />
  14. 14. Good example<br />Users who are part of this network feel that they have some role in the decision making process of the company and it makes them feel a part of it.<br />
  15. 15. #3 ROI Metrics<br />In the world of social media, all roads should<br />lead to ROI.<br />Conversion rates<br />3 categories of measurement<br />
  16. 16. Here’s how 5Fortune 500 companies use Social Media<br />
  17. 17. Branding<br />Create buzz<br />180 million + total upload views on YouTube channel <br />and sales increased 27% in six months (Nielson).<br />
  18. 18. E-Commerce<br />Drive people to their landing page then Dell can<br />easily track their prospects' behaviour.<br />In 2009, $6.5 million in revenue from Twitter<br />
  19. 19. Research<br />a tool to do simple,<br />anecdotal research. <br />Hey PodCampers, can you think of more?<br />
  20. 20. Customer Retention<br />It costs 3-5 times as much to acquire a new customer as it<br />does to keep a current one.<br />
  21. 21. Lead Generation<br />Don’t sell online? Use social media to drive prospects to a<br />website where they can download a whitepaper, listen to a<br />podcast, or watch a video. <br />Once you've captured the prospect's contact information, you can re-market to them via email, direct mail, etc<br />
  22. 22. Let’s do some math<br />
  23. 23. Customer Lifetime Value (CLV)<br />It’s the most important formula in social media <br />CLV is the amount of revenue a customer will<br />bring to your company over the course of his/her lifetime with your brand.<br />
  24. 24. Customer Lifetime Value (CLV)<br />Example: <br />Cable TV provider knows that a typical<br />customer spends $80 per month and that<br />the average customer stays with the<br />company for three years.<br />$80 x 12 months x 3 years = $2,880 (CLV)<br />
  25. 25. Customer Lifetime Value (CLV)<br />Once you know the CLV, you can decide how<br />much $ you'd like to invest to acquire a<br />customer (allowable cost per sale)<br />Many people use 10% of their CLV as a<br />starting point.<br />In the cable TV example, the CLV is $2,880 and<br />10% of that is $288 (allowable cost per sale)<br />
  26. 26. Applying ACPS to Social Media<br />$288 is what it takes to get 1 customer.<br />Let’s say you want to run a Social Media<br />campaign to get 100 customers<br />$288 x 100 = $ 28,800 campaign budget<br />
  27. 27. What $28,000 can get you<br />Create:<br />Landing page?<br />Mobile application?<br />Monthly e-newsletter with cable TV tips to stay in<br />front of prospects and new customers?<br />
  28. 28. Design landing pages on your website to capture prospects and <br />help convert them into paying customers. The landing pages <br />would be designed specifically around the social media <br />campaign, and you would need Google Analytics etc installed<br />to track traffic and conversions.<br />The key point is that all of your social media programs<br />(Facebook, Twitter, YouTube, etc.) should drive people to the<br />landing page on your website where you can convert them from<br />tire kickers (prospects) to paying customers.<br />Test, test, test…<br />The ROI<br />
  29. 29. Pay off? <br />More engagement with your customers. <br />…listening, feedback, interactive, brand strength, and measurability!<br />Thanks!<br />Maria McGowan<br />Internet & Marketing Specialist<br />Greater Halifax Partnership<br /> @mariamcgowan<br /> @greater_halifax<br />