Business ROI of Social Media


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Presentation given at Social Media in Business, #SMiB10 - May 2010

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  • [twitter]Enough of this Twitter “Twat” crap! SHOW. ME. THE. MONEY. - My opening slide from[/twitter]
  • [twitter]Social Media for businesses is NOT free. It takes People, Tools and Time. All of which, in any org., need resources & budget[/twitter]Social Media is NOT freeBecause things in the real world cost moneyIt takes:People & resourcesTools & TechnologyTime AND BUDGET!All of which are limited
  • [twitter]Businesses have existing real & fixed costs. It doesn’t matter how you slice up reources, Social Media must be budgeted from somewhere[/twitter]You have real & fixed costs:Head countMarketing , PR, Advertising sales Customer Service – Call centresManufacturing, Production, ITBUT many of these resources are also those that generate your business – everybody works in marketing & customer service these daysSo the budget has to be sliced up.The pie has to go around which means in all probability you have to take budget from somewhere else.Business managers will ask “WHY?” – so it has to be justified
  • [twitter]One of the first places businesses start with Social Media performance is in reducing Customer-Service delivery costs[/twitter]So Why Social Media?Reduce the cost of customer service = Saving money. Maximising the efficiency of our limited resourcesIncrease the value of a customer = Bigger profits
  • [twitter]Business objectives and tactics are measured on multiple metrics, incl. hard financials AND soft KPIs[/twitter]Why? Traditional business metrics & rationalesThese things too
  • [twitter]Income and spend can be defined in a number of different ways. But they all lead to the same basic business fundamental - ROI[/twitter]Income and spend can be defined in a number of different ways. But they all lead to the same basic business fundamental - ROI
  • Trying to evaluate ROI based on your media spend Campaign measurement & performance are important but on their own they don’t give you the other important parts of picturee.g. ROIDoesn’t matter if you are spending big budgets on major campaigns or small tactical executionsIt doesn’t matter if you are measured on cost control or savingsAnd what about the ROI of NOT doing something or doing something and failing e.g. Eurostar, Nestle, Skittles, United Breaks Guitars, The Key Influencer (Fedex)
  • So – supposing you get approval to do some Social MediaYou get some budget from somewhereThe business manager says Yes.Someone decides to take a chance & test it.All you have to do now is Prove it
  • WooHooFollowers are following, Fans are joining in droves. The blog is ranked high on Google. Our sentiment analysis shows a rise. Negatives are down, positives are up. Traffic is up. Retweets are at a high.We’re listening. We’re learning. We’re engaging. We are locked & loaded, and firing on all our social media cylinders
  • But these are not financial impact measuresThey may be good for tracking campaign and promotion success – but they don’t give us true insight into how they are affecting our businessWe need to find some way of equating this to business performanceSOYou invest in something. You do something. It causes a re-action. There is a non-financial impact. It creates a financial impact
  • Look at what’s gone beforeSet baseline measurementsIrrespective of whether they used social media or notThe key here is to establish the point at which you want to measure the effect and change that social media is havingMonitoring and measuring to provide base data is key. Business performance, Analytics, Market research etc.What is our growth rateHow much revenue did we makeWhat is our profitHow much did it cost us
  • Measure transaction data - FREQUENCY, REACH, YIELDHow often customers transact. (transactions per month)How many customers you are reaching. (net new customers)How much did they spend. (£ per transaction)Revenue per customerCost per customerBe specific.So now to figure out the difference Social Media is having
  • Web trafficBlog visits, comments & website ClickThroughsTwitter followersVideo / podcast subscribers / playsSentiment analysisFacebook friends or fansDemand on mobile serversTransactional precursors – like retail footfallOnline AND OfflineRetail store footfallOTV – Opportunities to viewAVE – Advertising Value EquivalencyCustomer service costsNeed to equate this to traditional sales & marketing activity incl. OfflineSANYO Xacti launchHD video cameraConsumer tech product launch5 figure budget6 countries – 2x Europe, 2x N.Amer. & 2x Far EastSegmented audienceDevelop marketing strategyIntegrate social media Blogger outreach Specific vertical market engagement Style - Young fashionistas Music SportsCharles SchwabVirgin Media
  • Look for the patternsRelationships & CorelationsImpactsCauses & effectsCoefficients, deltas & indecesStatistical probabilitiesThere is no substitute for doing number crunchingAND thenPlug in the cost savings and revenue gains
  • Business ROI of Social Media

    1. 1. Social Media is NOT free! KTHXBAI
    2. 2. Customers Loyalty Transactions Yes! We can do those too Revenue
    4. 4. BUT... ROI is a business metric, NOT a media metric ROI is agnostic Just measuring media is NOT the answer
    5. 5. Baseline Before After
    6. 6. Measure Before After What did we do here , here & here ?
    7. 7. Overlay Before After
    8. 8. Figure it all out
    9. 9. ...apply the ROI equation With the cost savings and the business generated, to give you...
    10. 10. ROI 21st May 2010 @andrewgerrard