How to calculate the ROI of social media activities
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Forget all that other BS you've read about social media ROI, this gives a proper metthod
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How to calculate the ROI of social media activities
- 2. ROI = (Final value – starting value) starting value What is R.O.I.?
- 3. 5x 20 x 5 x 3 (or 300%) Now with carrots
- 4. Examples of non-financial outcomes • Increase in website visitors and/or time spent on the website • Change in the ratio of positive/negative brand mentions • Increase in Twitter followers or Facebook fans • Increase in requests for product information • A 20% increase in subscriptions to the e-newsletter • A 200% increase in YouTube video downloads • 15 comments on the latest blog post
- 5. Examples of financial outcomes • A 15% reduction in customer service costs by shifting a portion of customer service activity to Twitter • A 12% increase in online sales during a Facebook campaign • A decrease in cost per impression from £2.55 per person per mention of brand to £1.22 by leveraging social media channels • £500,000 in sales attributed to new customers acquired through Facebook.
- 6. Gary Vaynerchuck tv.winelibrary.tv Twitter $15,000 on direct marketing = 200 customers $7,500 on bill board advertising = 300 customers $0 (except time) on Twitter = 1,800 customers
- 7. Return rate for products with reviews = 20% lower Petco.com pet supplier Reviews Return rate for products with 25+ reviews = 45% lower …saving on shipping, restocking, and customer service costs
- 8. Customers who went to the website via a Facebook page = 30% more sales than those who went straight to website Ford Explorer Facebook
- 9. Sales directly attributable to links on Twitter in 2009 = $3,000,000 Dell Computers Twitter
- 10. Blog about HSBC mis-selling + Twitter syndication = national media coverage Nick Bamford, IFA Informed Choice Blog, Twitter
- 11. Sequence of events between Initial investment and gain Investment (£) Action Reaction Nonfinancial impact Financial impact (£) Tweets, RTs, comments, ‘li kes’, downlo ads Brand awareness, Product sentiment online reputation, loyalty, share of voice, Strategy and tactics (ie.campaign) More customers, spen ding more, more often (financial ROI)
- 12. Sequence of events between Initial investment and gain Investment (£) Action Reaction Nonfinancial impact Financial impact (£) This is great but it’s not where financial impact lives
- 13. Sequence of events between Initial investment and gain Investment (£) Action Reaction Nonfinancial impact Financial impact (£) This is great but it’s not where financial impact lives It’s here!!!
- 15. Enhance branding/awareness Protect reputation Enhance public relations Improve loyalty/retention Build community Enhance customer service Facilitate research & development Drive sales and leads Start with “why?”
- 16. Showing a return • Overall objectives – what do you want to achieve? • Identify metrics • Set an intelligent measurable goal • Activity • Measure – the ‘return’ is successful achievement of the goal
- 17. Showing a financial return: FRY (© Microsoft) • Frequency (increase in frequency of transaction by customers) • Reach (net increase in customers) • Yield (increase in how much customers spend)
- 18. Sequence of events between Initial investment and gain Investment (£) Action Reaction Nonfinancial impact Financial impact (£) Tweets, RTs, comments, ‘li kes’, downlo ads Brand awareness, Product sentiment online reputation, loyalty, share of voice, Strategy and tactics (ie.campaign) More customers, spen ding more, more often (financial ROI)
- 19. Step 1: Create Activity Timelines
- 20. Sequence of events between Initial investment and gain Investment (£) Action Reaction Nonfinancial impact Financial impact (£) Tweets, RTs, comments, ‘li kes’, downlo ads Brand awareness, Product sentiment online reputation, loyalty, share of voice, Strategy and tactics (ie.campaign) More customers, spen ding more, more often (financial ROI)
- 21. Step 2: Social media reactions
- 22. Sequence of events between Initial investment and gain Investment (£) Action Reaction Nonfinancial impact Financial impact (£) Tweets, RTs, comments, ‘li kes’, downlo ads Brand awareness, Product sentiment online reputation, loyalty, share of voice, Strategy and tactics (ie.campaign) More customers, spen ding more, more often (financial ROI)
- 23. Step 3: Measure transactional precursors Loyalty Trust Awareness Sentiment
- 24. Sequence of events between Initial investment and gain Investment (£) Action Reaction Nonfinancial impact Financial impact (£) Tweets, RTs, comments, ‘li kes’, downlo ads Brand awareness, Product sentiment online reputation, loyalty, share of voice, Strategy and tactics (ie.campaign) More customers, spen ding more, more often (financial ROI)
- 25. Step 4: Look at Sales (or another FRY outcome)
- 26. Step 5: Overlay all timelines activities transactions social data web data loyalty metrics etc.
- 27. QUESTIONS