We described it as the 'simple' business of increasing the number and value of transactions as well as building and retaining the customer base. So, all we need to do is look at how our revenues have increased since starting our Twitter campaigns, pat ourselves on the back as we attribute it directly and book a long break in the Seychelles.
Of course not. These steps can help you with producing financial stats for social media ROI.
First of all, without giving grandma an instruction manual for egg-sucking, there's no chance of measuring if you haven't set objectives in the first place to measure against. Here's some ideas for objectives that will help you see tangible and (FDs take note) measurable upturns:
1) Acquiring new customers and prospects. The holy grail of any marketing campaign, the difficulty is in working out which new customers, or in b2b bits of the pipeline, have come from the social media campaigns, and which from other prospecting techniques. The answer is likely to be a combination of the two, but here are some pointers to where you may be able to do some calculations:
- Prospecting via Linkedin. For b2b environments, salespeople are increasingly doing their prospecting via this professional network. A successful direct approach here will come about from researching, messaging and engaging. So the measurements are the cost of the salesperson's time rather than traditional list acquisition, mailing, lead management costs and the value of the resulting sales funnel.
- Purely social promotions. In some ways these are the easiest to measure; you may have set a FB ad budget, developed a competition page, or simply providing a discount offer for new and future customers. Even if these don't lead to a direct product sale, taking up the voucher offer gives a new population of customers who should have an associated value.
2) Product sales. This is almost synonymous with new customers but particularly in the consumer space, it's units shifted not the names of the buyer that can count. A study by Bazaarvoice and the CMO club showed that roughly three out of four CMOs expect to tie social media to revenue in 2011.
3) Social recruitment. One of the biggest costs for any organisation is recruitment and social media is increasingly part of the recruitment mix, as well as being a factor in staff retention. Although this may not form part of the obvious metrics for marketing campaigns, social marketing activity has a knock on effect for would be employees, and cv submissions can come directly from this, removing consultancy and advertising fees and seeing an instant and very measurable ROI.
Secondly, as with any marketing campaign, you should consider A/B testing. What do we have if we try to target customers by traditional means vs new methods. This gives you a basis for directing future social media efforts. Then of course you can compare the different social media channels. What this points to
Thirdly, add in the organic growth factor. This is the extended family that you acquire through social. If you notice an upturn on a promotion it may be as simple as the original targets, for example your facebook followers, have shared and promoted to their friends. This effect has the potential for exponential growth and is probably the hardest to measure directly but in real terms should actually bring down the cost per conversion as your effort and costs are not increased but your returns are.
The simplest formula for all of these for ROI calculation still relates to cost of campaign vs return. There will still be arguments as to at what point it was social media that caused the uplift, but by thinking in advance about those objectives, rather than just twitter for tweet's sake, gives a greater chance of getting measurements that are attributable to campaigns. Classic analytics tools are important here; use all the insights from Facebook pages, Linkedin company pages, Twitter tools, as well as your website analytics to understand what the engagement behaviour is at any point. In amongst all the excitement that Old Spice Man generated, sales of its its Body Wash more than doubled - so here there was a straightforward, measurable result against the cost of a campaign.
In summary, measurement may be more complex because social media by its very nature isn't about discrete activitiess, but by remembering a few old-fashioned rules, it starts to become easier to see some straight financial returns. In future blogs, we'll be considering some of the additional features that make up ROI - from reputation management to driving digital traffic. As you get smarter with social media, you'll start to put a value against some of these softer uplifts and impress the finance team some more. Meanwhile continue to monitor your social media activities and make sure you're bringing all the elements into your measurement mix.
