Financial vs. Non Financial Measurement Oliver Blanchard (Brandbuilder Marketing) - Outlining the differences between financial measurement (R.O.I.) and non-financial measurement, then explaining why understanding that distinction is important to organizations.

1. Social Media R.O.I. olivier alainblanchard @thebrandbuilder SMiB Conference London, UK 23 October 2009 #SMiB

2. “Social Media R.O.I. is overrated.” “Social Media is about sharing things we are passionate about.”

3. Translation: “We have no @#$*& clue What R.O.I. actually is.”

4. R.O.I. RETURN ON INVESTMENT

5. THE R.O.I. EQUATION Investment Expectation of return

6. THE R.O.I. EQUATION (GAIN FROM INVESTMENT - COST OF INVESTMENT) ROI = COST OF INVESTMENT

7. Truth about R.O.I. ROI is a business metric, not a media metric. ROI is 100% media-agnostic. Only measuring digital or social won’t get you anywhere.

8. Why is this important?

9. These resources = 100% of your budget These resources generate 100% of your business E-Marketing Head Count Advertising I.T. Inbound Call Center Marketing Sales Dept. Accounting Public Relations

10. Understand that a new Social Media program’s funding doesn’t appear out of thin air.: Which buckets do we empty to fill this new one?

11. R.O.I. Business Justification

12. How much is this going to cost me? What will this do for us? Mr. Bossman has simple questions.

13. “Social Media R.O.I. is overrated.” (Not knowing what you’re talking about has exactly zero value.)

14. SOCIAL MEDIA IS NOT FREE.

15. 1. It takes skilled people.

16. 2. It takes technology.

17. 3. It takes time and effort.

18. We have… rocks. … all of which are limited resources.

19. Reason #1: COST REDUCTION Reason #2: REVENUE GENERATION

20. Return On Influence? Return On Interest? Return On Intuition? Return on Inovation? Return On Imitation? Return on Incompetence? Return On Idiocy? Return on Incompetence? (Not knowing what you’re talking about has exactly zero value.)

21. Stop the nonsense. Just Stop it.

22. Financial vs. Non-financial Impact Non-Financial Financial

23. Types of non-financial impact Customer complaints Website Visitors Impressions Positive press Click-throughs YouTube views Retweets Coupons distributed Visitors to a brick & mortar store Positive WOM Delivered emails Negative press Negative WOM Employment applications Blog comments FaceBook friends Social mention Twitter followers

24. Things happen in sequence.

25. Non-financial impact is not ROI (yet). Too many agencies only measure here.

26. Non-financial impact = potential.

27. ROI = actualized potential.

28. Reason #1: COST REDUCTION Reason #2: REVENUE GENERATION Mr. Bossman doesn’t care about web traffic.

29. Measuring transactional precursors

30. Non-Financial Impact as transactional precursors

31. Measuring transactional precursors

32. Meauring Sales Revenue

33. If you can, also look at # of transactions

34. Also measure net new customers NNC is a measure of effective reach, not just media reach.

35. Transaction data should be specific F.R.Y. FREQUENCY, REACH, YIELD How often customers transact. (transactions per month) How many customers you are reaching. (net new customers) How much they spend. ($ per transaction)

36. Overlay your data as a timeline activities social data web data transactions loyalty metrics etc.

37. Look for patterns Impact Uncertain Impact Impact Impact No Impact Before After

38. Prove & disprove relationships How was this group Touched by SM? Before After

39. Prove & disprove relationships How are these elements Connected to each other? Before After

40. Prove & disprove relationships Is one of these elements A financial metric? Before After

41. Prove & disprove relationships How do the non-financial and the financial elements connected? Before After

42. How long will all this analysis take? It’s all a process of elimination, really. Isolating patterns, quantifying deltas, proving ad-hocs… Then all we have to do is figure out what the cost savings and revenue gains are, and plug them into the equation.

43. Oh wow. This R.O.I. thing wasn’t at all about measuring media, impressions and eyeballs!

44. Finally, someone with some real metrics for me to sink my teeth into! Good job, Sparky! You done gewd!

45. Drinks for Everybody!

46. Ask away. www.SMROI.net Olivier Blanchard 864.630.7398 www.thebrandbuildermarketing.com @thebrandbuilder(on Twitter)