The what, why and how of Social Media ROI: Business definitions, methodologies and situational narrative. This presentation's purpose is to clarify what ROI is and isn't within the context of Social Media and offers a basic explanation of how to tie Social Media activities to real ROI.
7. These resources = 100% of your budget E-Marketing Each resource has a specific cost Head Count Advertising I.T. Inbound Call Center Each resource yields specific results Marketing Sales Dept. Accounting Public Relations
8. These resources generate 100% of your business E-Marketing Losing even 1% of your budget’s efficiency could seriously ruin your day. Head Count Advertising I.T. Inbound Call Center Marketing Sales Dept. Accounting Public Relations
9. Okay fine. But if I’m going to take a chance on this social media thing, it had better make good business sense! Why should I allocate resources to it?
10. Reason #1: It will result in a cost reduction. Maybe in customer service? You mentioned something about business intelligence and market research? Reason #2: It will generate more revenue. I want more transactions, more net new customers, more customer loyalty, etc.
11. Now go figure out what Program you have to cut to fund this Social Media thing. Remember that our bonuses are on the line.
12. 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?
16. THE R.O.I. EQUATION (GAIN FROM INVESTMENT - COST OF INVESTMENT) ROI = COST OF INVESTMENT
17. 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.
18. Reason #1: COST REDUCTION Reason #2: REVENUE GENERATION Remember what Mr. Bossman said…
19. I shrank my PR budget by 20% and my outbound call budget by 40%. Now I can afford a team of social media Rock stars. Can I get a hellz yeah? Okay, hotshot, You have your Social Media doohickey. Now I’d better see some real results! Or else…
23. What about our Twitternets? Oh my! Look at all the new visitors to our website! and all of our FaceBook friends! Hot Damn, we even have comments on the blog!
26. Yeah but… What about the P&L? Monitoring to base… Monitoring to base… Our Google Analytics are through the roof! Even our social mentions are wicked good! We have liftoff!
29. What kind of mood is The old man in today? Not good. He doesn’t care how many visitors the website gets, or how many eyeballs we estimate we’ve reached unless it means we’re selling more stuff.
30. But why? Our website is getting mad hits, Jack! And we have 3,000 followers on Twitter now! I’m sorry, son. If your Social Media program is generating revenue, we aren’t seeing it. We need to allocate resources where we can make money. It’s just business.
31. Darn it. This media measurement stuff isn’t working. We need to start tying this stuff to actual Business performance. Where to start? Let’s see… At the beginning?
47. 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)
48. The latest numbers indicate that our YoY sales $ are up 60%. Our individual transactions have doubled, as have our transacting customers. Something’s working! Groovy! Let’s figure out what.
52. We overlaid all of our timelines and noticed that since our social media activities began, our website visits are up, our social mentions are also up, and everyone seems to love us. So is there a discernable pattern in this?
53. Step 5: Overlay all timelines activities social data web data transactions loyalty metrics etc.
54. Step 6: Look for patterns Impact Uncertain Impact Impact Impact No Impact Before After
55. Step 7: Prove relationships How was this group Touched by SM? Before After
56. 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.
57. THE R.O.I. EQUATION (GAIN FROM INVESTMENT - COST OF INVESTMENT) ROI = COST OF INVESTMENT
59. Oh wow. This R.O.I. thing wasn’t at all about measuring media, impressions and eyeballs!
60. All things remaining the same… We may have proof of concept. Hot damn! ACCOUNTING First things first: Prove that Social Media works
61. So it turns out that our Social Media program is impacting every aspect of our business except traffic in our brick and mortar stores. Can you get on that? Yeah. We need to find out why we aren’t having an effect there. Kthxbye. Then use what you know to make it work better.
62. More store traffic. Roger that. Dudes, we are ON THIS!!! Let’s start engagin’!!! I’ll start crafting some wicked blog posts.
63. Finally, someone with some real metrics for me to sink my teeth into! Good job, Sparky! You done gewd!
64. So I guess Social Media is going to stick around a little while longer after all, isn’t it? Yessir. Looks like our budget is safe for now.