Simple Ways to Prove ROI on Social Media

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Why do we care about ROI?

The hardest part of writing anything about calculating Return On Investment (ROI) in social media is coming up with an introduction. What do you say? Proving ROI on anything is complicated; there are very few activities, if any, that you can directly show a percentage. There are books devoted to proving ROI and other performance indicators.Pic 1-1

This is the very basic formula for ROI. I wish you could shake some magical piece of software and some numbers would fall out that could be plugged in a formula that would show how awesome I am doing. Unfortunately the magical software is under development and will not be completed any time soon. In the mean time we have to find other innovative way to measure the success or failure of our social media campaigns and what social media can be used for.

Traditional Media Equivalence

Radio, TV, and print have been around for a long time and most people feel comfortable when they hear that 10,000 people saw an ad or 6,000 people heard a radio spot. These numbers are really no different than reach or views on social media but due to their use over decades have made them commonplace.pic 2

The metrics on many platforms provide great detail about the audience thaviews your content.  Use that information to calculate what is the cost per impression using social media versus cost per impression (or 1000 or some number) using traditional media. A positive number indicates that social media provides better value at reaching your target audience than a traditional channel. A negative number would prove the opposite.

Value Per Prospect

Many businesses attempt to gather prospects or personal information so they can specifically target those people with ads, mail outs, and other promotional material. Over time a business will determine approximately how much each new prospect is worth based on response raters and average spending. The same can be done on social media on a platform by platform basis. I say platform by platform because every single platform will allow access to various information and limit in the ways you can communicate with your prospects.pic 3

The term prospect will also vary from platform. On Facebook a prospect would be a page fane, on Twitter it would be a follower. Keep in mind that this is a metric best used after you have some data already from different social media platforms. It would be difficult to predict a value of a follower before some data is gathered.

Sentiment and Branding

Social media is the greatest listening tool currently available. Just a few years ago companies had to rely on focus groups and questionnaires to ascertain what consumers thought of their product and brand. Active polling suffers from many issues such as bias in questions and that the answer you get is always biased depending on who is asking. By passively listening on social media a company can receive immediate feedback about the positives and negatives that surround their brand.

There is no specific formula since it is hard enough to define what a brand is. However you do get key indicators in the shift in keywords and sentiment about your brand from real time social media monitoring tools. Are the keywords reflecting what you want said about your brand? Is the right audience talking about it? Are there issues that you never knew about? Social media can be great at detecting issues and problems with products before any warning comes from a traditional channel. The ability to avert crisis before any escalation cannot be quantified but this ability can be almost priceless.

Things to ponder:

1. Are my formulas correct? Seriously, are they?

2. Are quantitative methods best at proving ROI?

3. Is ROI always the goal?

A Quick Guide to Social Media Analytics

Social Media Analytics and Proving That Social Works

Cheesy Image? Yes. Good example? Kind of.

There is a lot of buzz out there about social media analytics, big data, and providing ROI from social media. With all this hype it is easy to get carried away in fancy buzzwords, certifications, and expensive software. Most people treat social media like some incredibly unique beast that requires some yet unknown methods to be tamed. Surprisingly this is not true. In reality social media is an extension of the same people that you would see on the street. The same people retain the same interests, purchasing habits, fears, and likes online just as in real life.

Don’t feel overwhelmed by all the available data from social media because there really is a lot of it. Facebook Page Insights will produce over a thousand different metrics for a single business page. However most of this data is not required or applicable. As long as you structure your goals, analytics, and key indicators, social media analytics is a breeze. There is doctrinal way to structure your analytics but the below method is the one that has worked for me time and time again.

Identify goal

This sounds like a given but you will be surprised how many times people and businesses dive into social media with no clear goal. Just like an advertising campaign or the business itself you have to set yourself a goal. You should really try to narrow down what you want to do on social media to one goal, although I have seen two or three at a time. If you choose more than one purpose for your social media campaign try to keep them relevant to one another. Your goals can vary but some examples are:

–          Raise brand awareness by reaching a targeted audience

–          Increase the effect of your traditional marketing campaign

–          Sell more widgets (or whatever you are selling)

–          Grow a particular target audience

–          Retain existing customer

There are also some bad social media goals:

–          Be on social media (a common and terrible goal)

–          Get more views, likes, shares (unless you are in a very specific business this is not a goal)

–          Raise brand awareness through shotgun blast to any audience

Create a Baseline

Before you start anything you have to gather baseline information on what is happening now. If you don’t have a social media presence then you should see if anyone is talking about you. You can do this utilizing a variety of paid and free tools, but more about that in a bit. Create a document that shows:

–          Online mentions

–          Sentiment on the mentions

–          Online conversions and sales

–          Conversation about your competitors

–          What audience you are targeting and their presence on social media

–          The social media platforms that your audience is on

–          What websites, blogs, and platforms you would expect to mentioned on and why

–          Anything else that you may find pertinent to your business

Identify Metrics

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Basic Social Media Metrics

Based on your goal identify what success would look like. Is it an increase in sales? More people reading your blog? Increased foot traffic in your store? Brain storm the possible metrics that need to be tracked to prove success of your social media campaign and how they can be related. The metrics will change or be amalgamated in the future since there is no way to predict everything ahead of time. You do need something to track as you begin to post online and these initial metrics will provide a starting point. Incorporate your baseline metrics here to see the change from the zero.

Choose tool, not hundreds of tool

There are literally hundreds and probably thousands of different consumer response, analytics, and media management tools. Each includes various set of capabilities and various prices. Many people just want to use every possible available tool and combine all their metrics into the worlds largest and most colorful PowerPoint presentation. This however is not a good idea. Each tool utilizes different techniques for collecting data which will not mach with other tools. Additionally the same metrics may be defined differently by each tool. This will lead to overall confusion. Pick tools that can monitor your already identified metrics and ask the tool provider to give you a demo first. I suggest utilizing one social media management tool like HootSuite to manage all your channels and one metric tool such as Sysmos or Radian6 for analytics. What you use is up to you and the size of your business. If Sysmos and Radian6 are to cost prohibitive then there are other cheaper solutions.

Understand What You Are Looking At

The tools and certain social media metrics may not make sense at first. The difference between weekly and monthly visitors, total reach vs post reach, or some of the other thousand metrics out there are important to understand. If you don’t understand them, don’t despair. There are plenty of resources online available that will explain every facet of social media of metrics. Also make sure that the pay tools you are using provide support and training for their tools, there are often features that you would have never found yourself. If all else fails feel free to shoot me a message and I will try to help as I can.

 

Questions to consider

1.  Are there any other imperative steps to the analysis process?

2. Why does social media have a bad track record of proving effectiveness?

3. What metrics do you find the most important?