In any kind of business, ROI (Return On Investment) is a must. And it is a common sense that whatever you invest in your business, you must get better return for it. And social media is no different. Social media marketers have found it tough to measure the ROI in the traditional sense (X-Y/Y, where X is gross profit & Y is marketing investment) but it is actually possible to measure the ROI of social media campaigns. But one additional aspect to ROI of social media apart from the financial aspect is that there is tremendous number of customer insights, brand building & other non-financial but very important aspects which are gained through social media.
The Right Approach
Brands should not approach social media just from the financial ROI perspective, it is absolutely correct to expect increase in sales from social media campaigns but this is only a one side of the coin. The other side of the coin i.e. non-financial aspect is also very crucial. So, they should include both these aspects in their social media ROI framework. This is the right way to look into social media returns.
What to Track in Financial ROI:
#1. Increase in sales
One of the best ways to track the sales is to use the combination of URL shortener and some form of a “cookie” to attach a campaign to a lead. Hootsuite can be used to integrate Google Analytics into their URL shortener for a seamless transition & tracking of sales. Also customised proprietary URL shorteners can be used which is helpful for branding purpose. The most reliable way to do this is to place a “cookie” on the user’s machine with the campaign name for the social media channel that generated the click. Dell has done this in a beautiful way and have generated sales worth millions of dollars on twitter. Another worthy mention here is Blendtec whose sales quintupled due to their highly successful “Will It Blend” Youtube videos.
#2. Reduction in cost
Brands can start with creating a report of their existing expenses for customer relationship management (CRM), recruitment of potential candidates, marketing/advertising/PR, market research & product design. Earned media is another aspect which can be worth millions of dollars of free promotion for a brand. Now compare this with the report you prepare after integrating social media into your marketing mix. You will be surprised to see the reduction in cost in all these aspects. Social media is not free but certainly it reduces the cost to a large extent. Asian Pacific Breweries did a great job on social media while launching their Guinness brand in Singapore which resulted in 21% surge in their sales and USD$ 220,000 worth of earned media!
#3. Increase in Loyalty of Customer
Loyalty is all about emotional connect of customers with the brand. And emotional connect can be built very easily on social media as compared to other mediums. The direct impact of Loyalty is on the customer's lifetime value. Deeper the loyalty, longer will be the lifetime value of the customer and hence the increase in sales. Loyalty can be created by building a community around your brand. Castrol India has created a community called 'Castrol Cricket' to engage their customers around cricket & castrol experience. Similarly Sunsilk has done a very good job of creating a 'Sunsilk Gang of Girls' community for young girls who happen to be their largest chunk of customers. The calculation of customer lifetime value can be done in the traditional way
What to Track in Non-financial ROI:
#1. Word of mouth for your Brand
It has been proved in various surveys & research reports that people don't trust the direct advertisements from brands as much as they trust in advocacy by their friends or testimonials by consumers available online. So tracking the WOM becomes very important as effort should be made to nullify the negative & amplify the positive WOM. This can be done by listening on paid tools like Radian6 and Alterian SM2 or by using free tools like Google Alerts to notify you of new mentions online, and searching on Twitter for key terms to see who's tweeting about you. Also features like 'Tell a Friend' should be introduced on your site that tracks who's referring your product to others. Social networking buttons like Facebook Like/Share, Retweet, Google +1 & LinkedIn etc should also be integrated on your websites & blogs which makes it easier for your users to share and also gives a fair amount of idea what is being shared about you online & how much.
#2. Sentiment of your brand
Sentiment analysis of a brand should be done on the regular basis to know whether the brand mentions are positive, negative or neutral. This provides insights to brands regarding any shortcomings for which they are being bashed upon on social media, which they need to overcome. This can be done using free tools like Social Mention and Twitter Sentiment or paid tools like Alterian SM2 & Radian6. Here's a very good piece on sentiment analysis. If the positive sentiment increases over time, consider it as a positive return on investment.
#3. Customer Insights
Social media provides a very good opportunity to do market research directly where the customers are. By running a survey or asking relevant questions on social platforms, brands can get really valuable insights about their customer demography, interests, wants, lifestyle etc. Even crowdsourcing can be used to create/change your brand logos or asking your customers what new products/services they would like to avail etc. This also brings in a sense of ownership among the customers. On Fastrack's Facebook page users comment on the merchandise and the company tweaks it accordingly. This saves it the money, engages the users as well as provides interesting insights in a quick time. Using Facebook insights, running poll on Facebook questions, asking your customers on Twitter or Facebook pages etc are some ways to start garnering customer insights.
As per experts like David Armano ROI is separate from Metrics! And i certainly agree with him. He shared a real life example of raising money online for some cause and according to him, Metrics included his number of twitter followers and the amount of re-tweets as well as blog views & ROI was the dollar amount raised via paypal divided by his time spent in activity.
What would you add to the list? Let me know in the comment box below.
The Right Approach
Brands should not approach social media just from the financial ROI perspective, it is absolutely correct to expect increase in sales from social media campaigns but this is only a one side of the coin. The other side of the coin i.e. non-financial aspect is also very crucial. So, they should include both these aspects in their social media ROI framework. This is the right way to look into social media returns.
What to Track in Financial ROI:
#1. Increase in sales
One of the best ways to track the sales is to use the combination of URL shortener and some form of a “cookie” to attach a campaign to a lead. Hootsuite can be used to integrate Google Analytics into their URL shortener for a seamless transition & tracking of sales. Also customised proprietary URL shorteners can be used which is helpful for branding purpose. The most reliable way to do this is to place a “cookie” on the user’s machine with the campaign name for the social media channel that generated the click. Dell has done this in a beautiful way and have generated sales worth millions of dollars on twitter. Another worthy mention here is Blendtec whose sales quintupled due to their highly successful “Will It Blend” Youtube videos.
#2. Reduction in cost
Brands can start with creating a report of their existing expenses for customer relationship management (CRM), recruitment of potential candidates, marketing/advertising/PR, market research & product design. Earned media is another aspect which can be worth millions of dollars of free promotion for a brand. Now compare this with the report you prepare after integrating social media into your marketing mix. You will be surprised to see the reduction in cost in all these aspects. Social media is not free but certainly it reduces the cost to a large extent. Asian Pacific Breweries did a great job on social media while launching their Guinness brand in Singapore which resulted in 21% surge in their sales and USD$ 220,000 worth of earned media!
#3. Increase in Loyalty of Customer
Loyalty is all about emotional connect of customers with the brand. And emotional connect can be built very easily on social media as compared to other mediums. The direct impact of Loyalty is on the customer's lifetime value. Deeper the loyalty, longer will be the lifetime value of the customer and hence the increase in sales. Loyalty can be created by building a community around your brand. Castrol India has created a community called 'Castrol Cricket' to engage their customers around cricket & castrol experience. Similarly Sunsilk has done a very good job of creating a 'Sunsilk Gang of Girls' community for young girls who happen to be their largest chunk of customers. The calculation of customer lifetime value can be done in the traditional way
What to Track in Non-financial ROI:
#1. Word of mouth for your Brand
It has been proved in various surveys & research reports that people don't trust the direct advertisements from brands as much as they trust in advocacy by their friends or testimonials by consumers available online. So tracking the WOM becomes very important as effort should be made to nullify the negative & amplify the positive WOM. This can be done by listening on paid tools like Radian6 and Alterian SM2 or by using free tools like Google Alerts to notify you of new mentions online, and searching on Twitter for key terms to see who's tweeting about you. Also features like 'Tell a Friend' should be introduced on your site that tracks who's referring your product to others. Social networking buttons like Facebook Like/Share, Retweet, Google +1 & LinkedIn etc should also be integrated on your websites & blogs which makes it easier for your users to share and also gives a fair amount of idea what is being shared about you online & how much.
#2. Sentiment of your brand
Sentiment analysis of a brand should be done on the regular basis to know whether the brand mentions are positive, negative or neutral. This provides insights to brands regarding any shortcomings for which they are being bashed upon on social media, which they need to overcome. This can be done using free tools like Social Mention and Twitter Sentiment or paid tools like Alterian SM2 & Radian6. Here's a very good piece on sentiment analysis. If the positive sentiment increases over time, consider it as a positive return on investment.
#3. Customer Insights
Social media provides a very good opportunity to do market research directly where the customers are. By running a survey or asking relevant questions on social platforms, brands can get really valuable insights about their customer demography, interests, wants, lifestyle etc. Even crowdsourcing can be used to create/change your brand logos or asking your customers what new products/services they would like to avail etc. This also brings in a sense of ownership among the customers. On Fastrack's Facebook page users comment on the merchandise and the company tweaks it accordingly. This saves it the money, engages the users as well as provides interesting insights in a quick time. Using Facebook insights, running poll on Facebook questions, asking your customers on Twitter or Facebook pages etc are some ways to start garnering customer insights.
As per experts like David Armano ROI is separate from Metrics! And i certainly agree with him. He shared a real life example of raising money online for some cause and according to him, Metrics included his number of twitter followers and the amount of re-tweets as well as blog views & ROI was the dollar amount raised via paypal divided by his time spent in activity.
What would you add to the list? Let me know in the comment box below.
