social media measurement and roi

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Social Media Measurement and the Real Meaning of ROI

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Sara MeaneyHanson Dodge CreativePartner | VP Social Media + PROctober 11, 2011

@SaraMeaney

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•Defining ROI•Define objectives•Measure them•Case studies•Tools•Q&A

Overview

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Defining ROI

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•# Fans•# ReTweets•Total Impressions•# Post views, clicks, likes, comments or burps

•These are key METRICS. But they are not ROI.

What ROI is NOT

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What did you invest?

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What did you get in return?

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What will your answer be?

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!"#$%&'#$&(#'%)#*+,#"-#'%.(#/("0.&1#2)3.&4#'%.56#"-#$%.0%#7"8#

(9)&:;#

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We don’t work in a vacuum

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Purchase decisions are complex

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Decision funnel (old)

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Decision funnel (new)

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Defining objectives

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What’s the point?

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What are you trying to do? How will you

measure it?

You can’t do everything. Focus. !

How will you know if you succeeded?!

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Defining social media objectives

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Augie RayForrester Research

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Financial objectives

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Revenue

Cost

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•Increased product sales•Increased ancillary service sales

Increase Revenue

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•Reduction in customer acquisition cost•Reduction in customer service cost•Reduction in cost to innovate•Reduction in returns

Decrease costs

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•Awareness•Sentiment•Word of mouth•Loyalty•Recruitment / Talent retention

Brand objectives

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•Reduction in exposure to risk•Improvement in response effectiveness•Speed of response

Risk management objectives

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•Enhanced owned and earned assets•Search / findability

Digital objectives

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Measurement

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What’s everyone else measuring?

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•PR / Advertising model•CLV (Customer Lifetime Value)•SEO model•Customer service / satisfaction

Measurement models

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•Identify / agree on key success metrics for this objective•Establish baseline levels•Track change•Ensure comprehensive measurement from all available data points

Pick an objective. Measure it.

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“Can we literally sell our product or service via social media

channels?”Objective: Sell more product /service

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YES! NO!

Integrate purchase functionality into your social channels: F-Commerce module, mobile storefront application, tracking codes, e-commerce, cookies, etc.

Maybe your budget or technology does not allow.

So what CAN you do to influence purchasing behavior?Measure sales volume and

calculate ROI based on cost to sell.

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•Let’s pick “Increase Product Awareness”•What data points would indicate success on this objective?

Identify success metrics

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✓Shares of product assets (images, video, etc.)✓Online customer reviews of product✓Traffic to product information page✓Social comments, likes about product✓Product mentions in third party media

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• What were the baselines before social media initiatives?• Have there been other additions to the marketing mix?• What other factors could contribute to potential increases or decreases?

Measure it

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GC: Gross contribution per customerr: annual retention rate (as a percentage)d: Discount rate, or cost of capital for the future value of a customer. Often roughly estimated w/ current interest rate.

*This equation is a good estimate but doesn’t take into consideration costs to maintain a customer and assumes constant values for each variable. More complex CLV equations are required.

CLV: Customer Lifetime Value

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CLV = GC x (r________

1 + d - r)

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GC = $50 per widgetr = 80%d = 2.75%Then CLV = $175.82

You spent $100,000 to acquire 2,500 new customers through traditional channels.Cost per acquisition = $40Customer acquisition ROI =

($175.82 - $40)/$40 = 339.5%

CLV: Customer Lifetime Value

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CLV = GC x (r________

1 + d - r)

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GC = $50 per widgetr = 80%d = 2.75%Then CLV = $175.82

You spent $75,000 to acquire 2,500 new customers through social media channels.Cost per acquisition = $30Customer acquisition ROI =

(175.82 – 30)/30 = 486.1%

CLV: Customer Lifetime Value

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CLV = GC x (r________

1 + d - r)

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Simple calculation

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(Sales – Investment) ÷ Investment = %ROI

Sales = $ sold via that channel or due to that channelInvestment = all $ costs related to acquiring the sale: development + design of platform, time to manage or staff it, maintenance costs, advertising to drive awareness of channel, etc.

Simple calculation

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Complex calculation

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(Revenue – Investment) ÷ Investment = %ROI

Revenue = $ attributed to sales from leads through or assisted by social mediaInvestment = all $ costs related to acquiring the sale: assign relevant costs to each level of lead nurturing required to close sale. Must include additional marketing, CRM, proposal development, presentation time, customer service activities, etc.

Complex calculation

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Case Studies

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• Used Helpstream (defunct) as CS portal• Before: 1 rep to 55 customers, 77% satisfaction rating• After: 1 rep to 172 customers, 87% satisfaction rating• Cost reduction: $millions• Satisfaction rating: up 13%

Customer service

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•Comprehensive launch program for a new router

-Second Life-3D gaming-YouTube-Video conference-Mobile datasheet

Cisco social product launch

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-Facebook -Social news releases-Blog-Tech Community

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• 9,000 people attended virtually – 90x more attendees than in the past• Saved 42,000 gallons of gas• 300% more media coverage than traditional outreach methods• More than 1,000 blog posts and 40 million online impressions• 1/6 the cost of a traditional launch• Saved $100,000

Launch costs

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Brand awareness

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Objective: Increase brand awareness for Wilson Basketball and its NCAA Tournament affiliation

Success Metrics:ImpressionsEngagementCommunity GrowthConversion to website

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Brand awareness

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Success Metrics:ImpressionsEngagementCommunity GrowthConversion to website

Outcomes: -50 million Facebook Impressions in 24 days.-Product page website traffic up 44% over previous month and 77% over March 2010.-Facebook became #2 source of all traffic to Wilson.com/Basketball, after Wilson.com-Community grew from 0 to 23,200 in 24 days.-Feedback avg of .45% outpaced Facebook average .29% by 150%

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Visits to Wilson.com/Basketball (all traffic 2011 vs. 2010)

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!"#"$#%&%'())%

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Tools

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Aggregated metrics

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• Most tools make gathering and processing easier• Some include distribution• Some include analysis• Some make pretty pictures• They (nearly) all cost money

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Want vs. need

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• Search / Aggregate mentions• Moderate conversation• Schedule / Publish content• Engagement management• Measure / Analyze• Language / Translation• Gamification / sweepstakes tools• Pricing model

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Want vs. need

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No one-button solution

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Constant change

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10 Metrics to watch

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1.Leads generated2.Website bounce rate3.Website behavior4.Growth of active network / engaged base5.Brand mentions across social platforms6.Website visitors and sources of traffic7.Conversion: subscriptions, email lists, etc. 8.Time spent engaging: apps, time on site, etc.9.Engagement ratio: active network / total network10.Viral engagement: sharing, “people talking”

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Hanson Dodge Creative is relentless about pushing the boundaries of engagement to deliver integrated solutions that work.

MAKING THE WORLD MORE ACTIVE.™

Contact:Sara MeaneyPartner | VP Social Media + PRTwitter: @sarameaney