How to calculate the R.O.I. of social media media activity

DEMONSTRATING SOCIAL MEDIA ROI

ROI =

(Final value – starting value)

starting value

What is R.O.I.?

5x

20 x 5 x3 (or 300%)

Now with carrots

Examples of non-financial outcomes

• Increase in website visitors and/or time spent on the website

• Change in the ratio of positive/negative brand mentions• Increase in Twitter followers or Facebook fans• Increase in requests for product information• A 20% increase in subscriptions to the e-newsletter• A 200% increase in YouTube video downloads• 15 comments on the latest blog post

Examples of financial outcomes

• A 15% reduction in customer service costs by shifting a portion of customer service activity to Twitter

• A 12% increase in online sales during a Facebook campaign

• A decrease in cost per impression from £2.55 per person per mention of brand to £1.22 by leveraging social media channels

• £500,000 in sales attributed to new customers acquired through Facebook.

Gary Vaynerchucktv.winelibrary.tv

Twitter$15,000 on direct marketing

= 200 customers

$7,500 on bill board advertising= 300 customers

$0 (except time) on Twitter= 1,800 customers

Return rate for products with reviews

= 20% lower

Petco.com pet supplier

Reviews

Return rate for products with 25+ reviews

= 45% lower

…saving on shipping, restocking, and customer service costs

Customers who went to the website via a Facebook page

= 30% more sales than those who went straight to

website

Ford ExplorerFacebook

Sales directly attributable to links on Twitter in 2009

= $3,000,000

Dell ComputersTwitter

Blog about HSBC mis-selling + Twitter syndication

= national media coverage

Nick Bamford, IFA Informed Choice

Blog, Twitter

Sequence of events between Initial investment and gain

Investment (£) Action Reaction Nonfinanci

al impactFinancial

impact (£)

Tweets, RTs,

comments, ‘likes’,

downloads

Brand awareness,

Product sentiment

online reputation,

loyalty, share of voice,

Strategy and tactics (ie.campaig

n)

More customers, spending

more, more often (financial

ROI)

Sequence of events between Initial investment and gain

Investment (£) Action Reaction Nonfinanci

al impactFinancial

impact (£)

This is great but it’s not where financial

impact lives

Sequence of events between Initial investment and gain

Investment (£) Action Reaction Nonfinanci

al impactFinancial

impact (£)

This is great but it’s not where financial

impact lives

It’s here!!!

Start with “why?”

Enhance branding/awareness

Protect reputation

Enhance public relations Improve loyalty/retentionBuild community

Enhance customer serviceFacilitate research & development

Drive sales and leads

Start with “why?”

Showing a return

• Overall objectives – what do you want to achieve?• Identify metrics• Set an intelligent measurable goal• Activity• Measure – the ‘return’ is successful achievement of

the goal

Showing a financial return: FRY (© Microsoft)

• Frequency (increase in frequency of transaction by customers)

• Reach (net increase in customers) • Yield (increase in how much customers spend)

Sequence of events between Initial investment and gain

Investment (£) Action Reaction Nonfinanci

al impactFinancial

impact (£)

Tweets, RTs,

comments, ‘likes’,

downloads

Brand awareness,

Product sentiment

online reputation,

loyalty, share of voice,

Strategy and tactics (ie.campaig

n)

More customers, spending

more, more often (financial

ROI)

Step 1: Create Activity Timelines

Sequence of events between Initial investment and gain

Investment (£) Action Reaction Nonfinanci

al impactFinancial

impact (£)

Tweets, RTs,

comments, ‘likes’,

downloads

Brand awareness,

Product sentiment

online reputation,

loyalty, share of voice,

Strategy and tactics (ie.campaig

n)

More customers, spending

more, more often (financial

ROI)

Step 2: Social media reactions

Sequence of events between Initial investment and gain

Investment (£) Action Reaction Nonfinanci

al impactFinancial

impact (£)

Tweets, RTs,

comments, ‘likes’,

downloads

Brand awareness,

Product sentiment

online reputation,

loyalty, share of voice,

Strategy and tactics (ie.campaig

n)

More customers, spending

more, more often (financial

ROI)

Step 3: Measure transactional precursors

Loyalty

Trust

Awareness

Sentiment

Sequence of events between Initial investment and gain

Investment (£) Action Reaction Nonfinanci

al impactFinancial

impact (£)

Tweets, RTs,

comments, ‘likes’,

downloads

Brand awareness,

Product sentiment

online reputation,

loyalty, share of voice,

Strategy and tactics (ie.campaig

n)

More customers, spending

more, more often (financial

ROI)

Step 4: Look at Sales (or another FRY outcome)

Step 5: Overlay all timelines

activities

transactions

social data

web data

loyalty metricsetc.

QUESTIONS