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Unraveling the Mysteryof Social Marketing ROI
Paul Gillin, authorThe New InfluencersSecrets of Social Media MarketingSocial Marketing to the Business Customer
It’s Simple, Knucklehead
ROI = COST OF INVESTMENT
(GAIN FROM INVESTMENT - COST OF INVESTMENT)
A. Revenue
Types Of Financial Impact
B. Costs Avoided
Anything that leads to A or B,But only if you can directly
equate its value to an action
Website Visitors
Click-throughs
Store visits
Press coverage
“Buzz”
Employment applications
Retweets
FaceBook friends
Blog comments
Video views
Twitter followers
Impressions
Friends
Coupons distributed
These are NOT ROI
But if you can quantify their financial impact, you have ROI!
Historical Metrics
Excellent CRM Tools and Practices
Clearly Understood and Applied Web Analytics
What You Need
Basic Business Metrics
Lifetime Value of a Customer = (Longevity * Revenue) * Margin
Value of a Lead/Visitor = Visitor * Conversion Rate * Lifetime Value
Okay, Let’s Make it Real
Typical customer Moe spends $10,000/year with you
Moe is with you for five years
Your profit margin is 10%
Lifetime value of Moe is($10,000 * 5) * .1 = $5,000
CRM EssentialsMust be used by everyone who touches the customer
Must document online, offline and landline communications
Must span the engagement lifecycle
Must enable segmentation and grouping
Web Analytics
Must track individual visitors
Must document paths to desired destinations
Must identify referring sources
You must use them
Applying ROI: Value of a Visitor
Monthly Visitors
10,000
Conversion Rate
.5%
Lifetime Value $5,000
Calculation (($10,000*.005)*$5,000)10,000
Value of a Visitor
$25
Value of a Blog
Monthly Search Traffic 3,000
Estimated Traffic w/Blog 4,000
Value of a Visitor $25
Monthly Value of a Blog
Monthly Blog Expense $6,000
316%
Value of a Tweet You send 50 tweets a month… Generating 1,000 visitors to
your website… 2% of whom become leads… 5% of whom become
customers.
Therefore, the value of a tweet is:
(1,000 * .02 * .05 * 5000)/50 = $100
Cumulative ROI: the Eye Chart
Year Item Annual Cumulative
1Forum Administrative costs $ 35,000 $ 35,000 Savings $ 70,000 $ 70,000 ROI 100% 100%
2Forum Administrative costs $ 17,500 $ 52,500 Savings $ 105,000 $ 175,000 ROI 500% 233%
3Forum Administrative costs $ 7,000 $ 59,500 Savings $ 140,000 $ 315,000 ROI 1900% 429%
You want to launch a customer support forum to reduce your costs of telephone supportEstimated admin costs: ½ FTE yr 1, ¼ FTE yr 2 1/10 FTE yr 3Estimated savings: 1 FTE yr 1, 1.5 FTE yr 2, 2 FTE yr 3
Lift Studies
Store visits
Headline Counts
Employment applications
Speaking Invitations
Net Promoter Score Coupons redeemed
Measuring the Immeasurable
If You Can Measure It, You Can Calculate Its ROI
Thank You!
Paul Gillin
508-656-0734
Site: gillin.com
Blog: paulgillin.com
Twitter: pgillin
