Proving Social ROI. How to Justify Your Social Media Efforts

Transcription

1 Proving Social ROI How to Justify Your Social Media Efforts

2 PROVING SOCIAL ROI - HOW TO JUSTIFY YOUR SOCIAL MEDIA EFFORTS 2 Introduction Today s society is in the midst of a technological revolution. We re living in an age where consumers and brands alike are adapting to the constant accessibility of information and connectedness to others. While brands used to have control of their messaging and how audiences perceive them, these same audiences have migrated into the power position and are now able to dictate the conversation, and impact how people view brands and organizations via social media. But how are businesses supposed to keep up with the ever-connected, always-on consumer? By diving head first into social with the same enthusiasm as their customers. Companies that don t incorporate social media into all aspects of their overarching strategy will be left behind, while other businesses that better provide customers with what they want will leapfrog their competition and leave them in the dust. The following ebook will address everything regarding social media ROI, from the more qualitative, harder-to-measure metrics that mustn t go ignored, to the quantitative process for measuring individual social campaigns. Companies that don t incorporate social media into all aspects of their overarching strategy will be left behind, while other businesses that better provide customers with what they want will leapfrog their competition and leave them in the dust.

3 PROVING SOCIAL ROI - HOW TO JUSTIFY YOUR SOCIAL MEDIA EFFORTS 3 THE CHALLENGES OF SOCIAL ROI... 4 Table of Contents JUSTIFYING YOUR SOCIAL MEDIA EFFORTS... 6 Step 1: Set Your Goals... 8 Step 2: Choose a Technology Solution Step 3: Track Your Goals Step 4: Measure the Benefits by Social Channel Step 5: Identify Total Costs Step 6: Calculate Your Investment Step 7: Analyze Results and Make Improvements CONCLUSION... 17

4 PROVING SOCIAL ROI - HOW TO JUSTIFY YOUR SOCIAL MEDIA EFFORTS 4 Q: So what s holding companies back from taking social media seriously? A: Tying ROI to social efforts. According to a study from March 2015 by Simply Measured and TrustRadius, social media professionals from North American companies of all sizes were most likely to cite measuring return on investment (ROI) as one of the most challenging aspects of their social media programs. Biggest Challenges of Executing Social Campaigns According to Social Media Professionals in North America*, by Company Size, March 2015 (% of respondents) Measure ROI Trying social activities to business outcomes Small (1-50 employees) 58% 49% Midsize (51-1,000 employees) 63% 52% Enterprise (1,000+ employees) 62% 51% Social ROI refers to what you get back from all the time, effort and resources that you commit to social. Securing enough internal resources Developing our social media strategy 34% 54% 45% 48% 46% 35% There they are; those three letters that drive investment decisions ROI. ROI metrics are deeply rooted in business finance, serving as the means to measure dollars-and-cents return on dollars-and-cents investment for all initiatives across the organization. There is a recurring debate amongst social media professionals surrounding the validity of social ROI, however, the fact of the matter is both qualitative and quantitative measurement can help you to improve your business tremendously. While social media ROI measurement is still relatively immature, the qualitative side more than makes up for this with rich consumer insight at an incredibly large scale. But defining social media ROI can be difficult. At a high level, social ROI refers to what you get back from all the time, effort and resources that you commit to social. Tracking results in a centralized dashboard Integrating various social tools Keeping up with ever-changing social networks Monitoring our competition Other 32% 21% 28% 18% 8% 34% 16% 25% 12% Note: n=573; respondents chose their top 3 challenges; *80% of respondents are from North America Source: Simply Measured and TrustRadius, *2015 Social Media Marketing Trends, June 2, % 33% 25% 24% 17% 7%

5 PROVING SOCIAL ROI - HOW TO JUSTIFY YOUR SOCIAL MEDIA EFFORTS 5 According to a CMO survey conducted by CIO in August 2014, only 15-20% of companies quantify social ROI. Which best describes how you show the impact of social media on your business? Which best describes how you show the impact of social media on your business? 15% B2B Product B2B Services B2C Product B2C Services Have proven the impact quantitatively We haven t been able to show the impact yet 54.2% 42.0% 46.9% 30.8% 45% 45% Haven t been able to show the impact yet We have a good qualitative sense of the impact, but not a quantitative impact 34.9% 43.2% 34.7% 51.3% Have a good qualitative sense of the impact, but not a quantitative We have proven the impact quantitatively 10.8% 14.8% 18.4% 17.9%

6 PROVING SOCIAL ROI - HOW TO JUSTIFY YOUR SOCIAL MEDIA EFFORTS 6 So why aren t more organizations quantifying the ROI of their social efforts? For starters, social media is relatively new to business ops. Data is being shared between people and companies at an unmatched pace and scale. With so much information flying around, businesses are just beginning to get comfortable with, let alone master, which metrics to pay attention to and how they can alter their efforts for better success. The challenges of defining social media ROI can be boiled down to the following: Lack of strategic intent: According to the same CIO survey, less than 25% of companies use social media to increase revenue % of CMOs that partook in the survey cited increased brand presence and awareness as their major return after implementing a social strategy. 1 Unfortunately, brand presence isn t exactly a CEO-friendly metric. Only what is easy is measured: While 80% of companies want to know how to tie ROI to their social efforts, less than 50% actually measure the results. The most consistently measured metrics are reach (# of friends or followers), and metrics from web analytics such as clicks, website visits, etc. 2 Lack of experience: Most companies are simply experimenting with social, implementing guess-and-check techniques based off qualitative analysis. A community manager might notice that social posts with a particular style or differentiation generally receive more engagement from their audience, so they then create more posts of that style in the future. But what does engagement even mean? Are those extra likes actually transferring to more prospects moving down the funnel? Much of the time these company data professionals are not digging into their social data, and accordingly lack direction with their strategy

7 PROVING SOCIAL ROI - HOW TO JUSTIFY YOUR SOCIAL MEDIA EFFORTS 7 Difficulty measuring campaigns: If approached appropriately, campaigns on social should maintain as much consistency in regards to messaging as possible across varying networks and channels. While this is good for establishing a solid social presence, it can be hard to extract the true effect of social when you re only tracking the last click, not the entire path from the first click. Part of what makes social campaign success difficult to measure is that these campaigns often end up having impact outside of the click path that is not trackable without the proper tools. Social users will often see a social ad, and then end up buying the product a week or a month later, sometimes in person and not online. Complex data and tool integration is required: Finding the right social media technology for your business can be a daunting task, let alone implementing the software into your department s everyday workflow. (We ll cover solution selection shortly).

8 PROVING SOCIAL ROI - HOW TO JUSTIFY YOUR SOCIAL MEDIA EFFORTS 8 STEP 1: SET YOUR GOALS Defining and setting goals for your business Social ROI can be measured in a variety of ways. Some companies might choose to pay attention to customer acquisition or lead generation, while others might hone in on clicks, revenues, contest entries or something entirely different. What you choose to pay attention to should depend entirely on what you re trying to gain from social Is it brand awareness? Market research? Increased revenue? Or possibly, all of the above? Here are the top social media ROI metrics that provide the most intricate and powerful understanding of where your organization stands on social. Tying ROI to your social media initiatives begins with approaching social strategically from a big picture perspective. Top Social Media ROI Metrics Reach refers to the number of followers, fans, or group members your business has on a particular network, and it plays a major role in your social success. Basically, reach refers to the number of people that will see your content, distribute your messages and ultimately affect your ROI. By tracking how your reach is increasing over time, you can begin to see whether or not your increased efforts are cultivating a larger following. If you re not seeing the gains in reach that you would like to see, augment your efforts to focus more on gaining new fans or followers, perhaps by offering awards or discounts to your fans for joining your community. Mentions refer to the instances where your brand or organization is being directly discussed online. This can come in the form of customers directly addressing their message to you, for example tweeting at your brand s Twitter handle, or a member of the social community mentioning you informally, as a smaller part of their overall discussion. Both types of mentions are important to monitor and measure, as they can provide deep insight into the health and robustness of your brand s social presence.

9 PROVING SOCIAL ROI - HOW TO JUSTIFY YOUR SOCIAL MEDIA EFFORTS 9 Top Social Media ROI Metrics (continued) Interactions add another layer to Mentions, as they help to paint a more detailed picture of what s happening around your brand online. Interactions refer to all of the actions someone can take on a social post, both pertaining to textual responses (comments) and non-textual responses (likes, shares, retweets, etc.). While someone might talk about your brand in a Facebook post and that qualifies as a Mention it s important to account for all of the people who did not voice support or disapproval of the message by commenting. Interactions account for everyone who liked the post, or shared it to his or her own online network. Traffic refers to the number of visitors that your website and/or blog are yielding. Increased traffic should go hand-in-hand with your increased dedication of effort to social. By looking at your website or blog s referral sources, you ll be able to determine how many visitors came from various social media sites. Pay close attention to that number over time, and make sure that as your reach improves, so Leads might be the single most powerful metric when it comes to measuring social media marketing ROI. After all, leads are the whole point, right? A topnotch social business tool will come complete with the ability to measure leads directly from social media by conducting text analysis that identifies purchase intent. For those using less comprehensive solutions, there are workarounds. By looking back at your traffic that has come in from social media sites, determine how many of those visitors are then converting into leads. Depending on which pages these people are visiting, and if they display interest or simply leave, you ll know which areas of your website need improving. Customers are measured by simply taking your leads data one step further. Are your leads actually converting into customers? How many people are paying for your services after coming in via social? The proper social business tool will keep track of the volume of people who actively talked about buying your products and services on social. Looking at this over time gives an indication of ROI. If you can tie actual, living, breathing and paying customers to your social media marketing, then you re well on your way to justifying your social efforts.

10 PROVING SOCIAL ROI - HOW TO JUSTIFY YOUR SOCIAL MEDIA EFFORTS 10 Top Social Media ROI Metrics (continued) Conversion Rate is the rate of visits-to-leads from your social media traffic. Simply put, of the social media traffic you ve generated, what percentage of those visitors then become leads? Conversion rate can be extremely useful when comparing channels to one another. For instance, comparing your social media conversion rate to your blog conversion rate to analyze the ROI of those channels will give you a more detailed perspective on the impact that social is having on your business. A few additional metrics to choose from include: Number of clicks on links in social updates Number of online purchases Number of filled out contact forms Number of signups from newsletters Number of downloads of.pdf files Time spent on particular webpages Social media sentiment Competitive share of voice in social media Top URLs shared in social Once you ve been monitoring these metrics for a few weeks or months, depending on how much data you want to work with, conduct a social media audit. What surprises you? Are you getting more or fewer leads from social media than you anticipated? Does social traffic convert better or worse than other channels? After completing your audit, establish firm goals, complete with dollar amounts attached to them.

11 PROVING SOCIAL ROI - HOW TO JUSTIFY YOUR SOCIAL MEDIA EFFORTS 11 STEP 2: CHOOSE A TECHNOLOGY SOLUTION Finding the right software Once you have your social media baseline audit complete, it s time to choose a technology solution that will help you to achieve your goals. This begins with identifying the monetary investment that your company is willing to put towards a social tool. From there, research the available solutions that best fit your goals. These capabilities should seamlessly integrate with the solution s publishing and engagement capabilities. Extensive and automated reporting functionalities will also play a key role as you continue to measure ROI. For a complete list of solution selection questions to ask regarding data, insights, engagement/publishing, automation, reporting, and measurement, be sure to download Tracx s Buyer s Guide. A major problem that plagues businesses that are attempting to fully adopt social is the overuse of numerous software solutions. When multiple platforms are used to measure social, problems such as data inconsistency and overinvesting are bound to occur. According to a study conducted by Trust 9% Use 6+ tools Radius, only 26% of businesses use one tool for their social needs, while 65% use two to five tools and 9% use six or more. In order to replace these multiple tools, businesses need a solution that provides deep, rich, contextual data from all users and departments across the social enterprise. The proper Use 2-5 tools Use 1 tool How many social media management tools does your company use? (Trust Radius, 2015) technology should provide nuanced insight into sentiment, influence, trend analysis/discovery, geo-spatial activity, audience profiling, and both text and visual analytics.

12 PROVING SOCIAL ROI - HOW TO JUSTIFY YOUR SOCIAL MEDIA EFFORTS 12 STEP 3: TRACK YOUR GOALS Implementing Your Solution The ability to track should be built into anything and everything that you do on social media. This is the first step in avoiding any scramble to prove the success of a campaign or social initiative. You should be checking the various social metrics that you have selected to measure frequently, most often daily. This may seem like overkill, but it s necessary to make sure that your goals are being met. Your audience on social media doesn t stop, so neither should you if you want to keep up. If your initiatives are built to be tracked easily, then measuring the success of your efforts based on your established goals should come naturally. Where to look for social ROI Social ROI can be derived from all aspects of your business not just from campaigns. In addition to looking at dollars-and-cents ROI, it s important to factor in things such as the amount of time that particular departments are spending or saving due to social, and how your online presence is impacting your brand overall. Are you able to gain competitive information that saves time and money? These are just a few of the tougher-to-define aspects of social ROI to consider. But if social media is successfully implemented into all overarching strategies of your organization, then ROI can be found across all major departments. Sales Monitor purchase intent, demographics and geography. Are your prospects growing more diverse and vocalizing intent more often? Are you expanding into more regions? Marketing Content Track engagement success from social. Is your community getting involved more? PR Is your messaging being amplified due to your community? Are crises being dealt with more quickly, or even before they occur? Product Has social media helped you to identify use cases more easily? Are people discussing how they use your product or service? Do social media discussions reveal product gaps, ways to optimize existing products or add new ones? Service and support Look for churn reduction due to increased responsiveness on your end, or even opportunities where reps have cross-sold/upsold customers. Have organized workflows from your social solution strengthened customer services overall?

13 PROVING SOCIAL ROI - HOW TO JUSTIFY YOUR SOCIAL MEDIA EFFORTS 13 STEP 4: MEASURE THE BENEFITS BY SOCIAL CHANNEL Now that we ve covered some of the more general and qualitative aspects of social ROI, let s begin to take a look at how to calculate ROI for a particular campaign. In order to create a realistic example for the remaining steps, we ve provided a dummy case study for Michael s Microphones. Michael s Microphones has found that prospects that enter their promotional contests are prosperous sales leads, and a significant amount of them become customers. They ve decided to hold a Best Air Guitar contest, and the winner will win a new microphone. The brand is holding social promotion of the Best Air Guitar contest on Facebook, Twitter, LinkedIn and Instagram. Lifetime value - How much you earn on average from a customer. A quick calculator can be found here, and Hubspot published a helpful article as well. Lifetime value, multiplied by conversion rate - How much each potential visit is worth to your business. Average sale - The monetary value of the average purchase through your site. PPC costs - The cost if you were to use ads to achieve the same social media actions. Once you ve chosen your goals and tracked your actions, it s time to get your hands dirty and calculate the dollars-and-cents facet of ROI. Here are a few options for measuring the benefits of your efforts by social media channel

14 PROVING SOCIAL ROI - HOW TO JUSTIFY YOUR SOCIAL MEDIA EFFORTS 14 STEP 4 (continued) Example: If you ve selected the proper social software solution, then it should come equipped with an integration into your web analytics tool. Collect incoming traffic and conversion numbers by social network accordingly. Social Media Channel Best Air Guitar Contest Entries Benefits = $20 x Total Downloads $31,740 From there, create a spreadsheet that correlates that data to the 290 $5,800 total monetary value of those conversions. 101 $2, $1,980 2,077 $41,540

15 PROVING SOCIAL ROI - HOW TO JUSTIFY YOUR SOCIAL MEDIA EFFORTS 15 STEP 5: IDENTIFY TOTAL COSTS In order to calculate total costs, add up the advertising fees and labor costs associated with your campaign by social media channel. Example: STEP 6: CALCULATE YOUR INVESTMENT Your investment per campaign on social media consists of... Time - Multiply your cost of labor per hour by the number of hours you ve committed over a week, month, or year, depending on the period for which you re measuring ROI Social Media Channel Fees Labor Hours Labor Cost $50 per hour Cost per channel Cost - The amount that you are paying for your social media technology solution $ $ $1,000 $10,250 $1,125 $12,568 Advertising Spend - The amount that you spent on social advertising such as boosting posts on Facebook, $375 $750 $3,750 $7,500 $ $3,250 $24,843

16 PROVING SOCIAL ROI - HOW TO JUSTIFY YOUR SOCIAL MEDIA EFFORTS 16 STEP 7: ANALYZE RESULTS AND MAKE IMPROVEMENTS Use the data from Step 4 and Step 5 to calculate ROI for each social media channel in order to get the results per channel and campaign or promotion as a whole. Once you ve calculated these numbers, they will serve as powerful ammo to take to your C-level come reporting time. Execs that have previously doubted the return on social will now be able to see actual dollar amounts associated with your social efforts. This, combined with the reports from your social media solution on your team s activities and performance, will break down exactly how you ve utilized your resources, the associated costs, and finally the actual ROI of the campaign. Example: Social Media Channel Benefits Costs ROI $31,740 $10, % $5,800 $12,568-54% $2,020 $3,750-46% $1,980 $7,500-74% $41,540 $34,068 22% ROI = Benefits - Costs x 100 Costs Percentage Return on the Investment Costs

17 SUMMARY There s no denying that proving social ROI can be difficult for businesses that face challenges such as lack of experience or strategic intent. Combine those factors with only looking at the social metrics that are easily measured, and the absence of the proper social business technology, and many teams get frustrated and discouraged. But social ROI becomes a lot easier to measure when social media is approached strategically across an organization from a big picture perspective. By implementing social into overarching strategy, finding the right tool, and being selective with the social media ROI metrics that are accounted for, justifying your social media spend and effort becomes more simple, natural, and most importantly powerful. ABOUT TRACX Tracx is the leading social business management platform empowering enterprises and brands to create, manage, monetize and optimize social interactions throughout the consumer journey. Born smart, our solution analyzes and refines mass amounts of geographic, demographic and psychographic data from across the social web to deliver deep insights into customers, competitors and influencers. It then makes those insights actionable through its contextuallydriven Social Recommendation Engine, enabling smarter interactions that deliver meaningful business results. The world s most respected and leading brands such as BMW, Kraft Foods, and Rolex rely on Tracx to identify and target audiences, improve planning, enhance monitoring and effectively engage consumers. Tracx is headquartered in New York City with offices in Tel Aviv and London. For more information, visit To learn more about Tracx, contact info@tracx.com or REQUEST A DEMO info@tracx.com US UK th Ave, 9th Floor, New York, NY 10016