Part 3. E-Marketing Strategies.- Measure ROI

How do we measure ROI with Social Media?  Return on investment (ROI) is the measure of an activity’s results relative to its cost. The equation for determining ROI, in its most simplistic form, has been presented in a SmartBrief Guide to Social Media as: (Results - costs) ÷ costs = ROI

The equation takes two things into account: Money spent (that’s the investment) and the resulting revenue/savings (that’s the return). Anything that isn’t money (such as the time you spend maintaining your social presence) must be converted into dollars and cents before it can be factored

into your calculations.  Results come in two ways: Income and cost reductions. 

·       Income includes any time your social media presence prompts someone to buy a product from you, donate something to you or hire you to perform a service.

·       Cost reductions are savings on existing business functions that can now be performed at a cheaper rate because of social tools.  Companies often trumpet social media success by announcing results, but outcomes are only half the story. Seeing results from your social media efforts is great, but if you’re spending $200,000 a year to generate $100,000 in sales via Twitter, you’re not seeing positive ROI.

What are Costs?  Anything that goes into the creation of a social media presence can be considered a cost.  Some common costs include:

·       Content creation costs: This could be something as cheap as licensing photos for blog posts or as expensive as buying audio-visual equipment to create videos and podcasts.

·       Training costs: Did you attend a social media conference?  Buy a book or two on social media best practices?  Bring in an expert to train your staff? These costs all count.

·       Software costs: There are dozens of great free social media clients and tools out there. But if you’re serious about determining the ROI of your efforts, you’ll want to at least consider investing in a premium social media client because paid clients offer more robust features and better tracking options than free programs.

·       Labor costs: This is often the biggest cost associated with a social media campaign – and it’s also the one most likely to be overlooked. If you’ve hired a dedicated social media staff member or outsourced your social media efforts to an agency, that cost is easy to measure. If you’re doing it yourself or if one or more employees are working on the company’s social media presence in addition to their other duties, then the calculation becomes more difficult. Typically you’ll need to figure out how much time each person spent on social media and then multiply that figure by their rate. If someone is paid $200 a day and spends half their day on social media, the cost of their social media efforts is $100 per day.

Part 2. E-Marketing Strategies.- Amplify & Lead

3. Amplify  Once a consumer has decided which product to buy and makes a purchase, companies can use social media to amplify their engagement and foster loyalty.   For example, when Starbucks wanted to increase awareness of its brand, it launched a competition challenging users to be the first to tweet a photograph of one of the new advertising posters that the company had placed in six major US cities, providing winners with a $20 gift card.  This social-media brand advocacy effort delivered a marketing punch that significantly outweighed its budget.  Starbucks said that the effort was “the difference between launching with millions of dollars versus millions of fans.”

4. Lead  Social media can be used to lead consumers toward long-term behavioral changes. In the early stages of the consumer decision journey, this may involve boosting brand awareness by driving Web traffic to content about existing products and services.  Consider the example of when grooming-products group Old Spice introduced its Old Spice Man character to viewers, during the US National Football League’s 2010 Super Bowl.  The company’s ambition was to increase its reach and relevance to both men and women.  The commercial became a phenomenon: starring former player Isaiah Mustafa, it got more than 19 million hits across all platforms, and year-on-year sales for the company’s products jumped by 27 percent within six months.
Marketers also can use social media to generate buzz through product launches, as Ford did in launching its Fiesta vehicle in the United States.

Finally, social media can solicit consumer input after the purchase. Intuit, for example, has its community forums.  Starbucks uses MyStarbucksIdea.com to collect its customers’ views about improving the company’s products and services and then aggregates submitted ideas and prominently displays them on a dedicated Web site. That site groups ideas by product, experience, and involvement; ranks user participation; and shows ideas actively under consideration by the company and those that have been implemented.

Convert knowledge into action  Despite offering numerous opportunities to influence consumers, social media still accounts for less than 1 percent of an average marketing budget when most CEO's should be pushing it to 5% for maximum gain.

Part 1. E-Marketing Strategies.- Monitor & Respond

The new marketing environment strongly suggests that the most powerful social-media strategies focus on a limited number of marketing responses closely related to individual touch points along the consumer decision journey.  One of the most critical—monitoring what people say about your brand—is so important that it really is a core function of social media, transcending across the entire consumer decision journey.  Other strategies underpin efforts to use social media to respond to consumer comments, to amplify positive sentiment and activity, and to lead changes in the behavior and mind-sets of consumers.

1. Monitor  Knowing what’s said online about your products and services.  This should be a default social-media function, taking place constantly.   It’s also critical to communicate such feedback within the business quickly: whoever is charged with brand monitoring must ensure that information reaches relevant functions, such as communications, design, marketing, public relations, or risk.

2. Respond  Responding in order to counter negative comments and reinforce positive ones will only increase in importance.  The responsibility for taking action may fall on functions outside marketing, and the message will differ depending on the situation.  No response can be quick enough, and the ability to act rapidly requires the constant, proactive monitoring of social media—on weekends too.   By responding rapidly, transparently, and honestly, companies can positively influence consumer sentiment and behavior.