Enough with the Social Media BS. Give me the realz. Social Fresh Conference // 24 August 2009
SOCIAL MEDIA IS NOT FREE.
1. It takes people.
2. It takes technology.
3. It takes time.
We have… rocks. … all of which are limited resources.
These resources = 100% of your budget E-Marketing Advertising I. T. Inbound Call Center Marketing Sales Dept. Public Relations Accounting Head Count Each resource has a specific cost Each resource yields specific results
These resources generate 100% of your business E-Marketing Advertising I. T. Inbound Call Center Marketing Sales Dept. Public Relations Accounting Head Count Losing even 1% of your budget’s efficiency could seriously ruin your day.
Okay fine. But if I’m going to take a chance on this social media thing, it had better make good business sense! Why should I allocate resources to it?
Reason #1: It will result in a cost reduction. Maybe in customer service? You mentioned something about business intelligence and market research? Reason #2: It will generate more revenue. I want more transactions, more net new customers, more customer loyalty, etc.
Now go figure out what Program you have to cut to fund this Social Media thing. Remember that our bonuses are on the line.
Understand that a new Social Media program’s funding doesn’t appear out of thin air. : Which buckets do we empty to fill this new one?
SAY HELLO TO: Business Justification R. O. I.
ROI RETURN . ON . . INVESTMENT
THE R. O. I. EQUATION Investment Expectation of return
THE R. O. I. EQUATION ROI = (GAIN FROM INVESTMENT - COST OF INVESTMENT) COST OF INVESTMENT
Truth about R. O. I. ROI is a business metric, not a media metric. ROI is 100% media-agnostic. Only measuring digital or social won’t get you anywhere.
Reason #1: COST REDUCTION Reason #2: REVENUE GENERATION Remember what Mr. Bossman said…
I shrank my PR budget by 20% and my outbound call budget by 40%. Now I can afford a team of social media Rock stars. Can I get a hellz yeah? Okay, hotshot, You have your Social Media doohickey. Now I’d better see some real results! Or else…
Woohoo! I have a job!!!
Dudes, we are ON THIS!!! Let’s start engagin’!!! I call dibs on the Corporate blog.
Cool. ACCOUNTING One Month Later…
What about our Twitternets? Oh my! Look at all the new visitors to our website! and all of our Face. Book friends! Hot Damn, we even have comments on the blog!
This rocks! I never had it so good!!!
Cool. ACCOUNTING Three Months Later…
Yeah but… What about the P&L? Monitoring to base… Our Google Analytics are through the roof! Even our social mentions are wicked good! We have liftoff!
Measuring media really rocks my world.
Nope. Anything? Nada. ACCOUNTING Six Months Later…
What kind of mood is The old man in today? Not good. He doesn’t care how many visitors the website gets, or how many eyeballs we estimate we’ve reached unless it means we’re selling more stuff.
But why? Our website is getting mad hits, Jack! And we have 3, 000 followers on Twitter now! I’m sorry, son. If your Social Media program is generating revenue, we aren’t seeing it. We need to allocate resources where we can make money. It’s just business.
Darn it. This media measurement stuff isn’t working. We need to start tying this stuff to actual Business performance. Where to start? Let’s see… At the beginning?
Things happen in sequence.
Non-financial impact is not ROI (yet).
Types of non-financial impact Website Visitors Impressions Customer complaints Positive press You. Tube views Retweets Coupons distributed Visitors to a brick & mortar store Positive WOM Delivered emails Negative press Negative WOM Employment applications Click-throughs Face. Book friends Twitter followers Blog comments Social mention
Non-financial impact = potential.
ROI = actualized potential.
Reason #1: COST REDUCTION Reason #2: REVENUE GENERATION Remember what Mr. Bossman said…
I need proof that we’re doing is actually working. Start with proof of concept.
Step 1: Establish a baseline 8% Yo. Y Growth
Baselines illustrate deltas (changes) Is something happening here?
Step 2: Create Activity Timelines
Step 2: Create Activity Timelines
Step 2: Create Activity Timelines
Step 3: Look at Sales Revenue
Step 3: Also look at # of transactions
Step 3: Also measure net new customers
Transaction data should be specific F. R. Y. FREQUENCY, REACH, YIELD How often customers transact. (transactions per month) How many customers you are reaching. (net new customers) How much they spend. ($ per transaction)
The latest numbers indicate that our Yo. Y sales $ are up 60%. Our individual transactions have doubled, as have our transacting customers. Something’s working! Groovy! Let’s figure out what.
Step 4: Measure transactional precursors
Step 4: Measure transactional precursors
Step 4: Measure transactional precursors
We overlaid all of our timelines and noticed that since our social media activities began, our website visits are up, our social mentions are also up, and everyone seems to love us. So is there a discernable pattern in this?
Step 5: Overlay all timelines activities social data web data transactions loyalty metrics etc.
Step 6: Look for patterns Uncertain Impact No Impact Before After
Step 7: Prove relationships How was this group Touched by SM? Before After
How long will all this analysis take? It’s all a process of elimination, really. Isolating patterns, quantifying deltas, proving ad-hocs… Then all we have to do is figure out what the cost savings and revenue gains are, and plug them into the equation.
THE R. O. I. EQUATION ROI = (GAIN FROM INVESTMENT - COST OF INVESTMENT) COST OF INVESTMENT
THE R. O. I. EQUATION Investment Expectation of return
Oh wow. This R. O. I. thing wasn’t at all about measuring media, impressions and eyeballs!
All things remaining the same… We may have proof of concept. Hot damn! ACCOUNTING First things first: Prove that Social Media works
So it turns out that our Social Media program is impacting every aspect of our business except traffic in our brick and mortar stores. Can you get on that? Yeah. We need to find out why we aren’t having an effect there. Kthxbye. Then use what you know to make it work better.
More store traffic. Roger that. Dudes, we are ON THIS!!! Let’s start engagin’!!! I’ll start crafting some wicked blog posts.
Finally, someone with some real metrics for me to sink my teeth into! Good job, Sparky! You done gewd!
So I guess Social Media is going to stick around a little while longer after all, isn’t it? Yessir. Looks like our budget is safe for now.
Drinks for Everybody!
Olivier Blanchard Principal, Brand. Builder Marketing 864. 630. 7398 www. thebrandbuildermarketing. com @thebrandbuilder (on Twitter) www. smroi. net
Slideography Slide # Source 3, 9, 10, 11, 18 -31, 37, 38, 48, 52, 56, 59 -65 UFO (TV series) http: //ufoseries. com/ 4 http: //www. minnpost. com/stories/2008/06/18/2282/this_doesnt_compute_as_more_wo men_enter_scientific_fields_their_numbers_in_computer_science_are_declining 6 Kim Jong Il puppet, from “Team America” http: //blogs. rockymountainnews. com/bridget/kimjongil. jpg
