Social Media ROI: How to Tell if Your Social Media Campaign is Making Money

You’re a fool, Turner. Social media can’t be measured on an

ROI basis!

You couldn’t be more misguided, my friend. And I’ll prove it!

Social Media ROI

• Many companies are still trying to figure out how to measure their social media return-on-investment

• Jamie Turner, the co-author of “How to Make Money with Social Media,” covers this topic in detail in his book

• Which, oh by the way, is available at fine bookstores (and a few crappy ones) everywhere

• Here’s a quick snapshot of the method he outlines in “How to Make Money with Social Media”

Hey, kids! Want to know how to calculate the ROI of a social media campaign?

Introductions

• But first, a little background -- Jamie is the Chief Content Officer for the 60 Second Marketer, the online magazine for BKV Digital and Direct Response

• He also writes for Mashable and is invited to speak about social media, mobile media and branding on TV, radio and at industry events around the globe

Hey, look! Our logos are on this page. What

a coincidence!

Introductions

• Who is BKV? Glad you asked• BKV creates direct response, social media, mobile media, email, paid search and other campaigns for clients like AT&T, Caterpillar, The Home Depot, Mercedes-Benz and Six Flags

• Okay, enough about us. Let’s talk about how you can calculate your social media ROI

Social Media ROI

• Our story begins in a company that’s eerily similar to your company

• And when we say “eerily similar,” we mean the “Are these people watching me?” kind of eery

• But fear not. We’re not watching you. We just know that what takes place in our story is happening at corporations around the globe

• You see, many social media practitioners have a problem -- they launched their social media campaigns without tracking the three M’s: Metrics, Measurement and ... a third M-word that we’ll come up with later

Social Media ROI

• The challenge most companies face with social media is that they can track quantitative metrics like page views, blog comments, Facebook Likes and re-tweets...

• But they can’t track the ROI of their social media campaigns

Barbara is going to love all these YouTube views. Can you say “Promotion”?

YouTube Views

Social Media ROI

• In order to calculate the ROI of a social media campaign, you have to understand the concept of Customer Lifetime Value (CLV)

• CLV is the amount of revenue a typical customer will generate for your company during his or her engagement with your brand

• Barbara, the CEO of Barb’s Lawn Care, understands this concept

• Unfortunately, Bob, of YouTube chart fame, does not

OMG! We did all that work and all you can tell me is that we got 12,573

YouTube visits?

No wonder I keep you in a cubicle. You are still in a

cubicle, aren’t you?

Social Media ROI

• Barbara, being the CLV whiz that she is, knows that the average customer spends $80 per month with her company and that they typically stay with them for 3 years

• So her Customer Lifetime Value is $2,880. $80 per month x 12 months x 3 years = $2,880

• This raises another question -- how many marketing dollars should Barbara spend to acquire a customer that generates $2,880 for her company?

• A good starting point is 10% of her CLV• In Barbara’s case, she’d spend $2,880 x 10% = $288 to acquire a new customer

• This $288 is called her Allowable Cost Per Sale (CPS)

• Barbara’s lawn care company uses direct mail as its primary marketing tool

• She spends $1.44 on each direct mail piece they send out

• Barbara’s conversion rate on her direct mail campaign is 0.5%

• So, for every 200 direct mail pieces she sends out, she gets 1 new customer

Social Media ROI

Damn. Barbara hated my YouTube chart. Is it time for brunch yet? I need

a drink.

• Barbara knows that if she gets 1 new customer for every 200 pieces she sends out, and each piece costs $1.44 to print and mail, then her Cost Per Sale is $288

• 200 direct mail pieces x $1.44 each = $288 = 1 new customer

• That matches her Allowable Cost Per Sale exactly!

Social Media ROI

Once again, Bob confused

YouTube visits with actual ROI. No wonder he drinks.

Social Media ROI

• However, in order to accurately calculate the ROI of her social media campaign, Barbara is going to have to find someone who can help her tie it in to her Customer Lifetime Value

How can I calculate the ROI of my campaign?

Fortunately, I know just who to turn to for the answer!

Social Media ROII’m off to re-connect with my old flame, Stone Steele.

Stone Steele ... the only guy man enough for Barbara’s love

Hmmm. I wonder what this glowing

green goop tastes like.

Once Barbara is in Stone’s lab, she hits him up with the big question...

Social Media ROI

Stone, we’re trying to calculate the ROI of

our social media campaign.

Will it require a super-human effort to

figure that out?

Social Media ROICalculating the ROI of a

social media campaign is easy. But more important, what do you think of my pecks? Can

you tell I’ve been working out?

• Barbara soon found out that Stone was still the egomaniac he’d always been

• Even so, she listened intently as he explained how to calculate the ROI of a social media campaign

Social Media ROI

• Barbara’s direct mail budget is $2.8 million per year. She knows that if she uses that to send out 2,000,000 direct mail pieces, she’ll get 10,000 new customers each year

• If she slices off 10% of that $2.8 million budget and uses it for a social media campaign, the social media campaign would have to generate 1,000 new customers for it to match the success of the direct mail campaign

Even if the social media campaign

only generated 800 new customers,

that’s okay because results would

improve each year

Social Media ROI

• Stone explained that in order to track the leads generated from her social media campaign, Barbara would have to use the hub-and-spoke system

• All of the social media spokes would drive leads to the landing page on her website

• From there, she could track how many prospects converted to actual customers

• Bingo. Barbara now had a way to track and measure the ROI of her campaign

YouTube

BlogEmail

TwitterFacebook

LinkedIn

SlideShare E-Newsletter

Barb’s Lawn Care Landing Page

Social Media ROI

Now that Barbara had a way to track the ROI of her social media campaign, she could get back to the task at hand - rekindling her love affair with Stone Steele.

He may be an egomaniac, but he’s

my egomaniac.

She’s probably wondering if that’s a rabbit in my pocket.

Social Media ROI

I think Bob’s YouTube charts are just dreamy. And Bob’s pretty

dreamy, too.Meanwhile, back at the office

The end, almost ...

Social Media ROI

• Jamie’s book, “How to Make Money with Social Media” is available at Borders, 800CEORead.com, Amazon and Barnes & Noble

• You also can contact him for speaking engagements via his email address at [email protected]

• You can download this presentation at 60SecondMarketer.com/SocialROI

• And, of course, you’ll also want to find out about BKV Digital and Direct Response, which generates a 10:1+ ROI on most campaigns it develops for large brands around the globe

www.60SecondMarketer.com