In the 20th century, marketing executives clamored for proof that their public relations strategies were working; now, in the 21st century, CMOs are up against similar ROI issues with respect to social media (SM).
Research shows that SM makes up 10.7 percent of marketing budgets and by 2020 that number is expected to double. Yet, according to a recent study by Duke University only 15-percent of CMOs are able to prove quantitatively the impact of social media on their businesses. And, while 58-percent feel the pressure to prove that value, only 2.3-percent of marketing budgets are dedicated to ROI measurement. Catch-22.
“If marketers are unable to map social media back to business objectives, board members and C-suite executives won’t take their efforts seriously,” says Michelle Vangel, vice president of the mass media and public relations company, Cision.
What is Social ROI?
The answer depends on a business’ or brand’s short- and long-term goals. Social ROI “could include how well your brand is building awareness and driving website traffic, inciting behaviors that drive prospects closer to conversion, or even changing perception of your brand or overall industry,” says Vangel. Financially, social ROI compares the amount of money you invest to the amount you get back.
Why Is Social ROI Important?
Social ROI allows you to present data that explains your efforts and prove that your strategies are working … that is, helping the business’ bottom line.
But, it’s important to point that out not all ROI is financial. Social ROI is about engagement and relationships built on social media venues. Organically, high engagement can lead to high social proof which, in turn, can capture the attention of new users and create new customers. Again, it’s organic and because it takes time, it can be tough to measure.
The challenge reminds me of the difficulty 20th century PR execs had with measurement (and continue to have even to this day). Think about an article published in 1981 in a print newspaper. The PR person pitched and landed an article/interview with the media outlet. Let’s say the piece is about buying lawn mowers. Joe and Jane Schmo read the article while eating their breakfast. The Schmo’s don’t need a law mower now, but because they may one day, they save the article. (You can hear the scenario play out: “Honey, the lawn mower has been acting up lately, I’m going to save this article,” the husband says. “Put it in the articles drawer,” the wife says). A year later, the lawn mower breaks down, the Schmo’s pull the article out from the “articles drawer,” drive to the store and buy the lawn mower that was written about in the paper a year prior. How do you measure that purchase (and hundreds if not thousands more like it) as part of a successful PR campaign? It’s nearly impossible because it took a year to happen.
Like this PR conundrum, it’s hard to measure exactly how loyalty and rapport on SM with existing customer’s converts to new customers, though we know it does. That’s because of what we know to be true: The recommendations of a friend are the most powerful recommendations out there. “The most credible form of advertising comes straight from the people we know and trust,” according to a Nielsen Global Trust in Advertising Report released last year. “Eighty-three percent of online respondents in 60 countries say they trust the recommendations of friends and family.”
That said, we can track social ROI with some very cool metrics, and the first one on the list reports on how friends share information on social media. So, set measurable goals and begin measuring with some of these tools.
Cyfe is an all-in-one reporting tool that provides “an insane amount of information about how your content is shared across social media and the impact it’s having on your overall ROI,” writes social media journalist, Ana Gotter. Cyfe will track advertising, blogging, email, social media, and more. For example, Cyfe has a tool that will track the number of Twitter mentions on a certain keyword or hashtag. Therefore, in a campaign you can track how far your designated hashtag reached and how many people participated in the hashtag campaign.
This metrics platform allows businesses to track users coming from Facebook, LinkedIn, Twitter, or any website. Conversion credits are tracked anonymously and through multiple visits. The standout, say critics of this evaluation tool created in 2008, is that “Kissmetrics… notes when users leave and come back, and what they do when they return,” writes Gotter.
3) Customer Lifetime Value Calculator
If staying connected with your customers and generating new leads is as important to your business as sales and on-platform engagement, then you business should use a tool that can calculate your approximate customer lifetime value (CLV).
Back in 2012, Entrepreneur Magazine was waxing poetic about the importance of CLV, “Mainly because it will give you an idea of how much repeat business you can expect from a particular customer, which in turn will help you decide how much you’re willing to spend to ‘buy’ that customer for your business,” wrote Brad Sugars. “Once you know how frequently a customer buys and how much he or she spends, you will better understand how to allocate your resources in terms of customer retention programs and other services you’ll need to keep your customers — and keep them happy.”
These free tools will allow you to create different customer groups to help you calculate the value of particular customers. For example, writes, Gotter, “a jewelry store can calculate the value of customers who make big, one-time, high-value purchases like wedding rings, as well as customers who buy a much less expensive charm bracelet, but who come back an average of six times to add charms to the bracelet.”
4) RJ Metrics’ Cloud BI
One step beyond the CLV is a tool that will not only calculate CLV, but also tell you from which social media venue the customer came from (to you) in the first place. RJ Metrics can help determine customer behavior, an accurate CLV and ROI.
5) Google Analytics
Google Analytics is a traffic reporter. It lets you see where your traffic is coming from — including from social media — and how visitors interact with your site.
You can track the response to different social campaigns and see which are more successful at moving users to and throughout your site, as well as tracking specific conversions. You can set up measurement goals and measure, for example, how long a page was viewed or if a video was played. The Google analytics social section session stats will tell you about your social traffic and from which specific venues your traffic is driven. And, it’s free.
6) On-Platform Analytics
The analytics tools offered by social media venues (Facebook Insights, Pinterest Analytics, Twitter Analytics, YouTube Analytics, etc.) provides valuable information about the success of different posts as well as clicks to your site and social shares.