Social marketing ROI; not social media ROI. I hope everyone realizes that “Social Media is Not Social Marketing and Why It Matters.” Additionally, we are talking about social marketing. Not social sales. A successful marketing outcome is lead generation, which is one step short of sales. The successful outcome of sales is a sale. (Pretty profound – huh?)
It is also worth noting that it is very difficult to attribute a specific sale to a social interaction. First of all, many peer-to-peer conversations cannot be monitored. If a verbal exchange happens where one participant recommends a product/service to another and the recipient responds with a purchase, attribution is near impossible. Similarly, most conversations on individuals’ social channels are private. If someone asks their friends for a recommendation on Facebook, and people reply, the individual’s privacy settings most often eliminates the ability to track such exchanges.
So the ROI of social marketing is not sales. It is audience adoption, development, and relationship building to yield awareness, consideration, enthusiasm, loyalty, and advocacy for a brand. And take note that I said brand. Not product/service. The brand is an extension beyond the product or service. It is the personality, stories beyond and overall customer experience that go beyond the specific product/service.
So what exactly does audience adoption, development, and relationship building mean such that it can be measured to evaluate ROI. Let’s start theoretically and then we will move to empirical.
Audience adoption and development means that you are taking the appropriate steps to make target segments (not the entire universe) aware of your offering. You do this by engaging in places the target segments frequent. You aim to go beyond getting their attention and actually get them attracted to your brand. Continuous audience development means that you remain an active participant in the digital channels they frequent so they start to build affinity for your brand. Relationship building continues when your target segment members literarily opt in to be part of your audience by their action. They sign up to receive emails, follow you, like you, and subscribe to your blog/site via RSS. Once they have become a member of your audience you have an opportunity to really enhance their user experience and develop an emotional bond. And the most successful outcome of the relationship for a brand is not a sale. It is having that individual refer and market your product for you. Yes they will buy the product along the way, but if they can influence people to try your product, ultimately you will yield grander sales.
So that is the theoretical side. But as one post-it read on the door of an executive at an agency where I worked, “there is no time for theoretical,” I’ll give you the empirical ROI. That is what matters for all types of executives.
Over two years ago, I wrote an article “Know What Successful Social Media Looks Like.” But like I said in the beginning of this article, social marketing is not social media. So that article requires an update. (And thus this article. :) ) In the original article, I made a point that social was poor to be used as a direct sales tool. But I said social was excellent for teeing up sales as a function of the other stages of a sales/marketing funnel – awareness, consideration, loyalty, and advocacy. I talked about a Social Brand Index I formulated which was a complex measurement with different coefficients for various parameters highlighting increased awareness, consideration, loyalty, and advocacy. Below is a chart showing some of the parameters I used.
But here’s the thing. Yes, successful social marketing increases the Social Brand Index month over month. But the real ROI of social marketing comes from your specific goals and objectives.
First understand what social marketing CAN do – the theory behind it. The value related to audience adoption and development, and relationship building. Understand how those facets relate to your company’s KPIs (key performance indicators). Determine what you want to accomplish, your goals and objectives. Back to marketing and lead generation … Do you need to increase awareness and consideration? Understand your company’s drivers. For example, many companies look at the cost of customer acquisition versus retaining customers. Others look at lifetime value of a customer. Loyalty is key in both these areas. And then of course there is the paramount value of social marketing – advocacy. Advocacy is the ability to unleash objective individuals to market your product/service to their friends, family, and colleagues. Is your company looking to accomplish this?
Social can do all these things, but you may be focused on some specific objectives. Determine this in the beginning of your social marketing effort. Then collect the data and show trending empirical results. Review some of the parameters I provided in the chart above and tweak for your own scenario. This is YOUR ROI. When you make a friend, what is the value of that friend? Different people would answer this question in many different ways. It is analogous with social marketing and companies. Everyone knows there is value in audience adoption and development. Everyone knows there is value in building relationships. But the ROI (the value) of these activities may be different for companies based upon the companies’ KPIs. It is also worth mentioning that different social marketing executions will yield various results on increasing awareness, consideration, loyalty, and advocacy.
In summation, the ROI of social marketing IS audience adoption and development as well as relationship building. Social marketing does have an ROI and can be measured. Based upon specific goals and objectives, various companies can measure social marketing ROI differently. But social marketing ROI can be measured if your strategy addresses what you look to accomplish and how the social marketing strategy contributes to your organization’s KPIs.
Make It Happen,