Category: marketing

Social Media Marketing ROI Calculations | Automotive Social Media Marketing

HOW TO: Calculate the ROI of Your Social Media Campaign

Written by Jamie Turner of BKV Digital and Direct Response. He is also the co-author of “How to Make Money with Social Media” now available at fine bookstores (and a few not-so-fine bookstores) everywhere.

First the bad news: If you’re going to calculate the ROI of your social media campaign, you’re going to have to know math. That may come as a disappointment to people who thought social media was only about accumulating Twitterfollowers or monitoring Facebook “Likes,” but it’s true. The future of social media is about math, metrics and monetization.

The problem is that most companies aren’t doing an effective job of measuring the value of their social media campaigns. In fact, a recent surveyby Econsultancy found that 47% of the companies it surveyed said they were “not able to measure” their campaigns and that “the jury is still out” on the value gained from their social media investment.

If you’re one of the people who isn’t measuring your social media campaigns on an ROI basis, you’re setting yourself up for failure. Here are some tips, advice, and a little bit of simple math to get you on the right path to ROI success.

Understand the Value of Your Social Media Campaign
According to the Direct Marketing Association, if you run a direct response campaign and spend $1, you’ll typically generate $10 or more in return. They know this because they’ve been tracking the transactional data from direct mail, paid search, direct response TV and other campaigns for more than 50 years.

But what if you’re new to social media or new to the world of direct response metrics and don’t have that data or experience? What should you do then?

Fear not. There’s a solution. It involves understanding the 3 categories of social media measurement as well as a simple formula that will help you calculate the ROI of your specific campaign.

The 3 Categories of Social Media Measurement
There are hundreds of different ways to measure social media, which makes it kind of difficult to wrap your mind around. To help with that, social media metrics can be broken down into three different categories.

Quantitative Metrics: These are the metrics that are data-intensive and number-oriented. You can really get overloaded with different metrics here, so the trick is to pick the key metrics that most influence your business and not get bogged down with the rest. Those metrics might include unique visits, page views, followers, demographics, frequency, bounce rate, length of visit or just about any other metric that’s specifically data-oriented.
Qualitative Metrics: These are the metrics that have an emotional component to them. For example, if 75% of the people who mention your product online call it “cheap” and only 25% call it “inexpensive,” that’s a qualitative metric that has an impact on your business. There are several companies that provide in-depth analysis of the qualitative metrics online. Some of these include RapLeaf, Nielsen and Adobe Online Marketing Suite.
ROI Metrics: In the world of social media, all roads should lead to ROI. After all, during business hours, social media isn’t just about being social, is it? We’re doing it to make money. And if you track what percentage of people you converted from a prospect to a customer on your e-commerce site, or how many people you converted from a prospect to a client on your B2B website, then you’ll be able to measure the success of your social media campaign on an ROI basis.
Break Out Your Thinking Caps for Some Math
The most important formula in social media is yourCustomer Lifetime Value (CLV). In a very basic sense, Customer Lifetime Value is the amount of revenue a customer will bring to your company over the course of their lifetime with your brand.

So, for example, if you’re a lawn care company and you know that a typical customer spends $80 per month with you and that the average customer stays with your company for 3 years, then your Customer Lifetime Value would be $80 x 12 months x 3 years = $2,880.

Once you know your CLV, you can decide how much you’d like to invest to acquire a customer. This is called your Allowable Cost Per Sale. Many people use 10% of their CLV as a starting point for their Allowable Cost Per Sale. In the example above, your CLV is $2,880 and 10% of your CLV is $288, so your Allowable Cost Per Sale is that number: $288.

Putting Customer Lifetime Value (CLV) to Work
YouTube channel –- a bit of work, but also not a big problem.
You’ll want a mobile application, since prospects and customers are beginning to expect them. And you’ll want to develop a monthly e-newsletter with lawn care tips to stay in front of prospects and new customers. (Yes, I consider e-mail marketinga social media tool.)

The most important part of the campaign, however, is a series of landing pages on your website designed to capture prospects and help convert them into paying customers. The landing pages will be designed specifically around the social media campaign, and they’ll need to have Google Analytics, Eloqua or Adobe Online Marketing Suite installed so that they can track traffic and conversions.

The key point is that all of your social media programs –- Facebook, Twitter, YouTube, etc. –- should drive people to the landing page on your website where you can convert them from tire kickers (prospects) to paying customers.

Looking at the program outlined above, it’s easy to see how quickly your $288,000 social media budget can get used up by Facebook, Twitter, YouTube, mobile applications, e-newsletters and landing pages on websites. All that said, it’s very realistic to assume that a campaign of that magnitude would generate 1,000 new customers each year. Better still, it may generate 1,100 new customers or even 1,200 new customers.

Remember, all you have to do is to generate 1,001 new customers in order to march into your CFO’s office and show them that social media can provide a positive return-on-investment.

See? Math isn’t that scary after all.

The Bottom Line
We’ve covered a lot of ground here: the three categories of social media measurement and the single most important formula in social media. But the bottom line is that, as businesspeople, we don’t use social media to be social, we use social media to grow our business. And if you use the program outlined above, you’ll be able to prove the value of social media on a campaign-specific, ROI basis.

Good luck. And keep me posted on your success stories. I’d love to hear more about how you’re using social media to grow your sales and revenue in the comments below.

[Sent from Ralph Paglia’s iPhone]

Ralph Paglia
Director – Digital Marketing
ADP Dealer Services
cell: 505-301-6369
office: 480-421-5005
RPaglia@Gmail.com
Ralph_Paglia@adp.com
http://www.RalphPaglia.com
http://ADPdealerservices.com
http://www.ADPsocial.com
http://SocialAutoSales.com
http://Twitter.com/ADPsocial
http://Facebook.com/ADPsocial
http://ADM.fm

Why Social Media Marketing?

Social Media Done Right Is Budget-Friendly

Social media is a critical part of any digital marketing strategy for small to mid-sized businesses. Finding the right budget for marketing is a challenge for smaller companies, and leveraging social media mitigates marketing costs when performed correctly. Social media accounts are a great way to add a personal tone to your marketing outreach and connect with customers on a more familiar level. The major social media outlets cost nothing to sign up with and can allow you to create a rapport with your customers to interact with your brand after investing some time on a regular basis.

81% of small and medium businesses use social media, and there are many reasons why. Social media provides your customer base opportunities to engage with your content and share to their own social media circles. Contests, free giveaways, or simply interacting with compelling content (such as a cute picture of a puppy or inspiring messages) are all methods to have your community interact with your brand on social media. Your fans become your publicists and user activity is visible to their friends and followers on outlets such as Facebook. There are 2.072 billion users on Facebook, and without using social media, you deny yourself the chance to reach so many potential customers.

Why Social Media Is Worth Every (Free) Penny

Social media accounts incur additional costs for posts you want to promote or boost (Facebook and Instagram offer such options). The main work involves dedicating your time to generate posts, interact with followers, and planning your content. Whatever your social media platform is, “content is king” and your social media outlets always need maintenance in relevant posts to keep users interested and returning to your site. The more people visit a social media outlet and comment, share, like, or subscribe the larger an impact your site will appear to have, and your brand recognition will grow.

Small and medium business owners easily have access to 2 billion users on Facebook, 326 million users on Twitter, and 500 million monthly active users on LinkedIn just by creating an account. This equalizes the marketing field for brands who want to focus on local customers and attention, providing a more accessible brand voice and presence than a larger business that might have a larger budget, but impersonal content with minimal social media presence. A local mom and pop store has a remarkable opportunity to market to their neighbors and friends, but also generate local fans who will be return customers and generate reviews, recommendations, and other engagement that bigger chains try to garner themselves.

To leverage social media in today’s consumer market means you have one avenue to reach customers that are almost entirely in your own hands to succeed. Invest the time and the effort, do the research about what your customers want, and gear your content to what your followers want to see. Your content must be fascinating enough that your message carries on through your followers, who will share to their followers and friends. As most social media accounts have an inherently low starting cost (free), these are marketing avenues definitely worth exploring.

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