Social Media ROI: Avoiding the Abyss

By Vikram BhaskaranCEO and Co-founder, GoJeeno

What should I be measuring?How do I monitor performance?

What’s the ROI?Do I need more followers?

Why Go Social?

Direct Interaction

Relatively Inexpensive

Higher Engagement

Rich Data Source

The Face of Marketing… Today

• Company Initiated• Every customer is directly acquired

But what if… …our customers were our evangelists?Would we continue touching each customer directly?

Social Media Marketing: How our Game Changes

• People trust their friends more than an advertisement

• Peer Pressure Sells!

…But where are these guys?…How can we identify and harvest them?

You don’t need to sell to the world- just sell to the evangelists!

It’s all about Networks

• Social Network ≠ Social Media• Social Network is Made of

• Individuals and Connections• Directed and Undirected Relationships

• Information Conduits• Information flows through Relationships

• Get more followers, fans, likes and check-ins• Search and Solve customer issues• Simulate Viral Contests• Follow up, Purge and Apologize!

Life of The Social Marketer

In Other Words..

• What they should be • What they are

Avoiding the Abyss

• What we are measuring is WRONG

• How then can strategies based on the wrong metrics give us the right result?

The Business Truth

Your Business doesn’t really care about your number friends or followers.

Profitabilit

yFuture

What it really cares about is:

-That’s not just $$s today but $$s forever!

Sub-Optimal Marketing Resource Allocation

All customers are treated equal

Why Is This Wrong?

The 80: 20 Rule in ProfitabilityTop 20% of customers account for over 80% of profits

CLV (Deciles)

Profi

tabi

lity

Value Driven Marketing• The Concept

• Allocate more resources to high value customers

• Do not spend marketing investments on the loss makers

• The Power of Word of Mouth• The loss makers could be the customers that are

evangelizing our products to the high rollers

Not servicing ‘low’ Alex could mean losing ‘high’ Charlie as well!

What We Overlook

Alex, the Super-Talker Low Buyer

Charlie, the review-reading High Buyer

= Net Present Value of Future Profits attributable to an individual’s influence

Identifying the Influencers

Social Profitability(or) Dollar worth of Word of Mouth

From Influence to Profitability

• Measuring Total Profitability of a Customer based on:• Direct Purchases made by customer• Purchases made by referrals• Purchases made by referrals’ referrals and so on

• By capturing attenuation effect of Word of Mouth• Since my influence over my friend is more

than that over my friend’s friend

About Influencability

• The proportion of a purchase attributable to influence– If I made a purchase for $100, and my own

decision making was responsible for $30, the Influencability Ratio (for that purchase) is 70%

Influencability over each degree

70% 49% 24.3%

Getting to Total Worth: Total Customer Value

• Completely captures the value brought by a customer to a firm

•

(or Proportional Individual Profitability)

(or Proportional Social Profitability)

How it WorksProportion of customer’s purchase attributable to own decisions

Proportion of 1st degree referral’s purchase attributable to influence

Proportion of 2nd degree referral’s purchase attributable to influence

…And so on…

(1-Inf. Ratio) X π1

+Inf. Ratio [(1-Inf. Ratio) X π2

+Inf. Ratio [(1-Inf. Ratio) X π3

+Inf. Ratio […]]]

Maximizing Social Media ROI

• Maximize Profits• Nurture High TCV Customers• Appraise Customers based on TCV• Seed the right Influencers to maximize spread and

profitability, subject to marketing budget

• Minimize Cost• Identify Key players• Minimize Acquisition Cost subject to

Total Profitability

What Next?

Collate Behavioral Data

Identify Attitudinal Data

Measure Total Customer Value

Maximize Customer Equity

• Customer Transactions

• Support queries

• Customer conversations

• Social network activity

• Own purchase data

• Influence & Referral Purchases data

• Optimized Marketing Investments

• Max Gains

SocialHarvest is a complete Twitter based Loyalty and Referral Management tool that lets you:

Check us out at www.gojeeno.com/socialharvest

Maximize Total Customer

Profitability

Measure Attitudes and

Word of Mouth

Track Conversation Driven Sales

Incentivize Multi- Level

Referrals

Optimize Appraisals and

Rewards

About SocialHarvest

Questions?Comments?

Queries?Feedback?

Email: vikram@gojeeno.comTwitter: twitter.com/gojeeno

Or visit us at www.gojeeno.com