return investment
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Enough withthe Social Media BS.
Give me the realz.
Social Fresh Conference // 24 August 2009
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SOCIAL MEDIA IS NOT FREE.
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1. It takes people.
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2. It takes technology.
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3. It takes time.
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… all of which are limited resources.
We have… rocks.
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These resources=
100%of your budget
Head CountAdvertising
E-Marketing
Inbound Call Center
Each resourcehas a specific cost
Sales Dept.Public Relations
MarketingI.T.
Accounting
Each resourceyields specific results
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These resourcesgenerate
100%of your business
Head CountAdvertising
E-Marketing
Inbound Call Center
Sales Dept.Public Relations
MarketingI.T.
Accounting
Losing even 1% of your budget’s efficiency
could seriously ruin your day.
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Okay fine. But if I’m going to take a chanceon this social media thing,
it had better make good businesssense! Why should I allocate
resources to it?
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Reason #1:It will result in a cost reduction.
Maybe in customer service?You mentioned something about
business intelligence andmarket research?
Reason #2:It will generate more revenue.
I want more transactions, more net new customers,
more customer loyalty,etc.
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Now go figure out whatProgram you have to cut
to fund this Social Media thing.Remember that our bonuses
are on the line.
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Which buckets do we emptyto fill this new one?
Understand that a newSocial Media program’sfunding doesn’t appear
out of thin air.:
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Business Justification
SAY HELLO TO:
R.O.I.
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R.O.I.RETURN ON INVESTMENT
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THE R.O.I. EQUATION
Investment Expectation of return
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ROI =COST OF INVESTMENT
(GAIN FROM INVESTMENT - COST OF INVESTMENT)
THE R.O.I. EQUATION
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Truth about R.O.I.
ROI is a business metric, not a media metric.
ROI is 100% media-agnostic.
Only measuring digital or social won’t get you anywhere.
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Reason #1:COST REDUCTION
Reason #2:REVENUE GENERATION
Remember what Mr. Bossman said…
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Okay, hotshot,You have your Social Media doohickey.Now I’d better see some real results!
Or else…
I shrank my PR budget by 20%and my outbound call budget by 40%.
Now I can afford a team of social mediaRock stars. Can I get a hellz yeah?
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Woohoo!I have a job!!!
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Dudes, we are ON THIS!!!
Let’s start engagin’!!!
I call dibs on theCorporate blog.
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One Month Later…
ACCOUNTING
Cool.
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Oh my! Look at all the newvisitors to our website!
and all of our FaceBook friends!Hot Damn, we even have
comments on the blog!
What about ourTwitternets?
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This rocks!I never had it so
good!!!
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Three Months Later…
ACCOUNTING
Cool.
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Monitoring to base…Monitoring to base…
Our Google Analytics are throughthe roof! Even our social mentions
are wicked good!We have liftoff!
Yeah but…What about
the P&L?
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Measuring mediareally rocks my
world.
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Six Months Later…
ACCOUNTING
Anything?
Nope.
Nada.
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What kind of mood is The old man in today?
Not good.He doesn’t care how many visitors
the website gets, or how manyeyeballs we estimate we’ve reached
unless it means we’re sellingmore stuff.
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But why?Our website is getting
mad hits, Jack!And we have 3,000 followers
on Twitter now!
I’m sorry, son.If your Social Media program
is generating revenue, we aren’tseeing it. We need to allocate
resources where we canmake money.
It’s just business.
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Darn it.This media measurement
stuff isn’t working.
We need to starttying this stuff to actualBusiness performance.
Where to start?Let’s see…
At the beginning?
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Things happen in sequence.
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Non-financial impact is not ROI (yet).
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Types of non-financial impact
Website Visitors
Click-throughs
Visitors to a brick & mortar store
Positive press
Positive WOMNegative press
Negative WOM
Customer complaints
Employment applications
Retweets
FaceBook friendsBlog comments
Social mention
YouTube views
Twitter followers
Impressions
Delivered emails
Coupons distributed
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Non-financial impact = potential.
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ROI = actualized potential.
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Reason #1:COST REDUCTION
Reason #2:REVENUE GENERATION
Remember what Mr. Bossman said…
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I need proof thatwhat we’re doing
is actually working.
Start with proof of concept.
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Step 1: Establish a baseline
8% YoY Growth
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Baselines illustrate deltas (changes)
Is something happening here?
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Step 2: Create Activity Timelines
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Step 2: Create Activity Timelines
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Step 2: Create Activity Timelines
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Step 3: Look at Sales Revenue
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Step 3: Also look at # of transactions
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Step 3: Also measure net new customers
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Transaction data should be specific
F.R.Y.FREQUENCY, REACH, YIELD
How often customers transact. (transactions per month)How many customers you are reaching. (net new customers)How much they spend. ($ per transaction)
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The latest numbers indicatethat our YoY sales $ are up 60%.
Our individual transactions have doubled,as have our transacting customers.
Something’s working!
Groovy!Let’s figure out what.
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Step 4: Measure transactional precursors
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Step 4: Measure transactional precursors
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Step 4: Measure transactional precursors
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We overlaid all of our timelinesand noticed that since our social media
activities began, our website visits are up,our social mentions are also up, and
everyone seems to love us.
So is there a discernable pattern
in this?
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Step 5: Overlay all timelines
activities
transactions
social data
web data
loyalty metrics
etc.
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Step 6: Look for patterns
Before After
Impact
ImpactImpact
No Impact
Uncertain Impact
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Step 7: Prove relationships
Before After
How was this groupTouched by SM?
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How longwill all this
analysis take? It’s all a processof elimination, really.
Isolating patterns, quantifying deltas,proving ad-hocs…
Then allwe have to do is
figure out what the cost savings and revenue gains
are, and plug them into the equation.
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ROI =COST OF INVESTMENT
(GAIN FROM INVESTMENT - COST OF INVESTMENT)
THE R.O.I. EQUATION
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THE R.O.I. EQUATION
Investment Expectation of return
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Oh wow.This R.O.I. thing
wasn’t at all aboutmeasuring media,impressions and
eyeballs!
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First things first: Prove that Social Media works
ACCOUNTING
All things remaining the
same…
We may have proof ofconcept.
Hot damn!
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So it turns out that our Social Media program is impactingevery aspect of our business except
traffic in our brick and mortar stores.Can you get on that? Yeah. We need
to find out why we aren’t havingan effect there. Kthxbye.
Then use what you know to make it work better.
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Dudes, we are ON THIS!!!
Let’s start engagin’!!!
I’ll start crafting somewicked blog posts.
More store traffic.Roger that.
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Finally, someone with somereal metrics for me to sink my teeth into!
Good job, Sparky! You done gewd!
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So I guess Social Mediais going to stick around a little while
longer after all, isn’t it?
Yessir.Looks like our budget
is safe for now.
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Drinks for Everybody!
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Olivier Blanchard
Principal, BrandBuilder Marketing864.630.7398
www.thebrandbuildermarketing.com@thebrandbuilder (on Twitter)
www.smroi.net
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Slideography
Slide # Source
3, 9, 10, 11, 18-31, 37, 38, 48, 52, 56,59-65
4
6
UFO (TV series) http://ufoseries.com/
http://www.minnpost.com/stories/2008/06/18/2282/this_doesnt_compute_as_more_women_enter_scientific_fields_their_numbers_in_computer_science_are_declining
Kim Jong Il puppet, from “Team America”http://blogs.rockymountainnews.com/bridget/kimjongil.jpg