article by Jamie Turner on MarketingProfs.com
We loved this article, as it will leave you knowing how to set appropriate goals for your social media campaigns, and how to demonstrate to management (or your accountant) that your investment of time and other resources was worth it.
Warning: Social media may be heading for a big crash in 2011.
It’s not going to crash because it’s ineffective. And it’s not going to crash because people stop using it. It might well crash because most businesses don’t know how to measure the ROI of their social media campaigns.
Are you one of those companies? Are you still trying to figure out how to measure a social media campaign and calculate your social media ROI?
Well, I have some good news. Social media can be measured and you can track its ROI—if you follow the simple steps outlined below.
Using Direct Marketing Techniques to Calculate ROI
If you run a direct-response campaign and spend $1, you’ll typically generate $10 or more in return. The direct-response industry knows that statistic because it’s 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? What should you do then?
In How to Make Money with Social Media, I wrote about something called the 5-3-1 program, which involves understanding the five ways Fortune 500 companies use social media, the three categories of social media measurement, and the one direct response formula that all social media practitioners should know.
If you understand the components of the 5-3-1 program, you’ll have everything you need to calculate the ROI of your social media campaigns.
The Five Ways Fortune 500 Companies Use Social Media
Branding. Some companies use social media strictly as a branding tool. Typically, that means running a YouTube campaign that (hopefully) gets a lot of buzz around the water cooler. The most successful campaign of this type is the Old Spice YouTube video, which has more than 140 million impressions and, according to Nielsen, helped sales increase 27% in six months.
e-Commerce. If you can sell your product or service online, then you’ll want to drive people to a landing page where they can buy your goods. How can you accomplish this? Just do what Dell does: Tweet about special promotions for its Twitter followers. Dell can easily track their prospects’ behavior as they click the link, visit the landing page, and buy the product. Dell generates millions of dollars in revenue each quarter just from Twitter .
Research. Many companies are using social media as a tool to do simple, anecdotal research. Sometimes, that involves building a website to engage in dialogue with customers or prospects. Starbucks has done this famously with its MyStarbucksIdea.com website. Or, using social media as a research tool can be as simple as doing a poll on LinkedIn.
Customer Retention. A good rule of thumb is that it costs 3-5 times as much to acquire a new customer as it does to keep a current one. Given that, wouldn’t it be smart to use social media as a tool to keep customers loyal and engaged? That’s what Comcast and Southwest Airlines do—they communicate via Twitter, Facebook, and other social media platforms to help solve customer-service issues.
Lead Generation. What do you do if you can’t sell your product or service online? You’ll want to do what many B2B companies do: use social media to drive prospects to a website where they can download a whitepaper, listen to a podcast, or watch a video. Once you’ve captured the prospect’s contact information, you can remarket to them via email, direct mail, or various other methods.
