The Social Marketer s Guide To SOCIAL MEDIA ROI. How to Understand and Measure Your Impact

Transcription

1 The Social Marketer s Guide To SOCIAL MEDIA ROI How to Understand and Measure Your Impact

2 Introduction Social ROI is a term that drives social marketers crazy, and for good reason. We hear about it so often that promises to solve the Social ROI problem are brushed off without much thought. The problem is that these promises either oversimplify the issue, or over-complicate it, and the truth is that no one has solved it, despite the empty promises you re getting from vendors. Trust me, Simply Measured does social analytics better than anyone in the business, and we re still working to solve the problem. We re getting close, but we re not there yet. Partial attribution and multiple touch points are issues with assigning ROI to any marketing activity, and social media is no exception. Social has it s own set of quandries to go with those marketing problems, like dark social and social impressions that don t equate to traffic. As social marketers, we want to prove social ROI so badly, and vendors want to sell you on the idea that they can prove it for you, that we don t take the time to outline what social ROI is for our brands. ROI is not a universal dollar sign across every business type. The ability to drive value from social media isn t the same at every company, and sometimes it doesn t even mean revenue. 2

3 While we at Simply Measured are working to make this problem easier for you to solve by automating parts of your measurement process and connecting more data sources so you can draw out better insight, it s not a simple issue. Before you can solve ROI you ll need to understand what ROI means, how to measure it, and what it means for your program. In the pages below, we ll answer several social ROI questions: What s Wrong with Our Understanding of ROI Today? How to Change Our Mindset About Social ROI How to Fix This Problem Today What s Up Next for Social ROI? Ready? Alright, let s get started. 3

4 What Is Wrong with Social ROI Today? Measuring activity metrics like reach, engagement, and share of voice is widely accepted in social marketing today. It s a solid starting point to quantify and optimize performance. But that s really just that a starting point. These metrics are rooted in an assumption that engagement is valuable. We make this assumption because we fundamentally believe that social media is an important part of the buyer s journey. But, we haven t proven this assumption. In every major survey of social marketers, Social ROI is still cited as a top challenge. This chart from the 2015 Social Media Marketing Trends Report from TrustRadius and Simply Measured shows that Measuring ROI is the biggest challenge for 60% of marketers. 4

5 Social ROI isn t just about assigning dollars to social media, it s about answering the next order questions. How do we connect social engagement to site traffic, conversion, customer lifetime value, and loyalty? How do we leverage social signals to drive marketing actions through our entire marketing process? How do we identify the people who truly impact our business via social media? There are two ways that marketers can get off-course when it comes to ROI: 1. They over-simplify ROI, thinking that buyers interact in a linear fashion 2. They over-complicate ROI, creating algorithms that assign numbers, but do little to express value because the unnecessary complexity can lead to flaws Lets take a look at each of these, and how they can stand in your way. The Over-Simplified Example Stop me if you ve heard your CMO, VP of Marketing, or another marketing counterpoint say this one before: How many sales were driven directly by social? Let s say that direct link is the definition of Social ROI: Someone clicks a link in a Tweet and makes a purchase. The revenue generated is the ROI of the Tweet. 5

6 Easy right? Unless you operate a brick and mortar store and don t have this direct digital pipeline or aren t able to attribute every sale to a specific source or there s overlap between social and other marketing channels or your customers visit social, then go about their day, and then purchase at a later time...or countless other reasons that this becomes difficult. By over-simplifying ROI, we focus solely on the return and ignore the investment. We also fail to recognize that our social channels can impact our business in more than one way at a time. Facebook, for example, can drive conversions AND increase brand awareness. The Overly Complicated Example The other direction is to create an unreasonably complex algorithm that churns out a number based on some social figures, but doesn t offer any real value or insight. This seems like a reasonable way to calculate ROI, right? Perfect. So I plug in my social numbers, including sentiment because somehow that factors into Social as quantifiable return, do some math, and then I know my social media ROI? Sweet. I bet that works for every business, because we all have the exact same goals and tactics for our social program. This causes problems, because ROI isn t social media-exlusive. It needs to take into account the entire customer journey, which involves other marketing touch points that don t happen on social media. 6

7 The Right Way to Think About Social ROI Social ROI is a problem because it s not easy to solve. And it s not easy to solve because we re thinking about it wrong. How are we wrong? Great question, fictional reader great question. The ROI problem is an impossible problem to solve until we solve another problem: attribution. The focus on ROI before attribution is a fundamental disconnect in the way we operate as marketers, and one that will continue to get in our way until we learn to address it. Attribution has to Come Before ROI Social media is a marketing function. Whether it feeds top-of-the-funnel brand awareness, mid-funnel conversions, or customer satisfaction and lifetime value, we can t talk about Social ROI until we understand social s impact. Attribution is an issue for two reasons: Because it s more complicated than connecting one channel to one purchase We are missing a massive piece of the puzzle when our customers interact with our social content on channels that aren t tracked Let s take a look at these two issues, and how they re standing in the way of solving The ROI problem. 7

8 Attribution Issue #1: Complex Interactions As marketers in a crowded, complex space, we can t afford to give sole credit to any one aspect of our marketing. If attribution were about limiting our activities to one successful tactic, none of us would be talking about this because that would be easy math. The problem is that it s more complicated than that. Attribution is not a straight line from one touch point to the next, which is why it needs to be customer-centric, and help marketing teams understand which touchpoints influence purchases, and how they re interrelated. 8

9 If we can identify which action moved a potential customer from one stage to the next, and which activities support other actions, we re able to build an attribution model that doesn t single out one tactic that takes all credit, but rather one that helps us understand which actions facilitate different parts of the customer s journey. This understanding will help allocate budgets, develop strategies and campaigns that give our customers a more meaningful experience, and move potential buyers through the lifecycle even quicker. Attribution Issue #2: Dark Social Ever ask yourself, What is this massive segment of website traffic called direct? For the most part, social marketers are missing a huge piece of the puzzle when it comes to attributing traffic, conversions, and sales to social media, because we can t see exactly where a lot of traffic actually came from. 9

10 We call this lack of attribution dark social and its a bigger issue thank you d think: According to RadiumOne, 70% of all social sharing is dark. According the The Atlantic, more than 50% of social traffic is dark. According to InsideSocial data, more than 50% of digital sales can be dark for consumer products. We don t even know which traffic comes from social, so how can we prove the ROI of our social media programs? Attribution is important, and not just for your peace of mind. As a social marketer, you need to understand and measure the impact your efforts are having on web and conversion metrics. You re driving site visits, signups, and sales. Without attribution, you can t prove that you are actually doing this and all of the credit goes to direct, so you are unable to illustrate your true business impact without implementing tracking and attribution tools. Brewster Stanislaw, Head of Attribution for Simply Measured 10

11 How Do We Fix These Attribution Issues? There are three steps to consider when trying to solve this attribution issue for your company, and these opportunities to connect the dots are critical if we want to identify real ROI. 1. Identification The first step is developing a social attribution model is to identify this direct traffic and dark sharing of your web content. Link shorteners are a good start for owned content, and Google Analytics UTMs shorten the gap, but they re not solving the whole problem, because users don t always behave how you tell them to. I don t always use a share button, sometimes I just copy a link and send it to someone. I don t always Tweet that link, sometimes I text it, it, or post it to a private Slack group. If you visit the Simply Measured website, you ll notice a hash and a tracking code appended to it. This allows us to see how this specific blog post is being shared all over the place, even across dark social (if you re a Simply Measured customer, contact your account manager to learn about this solution). Cookies and other tracking mechanisms allow you to see return visitors by storing data about them. Sometimes I look at a pair of shoes and then go about my business, but that doesn t mean I forgot about the shoe company, and it doesn t mean I won t be back. Partial attribution is going to be a critical component of social activity in the years to come. This is something we should all be focused on, and is one of the many reasons you need to develop a close relationship with your web team. 11

12 2. Communication and Integration One of the reasons that the identification above hasn t been addressed yet is because of another problem. Social marketing programs are not aligned with other digital marketing functions. They re not aligned because social isn t always viewed as a viable marketing channel. It isn t viewed as a viable marketing channel because it isn t aligned with other marketing functions See the problem here? This is a cycle that we won t get out of until we take it on ourselves to make it happen. We can t attribute traffic correctly because we re not partnering with our web optimization team to identify where our direct traffic actually comes from. The web team has this data, and social doesn t. Work with the to identify the dark traffic. This will make their program easier to run, and yours more effective. 12

13 3. Alignment Once you re able to attribute social s full impact on your business, you can align with the rest of the marketing team, and focus efforts on the areas you have the greatest impact. This map offers guidance on where to focus when leveling social up to broader marketing objectives. Social Metrics Map BUYER S JOURNEY OBJECTIVE SOCIAL MEDIA STRATEGY SOCIAL ACTIVITY SOCIAL KPI S BUSINESS IMPACT AWARENESS Create awareness Expose target audience to brand content Posts, promotions (boosts) Impressions, reach SOV, Top of Mind Awareness CONSIDERATION Generate demand Generate engagement of target audience with brand content Posts, responses # of engagements, types of engagements Visitors/traffic (online or offline) DECISION Drive conversion Drive target audience to brand offers Posts, promotions Link clicks Conversions (purchases, lead submissions, app downloads) ADOPTION Delight customers Drive engagement with brand product/services Responses (i.e. social customer care) (positive) earned mentions, customer care metrics (responses times & qty) Sentiment and satisfaction ADVOCACY Inspire evangelism Activate customer influencers Posts, outreach to influencers, reshares Earned impressions, earned reach, social UGC Referrals, influencer activity, positive word of mouth, NPS BUYER'S JOURNEY STAGE A person relative position to a buying decision MARKETING OBJECTIVE The brand s desired outcome from a marketing activity SOCIAL MEDIA STRATEGY The brand s plan of action to achieve the marketing objective SOCIAL ACTIVITY The social actions the brand must take to execute strategy SOCIAL KPI S The results of the social actions taken BUSINESS IMPACT The downstream effect of the social results on the business PRESENTED BY: 13

14 After Attribution, How Do I Solve ROI? This gets simpler once attribution is solved, but it s still a process, and it s important to ask yourself why identifying social media ROI is important to you. In most cases, we want to know the ROI so we can plan tactics, report to executives, and assign budget going forward. The most important thing to remember is that social ROI is not just about the initial sale. Social media has the ability to impact customers throughout their entire relationship with your company, and your budget, plan, and calculated ROI should reflect that impact. The first thing you ll need to become familiar with is Customer Lifetime Value (CLTV). You may already know about CLTV, but if not, here s a quick rundown. Customer Lifetime Value is the amount of revenue a typical customer will generate for a company during the customer s entire engagement with the brand. Suppose you are in the lawn care business and your typical customer spends $80 per month and stays with the company for an average of 3 years. Based on that information, they would use the following equation to determine the CLTV: $80 per month x 12 months x 3 years = $2,880 = CLTV This would mean that each new customer is worth $2,880. In other words, every time you get a new lawn care customer,you can plan on generating $2,880 in revenue from them over the course of 3 years. 14

15 How to Determine Your Social Media Budget Based on Value of New Customers If you know that every new lawn care customer will generate $2,880 in revenue, the next logical question is, How much of my budget should I spend in order to acquire a new customer? That number is called the Customer Acquisition Cost (CAC). There are many theories about what this should be. A good rule of thumb is that your CAC should be between 10%-30% of the CLTV, depending on the size, price point, and stage of your business. For this example, let s use 10% as our acceptable CAC. 10% of the CLTV ($2,880) is $288. In other words, you can spend $288 in marketing to acquire a new lawn care customer because every new lawn care customer will generate $2,880 in revenue over the course of his or her engagement. Of course, if you only spend 5% (or $144) to acquire a new lawn care customer you re a hero, but using the 10% formula (or $288) is an acceptable place to be. 15

16 Developing Social Programs Based on CAC and Projected ROI Now, imagine that your lawn care business has gone national. Your allotted marketing budget is $280,000, which brings in 1,000 new customers every year. If your social media budget comprises 10% of your total marketing budget, you d have $28,000 to acquire 100 new customers per year. In other words, all of the Tweets, Facebook promotions, YouTube videos, and Snapchat campaigns should bring in 100 new customers each year. If you re accounting for partial attribution, this gets more complicated, and the formula has more moving pieces. You need to start asking yourself questions like: How do I attribute the revenue from a customer who engaged with social content, clicked through to the blog, but then came back because of a retargeting ad? Do I assign more value to the first touch, last touch, or equal value to every touchpoint with a prospect? You re probably already familiar with the hub-and-spoke system, which places your website or landing page at the hub (or center) of a wheel. Your Facebook page, Twitter campaign, Pinterest Board, and YouTube channel are the spokes of the wheel which are all intended to drive prospects to your landing page. Once those prospects get to the landing page, you convert a certain percentage of them to customers. On average, you might convert 1 out of every 10 social visits to the landing page 16

17 into a customer (this is trackable using UTMs or a hash appended to a URL so shares and referral paths are collected). With a conversion rate of 10%, you d need to drive 1,000 visits to the landing page in order to get 100 new customers for your client. With Simply Measured, you can automate this process by linking a social network to Google Analytics or Simply Measured s attribution solution, which allows for depper insights around social content, influencers, and more. This connection can help you identify the percentage of traffic (and the individual users) that converts on your website by identifying the key goals you ve already set. In a nutshell, if you spend $28,000 developing and running an extensive social media campaign for your client, and that campaign drives 1,000 visits to the client s landing page, and the client converts 10% of those visits to new customers, you know that it cost you $288 to generate each new customer for your client. Here s how the math breaks down: Total Marketing Budget: $280,000 Social Media Marketing Budget: $28,000 Customer Lifetime Value: $2,880 Allowable Customer Acquisition Cost: $288 New Customers Needed for a Positive ROI: 100 (or more) Once you are able to track and understand the content and tactics contributing to revenue, you can spend more time and resources developing those tactics for future campaigns. This iterative process is how other areas of marketing have grown over the years, and what social media marketers will need to do to grow their programs as well. 17

18 What s Next for Social ROI Today, defining social media ROI is complicated mainly because social is big. On your website, there are only so many actions a user can take before converting, and even that can become complex. Meanwhile, social media is made up of dozens of disparate networks, each with its own nuances, and users can be active across any of them at almost any given time. Basic attribution is the first step to understanding the ROI of your social programs. As social marketing grows and becomes more sophisticated, we re pushing to tie your earned, owned, and paid social activity to other marketing functions, and the way to do that is through data. This will allow you to establish a more complex attribution model across all social touchpoints, getting very specific about the types of content, topics, audiences targeted, and other granular data that makes optimizing your social strategy for conversion and return easier than ever. This connective data is something we re passionate about at Simply Measured, and we re working hard to lead the industry to solutions that enable you to do your best work. When you can understand and measure the entire scope of a buyer s interaction with the marketing team, you ll be able to not only measure social media ROI, but validate social media s impact on your business s bottom line. 18

19 ABOUT SIMPLY MEASURED Simply Measured is the most complete social analytics solution, empowering marketers with unmatched access to their social data to more clearly define their social strategy and to optimize their tactics for maximum impact. Our goal is to put the tools to understand business data in the hands of business users. We think reporting should be simple, attractive, and accessible for everyone not just data scientists. Our software streamlines the process from data to deliverables and eliminates the countless hours spent on everyday reporting tasks. We do this by putting cloud data sources at your fingertips, providing a marketplace of best practice reports, and allowing you to generate beautiful solutions on the web, in Excel, and in PowerPoint with a couple of clicks. Want to try Simply Measured? Request a Trial 19 Copyright Simply Measured, Inc. All Rights Reserved.