Measuring the ROI of Social Media
We all know that everyone who’s anyone is on Facebook, right? Being social is cool, but the bigger question is… is it making your business money?
Branding through Social Media
“Brand Awareness” sometimes sounds like a cop-out when you’re talking about ROI (we all want to see the numbers!!!), but there truly is value in building your brand through the social space. According to Nielsen’s 2012 Social Media Report, 27 billion minutes were spent on the Facebook mobile application (61% YOY increase), 62.2 billion minutes were spent accessing Facebook via the PC site (23% YOY increase), 3.6 billion minutes were spent on the Twitter mobile application (48% YOY increase), and 2.1 billion minutes were spent accessing Twitter via the PC site (65% YOY increase). In fact, on average, consumers are on Facebook 17% of the total time they spend on their PCs. To build a brand, a company needs to be in front of large masses of people, and often. This data shows that these people can be reached with frequency through social media.
Social media is all about (buzzword alert) “engaging in conversations.” Just like in real life, if people are talking about you, don’t you want to be there? Whether to answer positive questions or defend yourself against a barrage of false claims, being aware of your social media presence allows you to gain greater control of the conversation.
But are they actually buying anything?!
That is the question, isn’t it? How can we tell that those multitudes of potential customers we’re connecting with through social media are turning into real customers? There are a few ways. If you are an e-commerce company, it’s a piece of cake. Simply look at the traffic sources of those visits that resulted in a purchase and you can know down to the penny how many real customers are coming from your social media sites. (Note that you do need to make sure your Google Analytics account is set up correctly to get this data). Alternatively, if you’re a brick and mortar location and need to monitor in-store traffic, you’ll have to rely on social media exclusive coupons or Facebook Offers as well as the diligence of your staff to know definitively whether or not your social presence is directly leading to sales.
To see the value in brand awareness, we can use tools such as Customer Lifetime Value. Rather than doing all the calculations yourself, you can use this handy tool from Harvard Business, https://cb.hbsp.harvard.edu/cbmp/resources/marketing/multimedia/flashtools/cltv/index.html. In this calculation, you are basically looking at the total revenue you would expect to receive from the average customer over their lifetime, subtracting the costs associated. You can use this as a very basic measure of the value of your social network.
A report by Syncapse takes more factors into account when determining the value of a fan. Among others, they looked at how much fans spent in comparison to non-fans, how efficient they were at winning new customers for the brand virally, how loyal they were, and the emotional connection that being a fan established with the brand. They looked across multiple business categories and found, on average, the value of a fan to be $174.17. You can take it with a grain of salt if you want, but establishing a strong social community around your business has value. And as our media landscape continues to evolve, that value is only growing.