How To Really Measure ROI of Social Communications

Social-media-for-public-relations1reduzidoToday I came across a whitepaper from Bazaarvoice, a leading social commerce solutions company. The report is called “Real ROI From Social In 5 Steps,” and provides a great set of options for decision makers trying to find a clearer value from social communications. In this post I’ll outline a few of the steps they provided, as well as a few of my own.

Follow the Money!

If you’re proactive in creating your social programs at the outset of a new campaign, you will be able to establish separate channel benchmarks. With data collected from these benchmarks, you’ll be able to compare A sales from your B direct marketing campaign against X sales from your Y Facebook campaign. It’s simple enough in theory, but many projects often consider adding social media only after heavy investment (of both time and money) into an existing campaign.

The facts support the importance of social for online shopping. Seventy-four percent of shoppers rely on social networks to guide their purchase decisions, hoping to see what others are experiencing with your product or service. Shopping has always been social; the Internet just offers a means to make it easier than ever. If you’re tracking conversions as a result of social campaigns and comparing them to traditional sales, you can measure ROI.

Use Content That Encourages Consumers To Buy

This is a basic idea that will probably take time to figure out; whether it’s a video, a funny meme created using your product or a very popular photograph of your product, publish the content that you know your consumers will find valuable. This could be new uses for the product that a consumer may not have considered, an informative demo that shows how your product works, or a super sexy, high-res photo of your product in action. The more skin you have in the social experience game, the more likely your consumers are to look at your product and drive your ROI.

Promote The Product As Your Consumers Promote It

There’s a reason what we’re talking about is called “social” media. Most consumers, depending on what your product is, love to show off their purchase and exhibit the unique and interesting ways they enjoy it. By fostering this sort of engagement and celebrating it when it happens, your customers will feel that your product is genuinely valuable. This could be as simple as thanking consumers when they share content with you, but is even more apparent when you utilize the content they’ve created.

Nearly two-thirds of consumers use search engines to help with product research when considering a purchase, so the more content you have out there convincing them to buy your product, the better off you’ll be.

Use Multiple Paths to Show ROI

Given the many variables you’re left to consider with any social strategy, focusing your efforts where they will give the greatest bang for your buck is key. For sales, this means having a hand at every point in the shopper’s journey, from research to retail. When you feel that you have a firm grip on your customers’ journeys, there is a simple formula you can use to determine the results:

Real return from social =
increase in transactions
x increase in revenue per transaction
+ total savings from decrease in product returns

If you followed the first point in this article, you should have a solid baseline to measure your social campaign against an average period of business. Combining the three variables in the equation above, you’re given a monetary value of your ROI that you can use to map the traffic from social channels to purchase paths.

References:
“Real ROI From Social In 5 Steps,” Bazaarvoice, April 2012
http://www.bazaarvoice.com/research-and-insight/white-papers/Real-ROI-from-social-in-5-steps.html

“Gartner Says Majority of Consumers Rely on Social Networks to Guide Purchase Decisions,” Gartner, July 2010
http://www.gartner.com/it/page.jsp?id=1409213

“How We Shop in 2010: Habits and Motivations of Consumers,” eConsultancy, July 2010
http://econsultancy.com/us/reports/habits-and-motivations-of-consumers

Images:
Wikimedia Commons

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