Introducing the Alinean Social Media ROI Calculator
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Transcript of Introducing the Alinean Social Media ROI Calculator
TOM PISELLO, CHAIRMAN & FOUNDER
Blog: http://blog.alinean.com/
Is there an ROI from Social Media Marketing?
Blog: http://blog.alinean.com/
Twitter: @tpisello
http://www.alinean.comhttp://www.fightfrugalnomics.com
Agenda
1. Need for Social Media Spending and ROI Trends
2. How to Measure Social Media Marketing ROI?
3. The Alinean Social Media ROI Calculator
4. Best Practices to Maximize Social Media ROI
© 2011 Alinean, Inc.2
© 2011 Alinean, Inc.3
Social Media Spending and ROI Trends
http://www.fightfrugalnomics.com
Social Media Spending on Rise
Social Media spending:
• Currently 6.4% of digital marketing spending
• Increases of 50%+ in 2011?
• Growing to 18% of total marketing spend in 5 years?
Greater spending = more financial
© 2011 Alinean, Inc.4
Greater spending = more financial accountability and transparency
Frugalnomics - decision makers more empowered, skeptical and frugal than ever before
CFOs taking more control
• 1/3rd of Marketing departments, budgets and oversight
Display ads21.0%
Search ads13.6%
Email marketing
18.6%
Digital events7.1%
Company web sites
26.7%
Search engine optimization
7.6%
Social networks
5.4%
IDC Digital
Marketing Program
Spend Allocations
2010 2010
Realizing ROI Important to Future Spending
• Respondents identified the top digital and social media execution challenge as 'measurement and ROI‘ - IDC’s 2011 Tech Barometer
• 48% “Creating ROI Measurements” as most important focus for 2011
© 2011 Alinean, Inc.5
important focus for 2011
• Current measurement efforts are incomplete:
– 65% of corporations using only Engagement Data as the top measurement metric
– mere 22% capturing Product Revenue, a key element in quantifying value and ROI
“Those that can effectively measure improvements can make the business case, and
can truly obtain more budget funding.”
© 2011 Alinean, Inc.6
How to Measure Social Media Marketing ROI?
http://www.fightfrugalnomics.com
What is ROI?
ROI =ROI = X 100%X 100%
ROI the formula
© 2011 Alinean, Inc.7
Example:• Investment = $100,000• Savings + Incremental Value = $200,000• ROI = ($200,000 - $100,000) / $100,000 = 100%• For every $ invested, get back original $1 plus extra $1 in benefits
Revenue Revenue AS ISAS IS
Making Making the Case for Changethe Case for Change
ROI = Making The Case For Change
Start with Status Quo
© 2011 Alinean, Inc.8MICROSOFT CONFIDENTIAL
Business Business / IT Costs / IT Costs AS ISAS IS
Project Timeline InitialInitial Year 1Year 1 Year 2Year 2 Year 3Year 3
IncrementalRevenueBenefits
Revenue Revenue TO BETO BE
ProjectProject
Making Making the Case for Changethe Case for Change
ROI = Making The Case For Change
Revenue Revenue AS ISAS IS
Simulate Project Impact
© 2011 Alinean, Inc.9MICROSOFT CONFIDENTIAL
Project Project InvestmentInvestment
CostSavings
CostsCostsTO BETO BE
ProjectProjectGrossGrossValueValue
Business/ IT Costs Business/ IT Costs AS ISAS IS
Project Timeline InitialInitial Year 1Year 1 Year 2Year 2 Year 3Year 3
Benefits: Turning Engagements into Incremental Value
© 2011 Alinean, Inc.10
Value from Prospect Engagement – New Customers
New Prospect Benefits Quantifying Value
Marketing Campaigns
User Responds to Post / Campaign
Conversion of Lead to Opportunity
Conversion of Opportunity to Customer / Sale
Marketing Monitoring
Monitor Identifies User as a Potential Prospect
Conversion of Lead to Opportunity
Conversion of Opportunity to Sale
Sales Identifies User as a Potential Prospect
© 2011 Alinean, Inc.11
Sales 2.0
Sales Identifies User as a Potential Prospect
Conversion of Lead to Opportunity
Conversion of Opportunity to Sale
Lead Cost Avoidance
Cost per lead savings
Generate qualified leads via social media vs. other campaigns
Marketing Campaign Benefits Example
Marketing Campaigns Searchers/Readers — converting like a typical website visitor / direct marketing recipient, with a 3% to 5% conversion from a searcher/reader engagement to an opportunity
Advocates/Influencers — 100% more likely to convert to qualified lead than a follower, with 10% or more conversion to an opportunity
Followers — at least 50% more likely to convert than
© 2011 Alinean, Inc.12
Followers — at least 50% more likely to convert than a less engaged searcher/reader, with an estimated 5-8% conversion to opportunity
Engagement = 10,000 Followers
Conversion of Engagement to Opportunity = 5% Conversion * 10,000 Followers = 500 Opportunities
Conversion of Opportunities to Customers = 10% Conversion * 500 Opps = 50 New Customers
Average annual value per Customer = $1000 Annual Subscription * 50 New Customers = $50,000 incremental revenue
Net Value = $50,000 Incremental Revenue * 20% Net Margin (COS + variable SG&A)= $10,000 Incremental Margin
Challenges to Quantifying New Prospect / Customer Value
New Customers Quantifying Value Challenges
Marketing Campaigns
User Responds to Post / Campaign
Conversion of Lead to Opportunity
Conversion of Opportunity to Customer /
Sale
Track leads to social marketing campaigns in
Lead Nurturing
Track qualified leads to opportunities in CRM
Track opportunities to sales in CRM
Marketing Monitoring
Monitor Identifies User as Potential
Prospect
Conversion of Lead to Opportunity
Conversion of Opportunity to Sale
Track leads to social marketing campaigns in
Lead Nurturing
Track qualified leads to opportunities in CRM
Track opportunities to sales in CRM
Sales Identifies User as Potential
© 2011 Alinean, Inc.13
Sales 2.0
Sales Identifies User as Potential
Prospect
Conversion of Lead to Opportunity
Conversion of Opportunity to Sale
Track sales qualified leads to opportunities in
CRM
Track opportunities to sales in CRM
Lead Cost Avoidance
Generate leads via social media vs. other
campaigns
Track cost of social media cost per lead
Compare costs to reallocated campaigns /
spending
Value from Existing Customer Engagements
Existing Customers Quantifying Value
Reduced Customer Churn Reduced customer turnover / churn
Increased Lifetime Value
Increased duration of relationship with customer
Renewal rate increases on annual / recurring subscriptions /
services
Increased up-sell / cross-sell rate
© 2011 Alinean, Inc.14
Increased Up-Sell / Cross-Sell
Increased up-sell / cross-sell rate
Increased revenue per customer
Increased Share of Wallet Increased share of wallet
Customer Loyalty Campaign Cost
Avoidance Reduce spending on customer loyalty campaigns
Reducing Customer Churn Example
Current number of customers engaged via social media = 10,000
Reduction in customer turnover rate = 15% current turnover * 10% improvement via social media = 1.5% reduction
Reduction in lost customers per year = 150 customers
Revenue loss avoidance per customer loss = $1,000 / customer
© 2011 Alinean, Inc.15
Revenue loss avoidance per customer loss = $1,000 / customer
Revenue loss avoidance per year = $150,000 Incremental margin contribution per year = 20% * $150,000 = $30,000
Challenges to Quantifying Existing Customer Value
Existing Customers Quantifying Value Challenges
Reduced Customer Churn Reduced customer turnover / churn
Measuring current customer turnover / churn
Measuring satisfaction / retention improvements
directly to social media campaigns / monitoring
Percentage improvement in turnover / churn rate
Increased Lifetime Value
Increased duration of relationship with customer
Renewal rate increases on annual / recurring
subscriptions / services
Tracking duration of customer relationship / annual
subscription renewal rates
Measuring incremental duration of relationships /
renewal rates
Increased up-sell / cross-sell rate
Tracking baseline revenue per customer and current
customer up-sell / cross-sell rates
Measuring incremental up-sell / cross-sell / promotional
© 2011 Alinean, Inc.16
Increased Up-Sell / Cross-Sell
Increased up-sell / cross-sell rate
Increased revenue per customer
Measuring incremental up-sell / cross-sell / promotional
sales to social media campaigns / monitoring
Increased Share of Wallet Increased share of wallet
Tracking current share of wallet
Measuring competitive wins to social media efforts
Tying share of wallet increases to social media efforts
Customer Loyalty Campaign Cost
Avoidance Reduce spending on customer loyalty campaigns
Track cost of social media customer loyalty campaigns
Current customer loyalty campaign spending
Savings from existing campaigns compared to social
media
Value from Collaborative Innovation
Collaborative Innovation Quantifying Value Challenges
Reduced Market Research Cost
Savings from current / traditional market
research spending
Measure current market research spending
Tally investment in market research via social media
Quantify difference from current spending
Product / Operational Cost
Savings Suggestions
Savings from product suggestions
Savings from supplier suggestions
Savings from distribution suggestions
Savings from process improvement suggestions
Tracking related social media suggestions
Quantifying specific cost reductions to collaborative
suggestions
Savings from marketing campaign suggestions /
crowd-sourcing
Savings from sales strategy suggestions /
recommendations
Tracking related social media suggestions
Quantifying specific cost reductions to collaborative
suggestions
© 2011 Alinean, Inc.17
Sales & Marketing Efficiency and
Effectiveness Improvements
recommendations
Improvements in sales & marketing effectiveness
from recommendations
suggestions
Quantifying specific sales & marketing effectiveness
improvements to collaborative suggestions
Accelerated Time to Market
Time to market / velocity savings from
suggestions
Tracking related social media suggestions
Measure time to market / velocity improvements from
suggestions
Quantify the value to incremental revenue / reduced
cost
Social Media Marketing Investments
• Setup Labor & Services
• Content Marketing Labor & Services
• Campaign Management Labor & Services
• Monitoring and Collaboration Labor & Services
• Tools
• Integration Labor & Services
© 2011 Alinean, Inc.18
• Integration Labor & Services
Social Media Value Map
© 2011 Alinean, Inc.19
© 2011 Alinean, Inc.20
The Alinean Social Media ROI Calculator
http://www.fightfrugalnomics.com
Alinean Social Media Marketing ROI Calculator
© 2011 Alinean, Inc.21
Organization Profile
© 2011 Alinean, Inc.22
Social Media Engagement Profile
© 2011 Alinean, Inc.23
Social Media Value Map and ROI
© 2011 Alinean, Inc.24
Graphs and Assumptions
© 2011 Alinean, Inc.25
Value of Follower Details
© 2011 Alinean, Inc.26
Review and Edit Key Assumptions
© 2011 Alinean, Inc.27
ROI Analysis Report
© 2011 Alinean, Inc.28
© 2011 Alinean, Inc.29
Social Media ROI Best Practices
http://www.fightfrugalnomics.com
Social Media ROI – Engagement Effort and Success
• Most Engagement Success
– High Technology
– Consumer Products
– Retail
• Least Engagement Success
– Energy
– Utilities
– Wholesale & Distribution
© 2011 Alinean, Inc.30
– Retail
– Travel
– Media and Entertainment
– Hospitality
– Automotive
– Wholesale & Distribution
– Pharmaceuticals
– Healthcare
– Chemicals
– Professional Services / Service Providers
600 Total Firms: Representative sample of Fortune 500, small and medium firms across 32 different industries
Engagement Success
• Important and timely content marketing
• An interactive dialogue with an active and engaged user base
• Special deals, discounts, contests and giveaways to promote, targeting frugal buyers (both business and consumer)
© 2011 Alinean, Inc.31
consumer)
• A strong and passionate “lifestyle” brand connection to its user base
• A natural demographic alignment with social media participants.
Engagement Success = Social Media Hierarchy of Needs™
© 2011 Alinean, Inc.32
Tier 1: Content Marketing
• Ideas
• Value
• Credibility
• Personalization
Loosening of the Status
Quo
Committing to Change
Discovery
Provide content to facilitate the buying lifecycle
© 2011 Alinean, Inc.33
• Entertainment Exploring Possible Solutions
Justifying the Decision
Making the
Selection
Committing to a Solution
Decision
Consideration
Tier 2: Campaigns
• Coordinated communications to connect to and engage new prospects or existing customers via social media channels.
• Some campaign examples can include:
– Facebook fan contests to attract new fans
– Scheduled tweets to promote a webinar
– Research summary tweets to promote white papers
© 2011 Alinean, Inc.34
Research summary tweets to promote white papers
– Syndication of a blog post to LinkedIn Groups to gain new connections and spur discussions
• The most successful campaigns:
– Have a content foundation
– Drive interaction (give and take) vs. pure promotion (push)
– Are more credible, often involving the voice of advocates, experts and/ or third party validation
– Provide unique value to users, such as delivering special offers, exclusive events, or important content
Tier 3: Monitoring
• Actively listening by marketing and sales to social media channels to gain and engage additional prospects or customers.
• The monitoring can include:
– Answering questions or queries about the company or products
– Assuring that campaigns are achieving the expected goals, driving the right responses, reactions and results
Gaining additional followers, connections and fans by tracking advocates and
© 2011 Alinean, Inc.35
– Gaining additional followers, connections and fans by tracking advocates and advocate reach
– Monitoring for positive sentiment and use for promotion to gain additional followers
– Monitoring for incidents / issues and negative sentiment to help mitigate these issues and limit risks
– Monitoring for competitive mentions or requests, engaging users who might be considering competitive solutions
– Providing feedback to fine tune campaigns and content to meet user needs
• Monitoring and Engagement Console essential for group success
Tier 4: Collaboration
• Collaborative Innovation- Creating and participating in a dialogue with prospects and customers to gain feedback and innovative ideas
• As opposed to the “push” oriented focus of traditional campaigns or the “pull” orientation of monitoring, collaboration is an interactive dialogue.
• Collaborative Innovation can include:
– Market Research
– Product Improvements, termed “Social Sigma” by Forrester, such as market
© 2011 Alinean, Inc.36
– Product Improvements, termed “Social Sigma” by Forrester, such as market opportunity, features and benefits, design, pricing and more
– Marketing Improvements, such as slogan testing, campaign and promotional ideas
– Business Development, such as advice on go-to-market, channel or strategic partners
– Advisory Advice, such as seeking and gathering advice on operational improvements, and suppliers
Measurement and Integration
• Measurement
– Conversation and Activity History / Archive
– Engagement Activity and Demographics
– Influence Measurement
– Lead and Transaction Tracking
– Tangible Benefits Quantification
© 2011 Alinean, Inc.37
– Tangible Benefits Quantification
– ROI
• Integration
– Campaign Management
– Content Management
– Lead nurturing
– CRM
Next Steps
• Social Media ROI Resource Center
– http://www.alinean.com/socialmediaroi
• Social Media ROI Calculator
• Research White Papers
© 2011 Alinean, Inc.38
• Research White Papers
http://www.fightfrugalnomics.com