Social Media ROI Explained

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Director of Marketing, ReachLocal

President, Social Media Club of Dallas

Organizer, Ignite Dallas

@MikeDMerrill

#OPTSUM #ROI

www.mikemerrill.comwww.mikemerrill.com

I Know I Saw My ROI Around Here Somewhere


Marketing has dramatically Marketing has dramatically changedchanged

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From Interruption to From Interruption to Conversation…Conversation…

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“If your target market is humans, then you should be using Twitter” - @unmarketing#OPTSUM #ROI via @MikeDMerrill


Are You Even Measuring ROI?Are You Even Measuring ROI?

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What Are You Measuring?What Are You Measuring?

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Measurement is Improvement!Measurement is Improvement!

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Right or wrong, web traffic is the leading metric used today to measure social media success#OPTSUM #ROI via @MikeDMerrill

www.mikemerrill.comwww.mikemerrill.com 04/10/23 10


The EquationThe Equation

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ROI=(Gain from Investment – Cost of Investment)

Cost of Investment


Two Ways to Connect the Dots Two Ways to Connect the Dots for ROIfor ROI

Cause Correlation

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Profit

Investment


What is your Financial Goal?What is your Financial Goal?

Increase Revenue Increase in new customers Increase in average revenue per sale Increase in revenue from existing

customers Reduce Costs

Lower Cost of Customer Acquisition Lower Cost of Customer Service

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Evolution of MeasurementEvolution of Measurement

Non FinancialOffsite

ClickthroughsFacebook FansFacebook Comments

Twitter Followers

RetweetsYouTube ViewsYouTube Comments

SentimentMentions

Social Press

Non FinancialWebsite

Unique Visitors Page Views Time on Site PageRank

Non FinancialConversions

Contact form Inbound Calls Downloads Event

Registrations Opt-in to email Subscribe to

Blog Register for

Online Community

Employment Apps

In-Store Visits Support Calls Returns


Map Activity TimelineMap Activity Timeline

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Month 1 Month 2 Month 3 Month 4

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• Overlay non-financial and financial to activity

• # of transactions, in store visits, coupon redemptions

• Revenue

Adapted from Olivier Blanchard at http://thebrandbuilder.wordpress.com


Define Your Success MetricsDefine Your Success Metrics

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Adapted from Olivier Blanchard at http://thebrandbuilder.wordpress.com

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Look for correlation by overlaying social media metrics with financial metrics over the same time period#OPTSUM #ROI via @MikeDMerrill


Lifetime Customer Value Lifetime Customer Value

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Years

Total Revenue

What is the value of a new customer?

• Initial sale

• Repeat business

• Up-sell

• Referrals

Knowing this value helps you…

• Determine how much to spend to get a new customer

• Focus your marketing budget on the most cost-effective tactics

• Develop plans to increase repeat business

• Create programs to reward customer loyalty

• Offer incentives to drive referrals


Lifetime Customer Value - Lifetime Customer Value - ExampleExample

Avg. sale per customer

Avg. repeat sales/year

Avg. years as customer

Special one-time purchases

Lifetime customer sales

Avg. value of referrals

Total lifetime customer sales

Gross profit margin

Lifetime customer value

Program cost

Customers to break even

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In order to measure ROI of marketing investments, you need to know Lifetime Customer Value#OPTSUM #ROI via @MikeDMerrill


Basic Online MetricsBasic Online Metrics

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Adapted from Paul Gillen at http://www.slideshare.net/pgillin/social-

marketing-roi-yes-you-can

Lifetime Customer

Value(Revenue x Longevity) x Margin

Conversion

Rate

New Customers

Visits / Leads

Value of a Visit / Lead

Visitor x Conversion Rate x LCV


Applying ROI to Value of a Applying ROI to Value of a VisitorVisitor

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Monthly Visitors 10,000

Conversion Rate 5%

Lifetime Customer Value $5,000

Calculation 10,000 * .05 * $5,000

Value of each visitor $25


Value of a BlogValue of a Blog

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Monthly Search Traffic 5,000

Estimated Traffic w/Blog 6,000

Value of a visitor $25

Monthly value of a Blog $25,000

Monthly Blog Expense $6,000

ROI=($25,000 – $6,000)

$6,000316%


Case Study - Large 4 YR Case Study - Large 4 YR University in OK University in OK

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Increase in Web Visits

Increase in Twitter followers

Increase in Revenue


McDonald’s Foursquare McDonald’s Foursquare Campaign Brought in 33% more Campaign Brought in 33% more Foot TrafficFoot Traffic

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• Foursquare day 4/16• Randomly posted $5 and

$10 coupons• Media published and

promoted• Investment $1,000

© 2010 ReachLocal, Inc. All Rights Reserved rlrc-2_0

Brooks Stone: 1 Cast per month

• No website

• No online marketing

• No voice

• No reach

September 2009• 4289 unique visits

• #1 Google result for ”Connecticut Stonemason”

• #1 Bing result for ”bluestone paths ct”

• #1 Yahoo! result for ”ct shoreline stonework”

June 2010

I’ve gotten more projects in the first half of 2010 than all of 2009“ “

- Josh Brooks, Owner

© 2010 ReachLocal, Inc. All Rights Reserved rlrc-2_0

Four Firkins: 1 Cast per day

• Static website

• Infrequent updates

• 700+ Facebook fans

• 250+ Twitter followers

August 2009• 120+ Visits/Day

• 66 Clicks on Twitter from 1 Cast

• 50,000+ visits in 9 months

• 2,326 Facebook fans (330% Increase)

• 1,113 Twitter followers (440% Increase)

• Engagement on every Cast

June 2010

50% of my store traffic comes in as a direct result of my daily cast“ “

- Jason Alvey, Owner

AJ Bombers1 year old Café – MilwaukeeGrowth was static for first 6 months of business (+/- 5%)Started using Twitter Tweeted specials Asked for menu suggestions Ran competition for new menu item

January 2010 started using Foursquare Offered Mayor specials February 2010 hosted “Swarm” event (50 people checking in) 1 hour prior ran a training session for non-foursquare users – 50

people showed up for training 165 showed up for the event Growth now running at 110% per month over previous months

Connect With Simon

@incslinger

[email protected]

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Social Media Club Mission

Promote media literacy, Promote standard technologies, Encourage ethical behavior, and Share best practices.

Social Media Club hosts conversations that explore key issues facing our society as technologies transform the way we connect, communicate, collaborate and relate to each other.

SMC Dallas Branding and Social Sites1. Name: Social Media Club of Dallas 2. Hashtag: #smcdallas3. Website and Blog:

http://www.smcdallas.org4. Twitter: @smcdallas5. Facebook:

http://www.facebook.com/smcdallas6. LinkedIn: Search for Social Media Club

Dallas7. Flickr:

http://www.flickr.com/groups/smcdallas

Upcoming SMC Dallas Events

October 7th, 2010 Screening “The Social Network” Sponsored by @bizzydallas

October 21st, 2010 Social Media Tips and Tricks

November 18th, 2010 Amber Naslund @ambercadabra

December 8th, 2010 Holiday Party

Let’s Connect and Follow Each Other

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@MikeDMerrill

http://www.mikemerrill.com

http://www.mikemerrill.com/linkedin

http://www.mikemerrill.com/facebook

[email protected]

Social Media ROI Explained

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