Olivier Blanchard literally wrote the book on social media ROI, and his talk at our Social Business Summit last week in Austin — Business Objectives, Data and ROI: Leveraging Social Platforms to Engineer Digital Wins — hit home for me because he put into clear focus the lessons that I, as a social media strategist and analyst, struggle to impress upon clients all the time.
Initially ROI wasn’t a part of the social media discussion for brands. It was enough to create a space, earn some fans, and have some conversations. Social media was seen very much as an extension of the marketing department at most companies, and it still is today in many cases. But as brands are maturing in the social media space, Blanchard points out how all the departments could get value from social media — customer service, consumer insights, human resources. It’s not just social marketing, it’s social business.
When brands only use their social media channels for marketing, it’s a huge missed opportunity. “Less than 1% of liked brand pages on Facebook get repeat visits,” said Blanchard. Just because brands are on social media doesn’t mean they’re necessarily forging deeper relationships with their customers. “We’ve just learned how to invade their social space better with more marketing,” he said. “We should be focusing on better products, better customer experiences, faster, simpler checkout, eliminating hurdles and pain points for customers, building relationships, converting our audience to customers, driving loyalty, repeat business and recommendations. Use social media to address those things, not just for marketing.”
Amen brother. It’s a huge opportunity! And there’s math to back this up as well. Customer acquisition costs 6x more than customer retention. So if brands are just using their social channels to advertise and lure in new fans and customers, that’s failing to address a much more valuable asset — the customers they already have. There’s mathematical value in using social for things like customer service, product feedback and driving loyalty and advocacy.
Of course along with this multi-faceted set of business opportunities comes a complicated task of measuring ROI. Blanchard’s advice is to start by considering the business objectives at hand. Then determine which social media performance measures tie back to that objective. It may be quantitative, it may be qualitative, it may be both. In my experience, it’s not always going to map neatly back to sales, but the “R” in ROI may be something equally valuable like “research” or “retention” or “recommendations.” I just made those three up, but the point is, sales can’t be your only success metric, nor can Facebook likes or Twitter followers be the only metric.
But for those who prefer the structure of three-letter acronyms (T.L.A.s), Blanchard suggests that social business should focus on measuring F.R.Y.:
frequency, increase the number of transactions per month
reach, increase net new customers
yield, increase avg transaction value
As your social efforts get more complex and address more business goals, your measurement activities must evolve as well. Blanchard suggests using correlation mapping to gauge the impact of activities. At Dachis Group we have our own big data platform to crunch all those social actions that result from a company’s social media activities into high level measures like Brand Awareness, Brand Love, Brand Mindshare and Brand Advocacy which normalize across the multitude of social channels. It’s a way to measure how multi-departmental social business efforts work together to impact brand success. To learn more, feel free to contact me, or sign up for a 1:1 demo of our product suite.
In time, with strategic planning and thoughtful measurement, businesses can start to see which activities in their social channels are yielding the best results for their brands. Odds are, it’s not just the marketing activities.