The genuine Social Media ROI principle

You are mainly likely using social media to promote your business. You’re tweeting, you’re Facebook liking, and you’re starting debate on LinkedIn. The million dollar question is…Are you tracking? No, it’s not a new social media site. I’m talking about tracking your social media ROI.

If you aren’t tracking, you are not the only one. Statistics illustrate that over 70% of businesses do not track their social media ROI.  This is a fanatical statistic when you consider that billions are spent on social media campaigns each year. You know you need to turn those social media mentions into an real sale, but where do you start? Well, I am here to help and share with you the “secret formula”, so pay notice!

What’s Your Return on Your Social Media outlay?

Yes, social media will likely profit your business, but you have to understand the beast first.
 

First Things First
 

Before the Internet, the conventional advertising methods were television, radio, print, outdoor, retail, and mail.  Let’s face it, there are tricks of the deal that every marketer knows uses to get a good return when using these mediums. Things like placing a print ad on the right boundary of a page so people look at it when the turn the page or personalizing a wrapper with the target’s name so they are more likely to open it. Social media has behavior just like print advertising, but first you need to appreciate how social media works.
Start by creating social media accounts for yourself first. To better understand social media and the go back you will get on your efforts, you need to experience the platforms first hand.
 

•    On Twitter, check out what’s trending and jump into the chat.
•    On LinkedIn, join a professional group to network or start a conversation.
•    On YouTube, browse channels and make a mention.
•    On Pinterest, peruse the boards, create a board and start pinning. 

•    On Facebook, become a fan of a favorite organization or like a product.
 

It’s very important that you experience social media firsthand so you can be grateful for how different it is from traditional media and begin to understand its value.
 

Traditional Media ROI vs. Social Media ROI
 

In traditional media, contact is one way– content attracts an audience.  To confirm the audience demographics, businesses use tools like Nielsen black box, subscription data, and survey responses. Before introduction advertising through traditional media, a business has a pretty good idea of who they are talking to, and the reach of their attempt.  To get that audience to respond, a business can include a special offer or a phone number that can be traced back to that ad.  Figuring the ROI is a straightforward calculation.  Right?

Now, enter social media.  Social media is as extremely complex as the millions of different personalities who log on to its networks every day

There’s not a clear way of communication and the audience demographics are equally as fluid.  For example, while a news agency may post a piece about your product on its web site, the real story may be the debate raging in the explanation section. That then spills over onto other sites. While social media metrics include clicks, comments, follows, likes, pins, posts, and tweets, those actions may or may not interpret to sales.  In fact, if giving your sales an immediate boost is the only reason you’re on social media, then you’ve missed the point.
 

Set Social Media Goals
 

Once you appreciate how the social media platforms work, it is time to build your social media goals. You already understand that there is not a straight line to sales through social media. So what goals should you set?
 

1.    Build Brand consciousness
2.    Grow your Customer Database 

3.    Boost Sales
 

Make sure you know what your business baseline is before you begin advertising on social media platforms.  When you add social media to your marketing mix, start with one network so you can better measure presentation.  Don’t only tweet coupon codes.  Social media is about engaging your audience.  Share company stories, profile employees, initiate conversations, and thank customers.  Don’t forget to make it easy for potential customers to click through to your Web site. Just like that!
 

The Social Media ROI Formula  

               
If you know your business baseline before adding social media, then any augment in brand awareness, database activity, or sales after tweeting and posting can be attributable to social media.  Is it an exact science?  As you try to quantify your social media activities, remember that the return on your investment may be further down the road and only evident if you give to the social media ride.
So what’s the actual formula? Wiki How gives us a couple examples, but here is the one we use:

Calculate New Customer Value using Social Media (N): This includes the sales, conversions, business to business transactions (B2B), contact value, and placing a value on these things. Add them all to get new customer value.

Calculate User Lifetime Value: Here you include the costs that you forgo to retain a customer plus the profit that you gain as a entire, while endorsing your brand to keep a customer. (It’s like losing a little to gain more and adding the lost and the gained)
Here is a formula on how to work out user lifetime value:

User life span value (U) = (Gross distribution per customer) X Σ (yearly retention rate)^i / (1+ yearly discount rate)^i – (Retention cost per customer per year) X Σ (yearly retention rate)^p / (1+ yearly discount rate)^p+0.5

i.      Where Σ runs from i= 0 to n in the first set while in the second set Σ runs from p= 0 to n-1. Here ‘n’ stands for the number of periods used in the calculation.

Calculate Impression Value: This includes the simple costs that are used to impress customers via social media to ensure a quick viewership or membership.( These are usually PPC ads)  Here is how to calculate it:

•    To calculate Impression value (I) = (Add up all impressions from Twitter, Facebook, You tube (Cumulative views), website traffic and other online sources) X (Industry based cost per thousand impressions (CPM))/100

Calculate Customer Service Value: This includes the costs saved on customer service via social media. Add all these values to get customer service value (C). Add all the investment Returns: Investment Returns (IR) = {(Customer Value/ (Time Interval in years)) X Number of new customers + I + N +’’C’’}

Calculate Social Media expenses: This includes the amount you spend on social media during the time of your movement or just taking a specific campaign interval into consideration. Here are the steps on how to calculate the social media expenditure:

•    Hard costs: compute the hard costs which denote the work or costs associated with the actual project during the campaign or during a specific interval.

•    Soft costs: Calculate the soft costs which include the unseen work that composes the initial part of developing a project throughout the campaign.

•    Cost/Time spent: Unlike other investments, social media has a greater value when it comes to time spent on it. compute the money spent per time spent on social media during the campaign.

•    Sunk costs: Calculate the sunk costs involved during the campaign which include the costs that were required during a new addition or an internal fix during the campaign.
 

Social media expenditure (E) = Hard costs + Soft costs + Cost/Time spent + Sunk costs
Now, calculate your Social Media ROI using the formula: Social media ROI = (‘‘IR’’ – E ) / E.
Other Social Media Tracking Tools 

Following are a few social media marketing apparatus you can utilize to increase your social media ROI and build brand loyalty via an active social media presence. Here are a few new tools:
 

TrendKite

Based out of Austin, TX, TrendKite is a social media monitoring set up incubated by DreamIt Ventures. TrendKite’s founders are A.J. Bruno, Patrick Brannen, and Matt Allison. The TrendKite platform monitors everything from traditional media outlets to social media for brand mentions. The data gathered is then turned into statistical graphs for exporting to the suitable departments. Via TrendKite, brands can send anything from a PDF to a PowerPoint presentation to their marketing department, their community appointment coordinator, or even their investors. obtainable via demonstration request, TrendKite’s analytical graphs are highly engaging and informative.
 

 Ejenio
 

A establish based out of Montreal, PQ, Ejenio is currently in the invite only stage. Their social media monitoring platform will allow businesses to tackle status management in real time. The Ejenio platform will notify businesses instantly whenever their brand is mentioned on social media. Businesses can receive notifications either via email or via SMS messaging. With everything from actionable analytics to real time modified reporting, Ejenio is definitely a social media monitoring startup to watch.
 

GazeMetrix

GazeMetrix is a create that approaches social media monitoring from a different angle. The GazeMetrix platform monitors social media for brand images. Rather than searching sites like Pinterest, Twitter, and Facebook for keywords, GazeMetrix scours the internet for a brand’s images and then reports back to the business in real time. Incubated by 500Startups, GazeMetrix has received plenty of media (Forbes, Wired, The Next Web) and investor (500 Startups’ Paul Singh and Pankaj Jain) concentration. If you plan on taking social media monitoring seriously, GazeMetrix is definitely worth adding to your to-do list.
 

Local Report Tool

This tool is mainly unique as it not only offers a local visibility report it also gives you reviews, rankings and a complete social media monitoring part. For local companies this tool gives you the best of both worlds.

For a list of other tried and true social media monitoring tools I propose reading Small Biz Trends 20 Free

 Social Media Monitoring Tools
 

These are just a few of the tools you can use to make the most of your social media hard work. Increasing your brand’s social media ROI does not simply being more active. Rather than increasing the volume of your social media hard work, it is more significant to increase the quality of your marketing efforts. By engaging with potential customers that have already shown an awareness of your brand, you really increase the chances of converting a social media mention into an actual sale. By combining social media monitoring with exceptional customer service, your brand will be able to turn social network mentions into real sales leads.