Mar 2, 2015 - Android and web apps that will assist you in building your ROIM framework. I hope you will have a ... 1.6 Marketing: expense or investment?
Francisco Marco-Serrano
Making sense of social media ROI A short guide focused on sales, marketing and strategy March 2, 2015
Business Research & Applications Limited
Second edition: March 2015 ISBN: 1502985926 ISBN-13: 978-1502985927 © 2014 Francisco Marco-Serrano All rights reserved.
Preface
Years ago, my friend and social media consultant Benet Marcos invited me to prepare a 20 hour module on social media ROI for a professional certificate program. He wanted to evade from the smoke and mirrors that were circulating at the time about the topic and was looking to give a marketing and financial perspective to the subject. After the first edition, another first edition for another program, and a one hour seminar for SME owners, I found the real truth about social media ROI: it is not about the ROI of social media, but about the ROI of any business activity. SMEs seemed to lack of the basic knowledge (and practice) of strategy, marketing, and the most important factor when measuring the return on marketing (ROIM): a culture of measurement and data analysis. However, I did not see it as a threat, but a possibility, for improving the general knowledge on strategic management within the regional SMEs. According to the European Commission, this type of company accounts for more than 99% of the number of businesses, create two thirds of the private sector jobs, and generate more than half of the value-added by businesses in the EU. In the UK, the Federation of Small Businesses (FSB) states that SMEs account for 99.9% of all private sector companies, generating 59.3% of the private sector employment, and 48.1% of the total turnover. It is noteworthy that the FSB quarterly report on SMEs views on the macroeconomic environment reflect the skills shortages as a major challenge for growth. I wonder if this is a further expression of a significant generalized lack of management skills in the SMEs; no offense taken, the European Commission already took measures with the beginning of the Lisbon Strategy (yep, already an oldie!) in order to improve the management capacity building in these companies. So, I am not the first one to affirm that small and medium sized companies need to strengthen their strategic management, marketing, and finances. Nor I will be the first one stating that you need to understand them before you design your social media strategy. When I recall my first sessions on social media ROI training I hope I would have known this at the time, so I could have adapted my speech and approach in the early stages of the development of the social media ROI measurement methodology I was exploring. Wasted time? I don´t think so! Just the natural development of science, I should say.
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Preface
Lesson learned: I am not going to carry on talking about social media ROI as if it was something unique and the savior of your business activity; I will get back to the concept of ROIM, focusing on the management strategy, commercial success metrics, and marketing strategy, all aligned to each other. The first foreseen benefit is the more foundational degree on the methodology. When the core concepts are unknown or obliterated, moving one step forward is made more difficult. The second benefit being a result of the former; as one commentator on the Amazon page for the first edition of my short guide on social media ROI pointed out, the vast majority of my methodology was also valid for R&D, sales, total quality, etc. She was right, but that does not take out the need for knowing about strategy, sales and marketing before you get into measuring financial costs and outcomes. Anyway, more than a downside of the model, take it as a strength; when social media ROI will start to fade, I will be able to talk about the next one thing: the ROI of whatever. As per the style of this booklet, I come from academia and I have written some papers, books, and technical reports; however, when I faced the possibility of writing about social media ROI I though the target reader should not have many time for reading about it, that he would want to have a quick guide, or even he would be used to read short guides or just the executive summaries of long reports. These considerations, together with the fact that I wanted to produce something I could release like “yesterday”, induced me to write it in an essay form. In this edition I have expanded the contents, improved the methodology and added links to some Android and web apps that will assist you in building your ROIM framework. I hope you will have a good and profitable read! London, 15th February 2015
Francisco Marco-Serrano
Contents
1
Basics for understanding ROI in social media . . . . . . . . . . . . . . . . . . . . . 1.1 How social media can create value . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2 Why you should measure your social media ROI . . . . . . . . . . . . . . . . 1.3 How to apply the Balanced Scorecard to your social media strategy . 1.4 Nine areas of your business you should empower using social media 1.5 Things to do before writing your social media plan . . . . . . . . . . . . . . 1.6 Marketing: expense or investment? . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1 1 2 4 5 6 10
2
Social Media ROI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1 Defining social media ROI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2 Why is so important to measure the ROI of social media? . . . . . . . . . 2.3 How to measure and calculate social media ROI . . . . . . . . . . . . . . . . . 2.3.1 Costs in social media . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3.2 Benefits of social media . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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3
Measuring Social Media ROI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1 Three concepts for mastering social media ROI measurement . . . . . . 3.1.1 Causality vs chance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1.2 Marketing-mix (again!) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1.3 Sales funnel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2 Social selling: a new customer journey? . . . . . . . . . . . . . . . . . . . . . . . . 3.3 Are you converting social leads into sales? . . . . . . . . . . . . . . . . . . . . . 3.4 The social media ROI indicator you cannot forget . . . . . . . . . . . . . . . 3.5 Is it possible to measure social selling, then? . . . . . . . . . . . . . . . . . . . . 3.6 Brand equity: branding is a measurable ROI . . . . . . . . . . . . . . . . . . . . 3.7 Social Media ROI: putting it all together . . . . . . . . . . . . . . . . . . . . . . .
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4
Conclusion: Social Media ROI in 30 sentences and an equation . . . . . .
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