In today’s social-minded enterprise, it is imperative for digital marketing to show executives ROI to support their social media efforts. Is your social media marketing team delivering content strategy—driving Facebook likes, as well as Twitter followers—without substantiating marketing spend against a demonstrated ROI? If so, this is a strategy for failure.
An article in pcmag.com explains that the value of Facebook fans, versus Twitter followers may vary based on a number of factors, such as how active the company is on social media and how much a user interacts with the brand. They further ask if your business is capitalizing on these fans and followers. Are you?
Define your business outcomes
What is the goal of your social media efforts? Brand promotions, awareness or gaining likes and followers are a focus of many organizations. Spend more time listening, building relevant thought-leadership and engaging content—while optimizing your efforts through paid ads.
Whether your company is a product or service, tell your audience why you matter, the value proposition to listen to what you have to say, and how you will enhance or improve their lives. Most social media leaders understand that social media is for listening— however you can be a welcomed advertiser, with the right tactics built into your digital marketing strategy.
Targeting your social engagement efforts
Facebook provides your business with the ability to customize branding with custom landing pages, fan contests, and paid ads placed in user timelines. Targeting can be varied according to demographics, geographies, and specific interests. You can then add a private list of your current customers to Facebook using custom audiences and then use lookalike audiences in the Ad Create tool to find other people who are similar to them.
When you create an ad using the ad create tool, use “interest targeting” to reach people who already like or have a connection to other things on Facebook that are similar to what you’re offering.
Twitter offers different promoted tweet campaign structures to increase engagement between users and advertisers with targeting by keyword, user gender and interests, device, geographical, and user ID. Twitter rolled out New ways to create and use tailored audiences providing advertisers experiential promoted tweet campaigns, and the ability to target lists of Twitter IDs—either usernames or user IDs.
Best-in-class companies now spend more on creating targeted content for their buyers’ journeys, and tracking this journey on social media, it is critical to use marketing automation tools. Twitter has partnered with the following CRM companies to integrate customer data into paid Twitter campaigns: Acxiom, Datalogix, Epsilon, Liveramp, Mailchimp, Merkle, and Salesforce ExactTarget.
If your organization is willing to put in the effort to establish meaningful goals — to collect and analyze social media data and social site metrics — it is possible to discover the value of your brand’s social media relationships.
What is the value of a Twitter follow, or a Facebook like?
The data from pcmag.com shows that a Twitter follower is worth about $2.00, where as a like on Facebook is valued at $8.00. In raw form, does this present a real value for your business? What further value can be provided to your company beyond a follow or a like?
Harvard Business School Publishing provides an excellent tool called the CLVC, or Customer Lifetime Valuation Calculator that can be used to discover a value for likes or followers once they move through your marketing funnel, and tracked from social media as the source.
To accurately use the CLVC, your business will need to determine these key data points:
• The average size of a basket size (avg. spent per purchase)
• The average number of purchases per customer each year
• The cost of goods sold per transaction (FIFO, LIFO, or cost average)
• The fixed overhead cost per transaction excluding marketing
• The average one-time customer acquisition cost
What is the customer value?
To be clear, the cost of acquisition and cost of goods sold (using FIFO, LIFO, or cost average), varies per type of business; whether e-commerce, brick/mortar, or hard/soft goods. The examples provided show how to determine customer value via acquisition method.
For example, let’s use an online retailer with an average basket size of $200, a combined cost of goods sold and non-marketing overhead of 40 percent. Research shows that an average online customer completes two purchases per year. Using this information, the estimated value a new customer is then $320for the first year—$400 x 0.4 x 2 = $320.
From $320 annual value subtract the average cost of marketing and customer acquisition. These costs will either be pay-per-click (PPC), ad spend on social media marketing (SMM), or the time invested by employees on social media sites to post, share, tweet, or engage. Take the time spent, and then subtract acquisition cost. If the average acquisition cost for each new customer is $55, your customer value for the first year is $265—First year customer purchase value of $400 x 0.4 x 2 - $55.00 = $265.
Each year thereafter, you would only calculate in a marketing retention cost—on average about $25 per customer—for a retained customer value of $295.
Considering a customer stays loyal —on average— for 2.5 years, this customer’s value is $707.50— $265 the first year, $295 the second year, then $147.50 for 6 months in the third year.
Putting it all together
The ROI is not simply on likes, followers, and social engagement—these results really just measure progress. Make the ROI discussion specifically about social media initiatives that are generating meaningful impressions, clicks, and signupsthat lead to qualified leads.
Remember: Your recipe for success is to create tweets and posts that are interesting and valuable to your customers—posts, tweets, and engagement in your messages that target the right audience, further improving ROI over time.
Manage social media correctly, and you’ll worry less about social media receiving the credit it deserves, and enjoy more social engagement benefits at the forefront of your organizations digital marketing strategies.