Imagine this scenario with me for one moment. You wake up to check on your client’s social media account and find that fans and followers have increased by 500 seemingly overnight. That bright glowing orb in the sky is shining on this glorious day and your ready to get to work thinking how excited you are for the day to end so you can enjoy the evening at that fancy new sushi restaurant down the street. But then, your client calls and says, “We need to talk!”
You stroll into the office and see the CEO, CFO and the marketing manager in deep discussion. You close the door and are subsequently told they are stopping all of their social media initiatives. Dumbfounded, you start babbling like Charlie Sheen, spouting off something about 500 new ‘droopy eyed one armed children.’ You tell them you and their fans are WINNING!
You ask for an explanation and receive puzzling answers. Something about costs, shifting budgets to advertisements and other mumbo jumbo. Confused, you leave dizzy and wondering what happened. Then the sad realization hits you…It’s the numbers, stupid!
What you lean very quickly is that the numbers matter. I’m not talking numbers of fans, followers, re-tweets and mentions, although those soft metrics are very important. I’m talking numbers in conversions and sales. Im talking new leads. I’m talking ROI. In most cases, those are the numbers equaling the holy grail for marketing departments, CEO’s, CFO’s and owners of small and medium sized organizations. Community building, PR, engagement, they get it, but not as much as justifying expenditures that lead to revenue.
If that scenario seems all too real, the following are 3 tips for justifying social media now and beyond:
1. Create Integration and Alignment with Business Goals
We like numbers, we like fans, followers, mentions. If you’re like me, you jump up and down when they grow and grow fast. Yet, those numbers, as exciting as they are, in the world of marketing are, “soft metrics”. Soft metrics do matter; however, soft metrics that lead to referrals, leads and sales are the “Holy Grail”. The problem stems from assumption, and you probably remember the old saying about “assume”. This means, that if we generate more views, more fans, more mentions, surely we think they’ll lead to more sales for the company. The quickest way to get a social media initiative killed is to guess or assume.
Therefore, justifying social media marketing often times comes down to the ability to integrate and capture results that align with measurable organizational goals. Not social media goals, business goals. For example, if the goal is to increase eCommerce sales by 30%, you might work with your client to set an objective using use social media marketing to drive 10% of that. Then you can work with your client to devise the tactics that will influence those numbers through social media marketing.
- Integrate and align business goals
- Set realistic objectives
- Create tactics that help achieve the objectives
2. Connect the Sales Funnel
I love the word “anecdotal”. Yet, anecdotal in most organizations doesn’t fly too well. Every organization has a sales funnel. That funnel likely starts with driving awareness, influencing current customers and getting new prospects to well….BUY. If your client, even your own company is pushing social media, eCommerce, or even brick and mortar as a way of driving business, usually everyone wants to know where sales are coming from. That doesn’t mean that you’ll be able to know every time that social media was the driving factor, but you’ll be able to justify its use that much better.
From coupon codes, to Google Analytics, finding ways to connect the customer path to the sale can help you find and uncover the numbers and evidence you might need to show that social media works. You may need to work with your clients marketing, sales or IT departments to gather the data, but it will likely be in your best interest.
Let me add that the numbers and data will tell you a great story that help in other ways too. For example, lets say there were 2000 new visits this month to the sales page directly from say a combination of Facebook, Twitter and YouTube, yet there were only five purchases. A root cause analysis might suggest that social media efforts were highly successful, but there is a problem that resides with the sales page or other areas not social media.
- Determine the path through the sales funnel
- Create tactics that influence that path
- Measure each phase of the path from new leads to website visits and conversions
3. Document the Numbers
Want to really justify the worth of social media? Well now that you have connected conversions/sales to business goals and the sales funnel, now it’s time to document the numbers.
At a minimum, the formula you should calculate should include:
- Staff Time (or your time) in $
- Estimated Cost in $
- Cost of Outside Services (i.e. Design, Software, Writing, Etc)
- Media Buy (i.e. Facebook Ads, Google, Print, etc.
- **** Total the above and label “Marketing Investment”
- Revenue Per Sale
- Overall Revenue
ROI is typically expressed in a percentage. Now you’re talking numbers!
To calculate your ROI for social media, work this formula in Excel or other software:
(Net Revenues – Marketing Investment) / Marketing Investment X 100 = ROI%.
If you’re just starting a campaign, aligning with benchmarks (reasonable ones) can help you forecast and justify the costs of social media marketing.
A one off sale or promotion, especially through social media is often times shortsighted. What happens next month or next year? Again you may need some data from the sales, marketing or even accounting departments. Therefore, if you’re really ready to get tricky and really impress you might calculate:
- Lifetime value of a customer
- Acquisition cost of a customer
- Avg. price per purchase
We won’t get into the methods for driving sales, creating experiences and all the other integration that leads to referrals, sales and even customer retention; that’s for a whole other writing.
However, do not ever be surprised when caught of guard if you are ever asked, what is the value of a fan, follower, re-tweet or mention. When you can connect the dots of “soft metrics” to the numbers or Holy Grail…you likely won’t wonder as to why your social media initiative got killed…as in, “It’s the numbers….stupid.”