Social media strategy and ROI ... again!

A recent eMarketer study highlighted that an ROI driven social media strategy was needed before businesses can actually start to invest in and reap the rewards. It was pointed, based on the 2 facts below, that social media users are not seeing the profits as anticipated and that there was a lack of data to support investments:


*  Only 35% are reported to have profited from social media through increased leads – these are also the ones who would invest in a social strategy and have staff dedicated to analyzing social media efforts.
*  The biggest hurdle to social media strategy is the lack of data to measure the ROI and a subsequent executive buy-in for greater investments – nearly 60% cited these as primary reasons for implementing social media strategy.

These are telling facts!

I maintained in this blog that measuring social media can be challenging purely in terms of an ROI model (net of revenue and cost), simply because the scale is not there for a typical business (in my experience). Instead, we need to utilize social media as a means to other insights (users and product) that may contribute to improving ROI through more traditional media – ones where we can easily setup a model to quantify revenue and cost for a net return (my earlier post on this topic:  http://www.analyticsheaven.com/2010/03/measuring-social-media-user-vs-product.html). 


I believe the social media efforts need to be looked at as pure investment into the future. The immediate benefits can be had from sampling and testing approach I proposed in the above post. Let’s look at social media data to learn more about our products, consumers and competitors, so we can make better decisions about our current marketing efforts. Hint - the consumers may tweet about a certain product feature they don’t like; certain types/demographics of consumers may be more interested in the brand/product; there may be a buzz about the competitive offerings that may need more attention; and so on.

Building the intelligence model from social media may be a simpler way to look at the ROI than trying to build an ROI model which, as the report highlighted, may not be easily done due to lack of data and appropriate mathematical model. 


Other insights, ideas ... please share!

Social media can drive ROI ... NOW!

Even as companies try to understand how to generate revenue out of their social media campaigns, there are other ways to define the ROI. Let us first simplify the dynamics of the social media – a whole lot of people sharing, commenting and blogging about their likes and dislikes. The positive – we are learning a lot about our users. The negative – our users are highly fragmented in every which way possible. So, how do we go about making sense of the feedback through social media and communities? After all, 10,000 visits from Twitter into our site that gets an average 5MM visits a month is not going to move the needle in revenue or traffic terms - for the most part that is the scale of variance we are talking about!

So where and how can we apply the findings for a greater return?

Presence in social media was often promoted as a way to build your brand recognition and image. However, marketers and product managers can utilize the data more robustly to develop new products and targeted campaigns. Consider social media as focus groups that are providing valuable insights into your products and services, albeit on wider and less cohesive manner than traditional focus groups. But herein also lies the advantage – if we can categorize the data into viable and logical buckets that best define our user base, we will have a much more specific knowledge that can be used to develop targeted offerings.

For starters social media findings (demographics, geography, product like/dislikes, interests, etc.) should be categorized into user data and product data. Product managers should work with analysts to define the current and future needs of the consumers, while marketers should think more targeting and localization of their campaigns. Take for example a shopping site – users look for latest offers, research about and seek approval for their next purchase, share the joy and frustrations from their new product, etc. – all the while also seeking for a relevant and targeted experience that caters to their whims and fantasies. If we can take the data from the social media voices of our consumer, we can make appropriate product tweaks, provide targeted offerings, edit our website navigation, make product related recommendations for up-sell/cross-sell, create more localized and focused experience, and so on.

The ROI of social media efforts would then be in-built with the ROI of product and marketing efforts, which will be a much more positive story, than the few hundred clicks it may be generating to our website. And, if positive word-of-mouth was to be factored in, our social media presence will find more internal support and add more to our P&L’s bottom-line.