How to Measure Social Media Return on Investment for the Complex Sale

social media how toAre you trying to figure out how social media is impacting your bottom line? Are you already measuring but not seeing the results you had hoped for?

One of the reasons measuring the return on investment (ROI) of social media has sparked so many discussions is because it’s not easy. The main barrier to end-to-end measurement is the lack of a true social customer relationship management (CRM) solution.

While Salesforce and others are working hard to bring a full solution to market, many marketers are simply cobbling together data they receive from web tracking solutions and social monitoring solutions.

Unfortunately, this will only give you pieces of the story. Those with proprietary CRM systems will have the toughest hurdle, which is a challenge I have personally faced.  In the short-term, the only hope is to integrate tracking cookies on your site and work with a development team to integrate with your CRM.

However, you can build an effective measurement strategy if you take a holistic view to social media lead generation. Here are four tips to make sure you are measuring the full impact of social media on your bottom line.

#1: Define Your Inputs for Lead Generation

In order for any type of measurement strategy to be effective, it’s critical to determine which key factors should be included. From a lead generation standpoint, there are two key lead generation inputs.

  • Indirect and Direct Response Conversion Points—These may be different based on your business model, but generally speaking, you would want to measure those who filled out your lead forms. These would then be given a lead score that defines the prospects’ interest level. Then you would break these scores into meaningful ranges and measure your social prospects within each range. Specifically look for the number of leads and the growth rate in each range.
  • New Business Campaign History—This is likely one of the most undercounted areas where social media plays a large role. Look at all of your new business for the month against the campaign history that has been reported in your cookies. How many times was social media an “assist” at any point in the campaign history leading up to the sale? How many times was social media the direct “conversion point” for the sale? How many times was social media the “originating lead source” for the prospect? Are these numbers growing at a healthy rate? If not, where do you need to adjust your strategy? Define a dollar value for different points in your lead cycle, define the costs for those efforts including the staff time required to execute and see where social media is showing the most impact for ROI.
measuring the new business campaign history

Add the social media "assist" to your ROI reporting.

#2: Use Lead Scoring to Place Leads Into the Proper Place in the Sales Funnel

When marketers talk about measuring the ROI of social media, many consider it a very cut-and-dried discussion. Either social media is delivering profit to the company or it isn’t.

While I agree with the premise, I also recommend that you take a step back before you make decisions based solely on numbers.

We discussed using lead scoring to define where customers are in the buying cycle. While there are likely very lengthy formulas for lead scoring that companies are using, I’ve found the best approach is the K.I.S.S. (keep it simple, stupid) philosophy. Break your leads into three distinct pools of prospects. Define timeframes for conversion based on your business and the standard buying cycle.

  • Slow—These prospects are likely in the pre-research/awareness phase. They find what you say interesting and they want to follow it, but they aren’t looking for a solution right now. You want to stay top of mind with these prospects for when they are ready to buy, but you don’t want to invest a lot of time from your sales force. This is a great opportunity to send these leads your relevant FREE content at some regular interval that isn’t annoying, but enough that you don’t fall off the radar.
  • Medium—These prospects are in the research/consideration phase. They are looking at products to be considered as a solution. You want to find the tipping point for these prospects to move them into the next stage in the funnel. It is likely that most of your marketing dollars get spent converting these prospects.
  • Fast—These prospects are in the decision-making/buy phase. They want a solution and they have a clear time frame for when they need it. It is likely that most of your sales team spends their time actively working these prospects. Generally, marketing takes a back seat on special marketing offers in order to not “delay” the sale.
defining the sales funnel

Integrating lead scoring into your sales funnel.

This gives you a framework for what you want to measure along the way. For it to be a true measure of ROI, you have to compare the cost of social media efforts against the revenue brought in for each point in the campaign history and the cost associated with converting each range of lead scores.

#3: Understand Where Social Media Efforts End and Sales Efforts Begin

Why are these different points in the buying cycle important to social media measurement? Because social media is just another lead generator. Once the lead comes in, your normal sales process takes over. That process may include marketing efforts and sales team efforts.

However, if you are reaching prospects at the pre-research/awareness phase with social media and you do not have marketing programs or sales processes to support it, you may cut bait on the only marketing effort that is touching this group. A hard-sell approach with slow prospects risks losing their business forever. Before you write off social media as not delivering the ROI you anticipated, make sure to review your sales and marketing efforts.

If you don’t have an awareness program as part of your strategy, it could be the reason you aren’t converting these leads. Evaluate social media for the value it really brings to the table and make sure you don’t overlook some of the areas where social media is already delivering ROI to your company.

#4: Ask Yourself Where You Need to Optimize Your Social Media Lead Generation Efforts

Here are some key questions to ask when evaluating your social media efforts:

  • Is there a bottleneck in your lead funnel? Review where leads are getting caught and reevaluate your approach.
  • Are you able to convert leads at the same or lower costs than other channels with social media?
  • Do you need to stop any activities that are causing leads to fall out of the sales funnel?
  • Are you reaching people at points in the buying cycle when other channels can’t?
  • Are you placing more people into the sales funnel at a lower cost? At what rate is it growing?
  • Have you aligned your sales process with leads that aren’t ready to buy today?

This post is just a starting point for discussions around ROI measurement. There are many variables specific to each company that make it difficult for generalizations to provide a solution.

Related Posts:

What are your thoughts? How are you measuring? Are you measuring the social “assist” in your organization? Do you have marketing messaging, marketing campaigns and sales processes that cater to the research/awareness phase?

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About the Author, Nichole Kelly

Nichole Kelly is the president of SME Digital, the digital marketing division of Social Media Explorer. They provide digital marketing strategy, implementation and measurement using the Full Frontal ROI methodology. Other posts by »




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  • http://www.socialcubix.com/ Facebook Apps

    There is no doubt that the ability to measure social media ROI is of infinite importance to a business.

    Thanks for posting this useful information!

  • http://dinodogan.com/ Dino Dogan

    Great handling of Social Media ROI…Even tho Im much more interested in Social Media’s right brain, this left brain post was awesomely revealing. Thnx Nichole.

  • http://twitter.com/StartupSidekick Jason Sullivan

    Smart article Nichole. When you quantify the process of visitors to leads to customers, you can identify an ROI amount. This amount can then be incorporated into your overall company value. You laid out the topic very clearly, and made it applicable. Thanks

    Jason
    http://www.facebook.com/pages/StartupSidekick/148793365130702 (Follow us on Facebook for more entrepreneurial advice)

  • http://www.bizchickblogs.com/ Tia Peterson

    This is really good information and very helpful. #3 is probably the most crucial for every company – and the hardest to tackle in terms of mindset as well. Many companies look to newer and better marketing strategies (like social media promotions/relationship building) to bring leads, but neglect to fix the issues that deter sales no matter how many leads are generated.

    Good post all around. Thanks!

  • http://CarlaJGardiner.com Carla

    Even though parts of this post went flying right over my head, it made me realize that my business just isn’t at this point yet. So, I will continue to work, learn and implement strategies and tips handed down through experts like you. Thanks for the info, good stuff and keep it coming.

    Carla J Gardiner

  • http://twitter.com/littlesMandC Sarah Lanphier

    It all comes down to the nature of the product you are selling. It is much easier to track ROI on consumer goods by running specials and coupons exclusive to social media. Ongoing services or larger purchases that require a great deal of follow up service, can track their savings as a measure of ROI (ex. reducing customer service wait time, discovering problems before they become catastrophes and monitoring the perception of their image). Social media needs to be looked at in the scope of your particular industry, goals and reach.

  • http://virtuallyspeaks.com Michelle

    Thank you very much for your insightful post…it’s is very helpful and will be beneficial when discussing this very topic with clients. I liked most that often the marketing efforts are cut-off at the awareness phase..lack of relationship building is truly impactful. I get very turned off when someone on twitter or FB is trying to sell to me and NO relationship building has taken place. I expect that these days!

  • Kate

    I think part of the challenge is that you cannot really ever know whether SM was the original source of the lead, or a supporting touch point. If your marketing activity or campaign is multi-channel, you’ll find it very hard to identify what lead to what.

  • http://daviddoolin.com/ Dave Doolin

    This looks like work!

    @kate – I suspect the problem will have to be dealt with statistically. But that’s a hard problem too.

  • http://twitter.com/Nichole_Kelly @Nichole_Kelly

    I’m so glad you enjoyed the post. Thank you for your comment.

  • http://twitter.com/Nichole_Kelly @Nichole_Kelly

    Thanks for your comment Dino. I always appreciate your perspective. Although, sometimes the left brain likes to come out and dance a little too! ;-)

  • http://twitter.com/Nichole_Kelly @Nichole_Kelly

    Thank you so much for your feedback Jason. I’m thrilled that you found the article useful.

  • http://twitter.com/Nichole_Kelly @Nichole_Kelly

    Tia – I agree with you 100%. #3 is definitely the most overlooked and I’ve found the most difficult for companies to evaluate objectively. However, like you said it is the most critical and many times the quickest way to convert the new type of leads that come through social media. I really appreciate your comment and I’m so glad you enjoyed the post.

  • Nichole_Kelly

    Carla – Thank you for your comments. Many businesses may not be in a position to do this level of in-depth measurement. It is really best suited for mid to large businesses who have fairly sophisticated measurement in place, as executive teams who are accustomed to having metrics for every marketing initiative are beginning to demand them from their teams. What is important for the smaller business is to build relationships with customers and prospects using social media, the rest will fall into place. I’m so glad you enjoyed the post.

  • Nichole_Kelly

    Sarah – I couldn’t agree more. Consumer goods with offers and specials are very easy to track due to coupon codes etcetera. However, you can track service related products and B2B goods through the use of cookies on your site. If you take a look at companies like Eloqua and Marketo who provide marketing automation solutions and tie it into a product like Salesforce you can pretty quickly get an end-to-end measurement solution. But like any solution there are limitations to what you can get “out of the box” as they say. There definitely isn’t a one-size fits all approach that will work with social media measurement, it really needs to be customized to meet the needs of each company. Thank you so much for your comment.

  • Nichole_Kelly

    Michelle – Thank you so much for your comment. I’m so with you…try to sell me something on FB or Twitter and it’s pretty much an immediate unfollow. However, I’ve also experienced the opposite where I tweet that I am LOOKING to buy something and need a recommendation or need a firm that specializes in what I need and get little to no response. We are creatures of habit, we love to buy but definitely hate to be sold! ;-)

  • Nichole_Kelly

    Kate – You are absolutely right it is very difficult to determine the originating lead source, especially if a lot of your promotions/sales process happens off line. If any part of the process is happening on-line I’ve been able to accomplish this through the use of cookies on the site and have worked with our business intelligence team to establish a report of the “full” campaign history so I can see where social media fits in the sales conversion process. I am dealing with proprietary systems so it required some custom web development, but for those using some of the larger standardized CRM systems this is not as difficult as it may sound. Thank you so much for your comment.

  • Nichole_Kelly

    Dave – Thank you so much for your comment. It definitely does take work to set up a measurement system like this, which is why it is most appropriate for the mid to large business who has the resources to invest in an end-to-end measurement system. For many of those types of businesses social media measurement becomes a modification to an existing system, rather than having to build from scratch. But I will say that once it is set up and the numbers start to come in it kind of makes you want to sing a little! ;-)

  • Stephanie Baffone

    Loved this! Thank you for sharing such useful info!

  • http://www.smm3.org/socmediator Andrei Kamarouski

    Nichole! Thanks for this applicable topic from Belarus SMM strategist!
    I have seen a topic in Russian about concret scoring matrix.
    Reason: the more social engagement level between customer, the higher score.
    Example: 1 for subscribing, and 10 for video sharing.
    Thanks! Sorry for mistakes :)

  • http://twitter.com/howardcshen Howard Shen

    Thank you for this Nichole! :)

    Sure to measure things up at my hub!

    My new post:
    HOW TO: Determine Your Social Media ROI

    Keep it up,
    Howard

  • http://www.expion.com/ EricaMcClenny

    Great points customers and their sales cycle but what about the employee and HR benefits of social media? I’m a big believer in local employee involvement. It builds instant retention when an employee feels valued and it also gives a local flare to the conversation. It’s an ROI that is over looked often.

  • Nichole_Kelly

    Stephanie – I’m so glad you enjoyed the post. Thank you for commenting.

  • Nichole_Kelly

    Andron – Thank you so much for your comment. I’m a big believer in lead scoring. It’s just a matter of tying activity to what is important to the business to create the right scoring model. However, that can be a challenge in and of itself! ;-)

  • Nichole_Kelly

    Howard – Thank you so much for commenting and linking to the post on your blog. I’m so glad you found it useful.

  • Nichole_Kelly

    Erica – You are absolutely correct that allowing employees to participate in social media could lead to higher retention rates and it is absolutely overlooked in the metrics many talk about. I’d love to hear your thoughts on how to measure this and where you would place it in the company’s value proposition for social media!

  • http://www.expion.com/ EricaMcClenny

    Nichole, every vertical will have different results but businesses like restaurants, retail or MLM’s have very high attrition rates that they’ve tracked for years. I started thinking about the hidden HR benefits about 6 months ago when a CEO of a CDR we’re working with spoke up during a presentation I was hosting and said “Social media will make me look cool to my employee’s…”

    It caught me off guard that “coolness” was a reason he’d consider it but it was true. His company’s brand was really getting hammered. He was trying to make a comeback and bring in a younger crowd while also slowing the turnover of staff members.

    So after 6 months of a social media participation, their attrition rates among managers who are active is dropping. This particular group only has 1/3 of their locations “live” with Facebook pages but I’m going to continue to track employee sentiment and attrition as our client expands. Unfortunately, this isn’t an ROI that you can show in 30 days but it is measurable. The verbal feedback that I’ve heard directly from employees is all positive. They feel entrusted with driving marketing and sales into their store. It’s not just a TV commercial that’s intangible to them.

    I’d be happy to catch up again on this topic. Maybe we should do a tag team article about employee sentiment and attrition rates in socially active companies vs. non active!

  • http://barnraisersllc.com/ Rob Petersen

    Nichole,

    Thanks for posting. As SME says, the #1 questions people ask about social media is how to measure ROI. This posts tackles the issue head-on, thoughtfully and measurably.

  • Nichole_Kelly

    Erica – Wow. This is a really interesting perspective. I would definitely like to catch up more on this topic. I am in the process of putting together an action plan to consider allowing more employees at my company access to social media sites and I would love to have more details based on what you are suggesting. Please DM me on Twitter and let’s set up a time to chat.

  • Nichole_Kelly

    Rob – Thank you so much for taking the time to post a comment and your kind words about the article. I’m so glad you found it useful.

  • nchou

    Excellent article, Nicole, with the key being, it’s easy to forget social media is a just another lead generator and once the leads are in, a business’ sales process takes over. Social media is not a replacement for a sales process, particularly when it comes to complex B2B sales.

    .

  • http://www.tweettronics.com/ Jen Charlton

    This is a great post on starting to understand ROI. There is so much developing (and so quickly) around social media, that businesses are still trying to understand how to maximize the value of campaigns for lead generation & sales. Not sure which tools you use for social media monitoring but I thought you’d be interested in checking us out at Tweettronics: http://www.tweettronics.com/ We measure and monitoring campaigns on Twitter for agencies, with reach, influence, impact and sentiment analysis. Try us out and enter TwitterMetrics for a free trail!

  • Nichole_Kelly

    I just added a download of my social media ROI dashboard on my blog. If you’re interested in seeing the full dashboard and excel download, be sure to check it out. http://bit.ly/bZRkPu

  • Nichole_Kelly

    Absolutely @nchou. I’m so glad you found the post useful.

  • Nichole_Kelly

    Jen – Thank you! I’ll definitely check it out!

  • http://twitter.com/johnflynn50 John Flynn

    A key part of any marketing campaign is that the vendor is prepared to receive the new business. If your staff and business is not ready getting no leads will not help and could hurt your small business. http://www.inboundinternetmarketing.com

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