target="_blank" rel="nofollow" href="#fb3_img_img_150f030a-1c7e-5fe7-a48b-ad16b537e0fd.png" alt="Remember"/> Whatever you plan for online marketing, it will cost twice as much and take twice as long as anticipated.
A social media service is likely to produce results only when your customers or prospects are already using it or are willing to try it. Pushing people toward a service they don’t want is difficult. If in doubt, first expand other online and offline efforts to drive traffic toward your hub site.
Chapter 2
Tallying the Bottom Line
IN THIS CHAPTER
In this chapter, you deal with business metrics to determine whether you see a return on investment (ROI) in your social media marketing services. In other words, you get to the bottom line! For details on performance metrics for various types of social media as parameters for campaign success, see Book 9.
By definition, the business metric ROI involves revenues. Alas, becoming famous online isn’t a traditional part of ROI; it might have a public relations value and affect business results, but fame doesn’t necessarily make you rich. This chapter examines the cost of acquiring new customers, tracking sales, and managing leads. After you reach the break-even point on your investment, you can (in the best of all worlds) start totaling up the profits and then calculate your ROI.
To get the most from this chapter, review your business plan and financial projections. You may find that you need to adjust some of your data collection efforts to ensure that you have the information for these analyses.
You don’t want to participate in social media marketing for its own sake or because everyone else is doing it. The following sections help you make the business case for yourself.
Preparing to Calculate Return on Investment
To calculate ROI, you have to recognize both costs and revenue related to your social media activities; neither is transparent, even without distinguishing marketing channels.
Surprisingly, the key determinant in tracking cost of sales, and therefore ROI, is most likely to be your sales process, which matters more than whether you sell to other businesses (business-to-business, or B2B) or consumers (business to consumer, or B2C) or whether you offer products or services.
For a pure-play (e-commerce only) enterprise selling products from an online store, the ROI calculation detailed in this chapter is fairly standard. However, ROI becomes more complicated if your website generates leads that you must follow up with offline, if you must pull customers from a web presence into a brick-and-mortar storefront (that method is sometimes called bricks-and-clicks), or if you sell different products or services in different channels. Table 2-1 provides resource sites that relate to these issues and other business metrics.
TABLE 2-1 Resources for Business Metrics
| Site Name | URL | What You Can Do |
|---|---|---|
| Hootsuite |
https://blog.hootsuite.com/measure-social-media-roi-business/
|
Measure social media success. |
| Harvard Business School Toolkit |
http://hbswk.hbs.edu/archive/1262.html
|
Use the break-even analysis tool. |
http://hbswk.hbs.edu/archive/1436.html
|
Calculate lifetime customer value. | |
| National Retail Federation |
https://nrf.com/resources/retail-library
|
Research, news, and white papers from the NRF’s digital retail community. |
| Olivier Blanchard Basics of Social Media ROI |
www.slideshare.net/thebrandbuilder/olivier-blanchard-basics-of-social-media-roi
|
View an entertaining slide show introduction to ROI. |
| Accounting for Management |
www.accountingformanagement.org/target-profit-sales-calculator
|
Target profit sales calculator. |
| HubSpot |
https://blog.hubspot.com/service/what-does-cac-stand-for
|
Calculate customer acquisition costs. |
|
|
