As you’d imagine, this is one of the questions we hear A LOT in the world of social media marketing. Sure, social media promotes engagement with your target market, yes it helps build brand awareness, but what about the bottom line?
How do we prove it works on a financial level? Anyone who doesn’t question the effectiveness of their marketing activity at a fundamental business level is setting themselves up to make poor investments, so let’s take a closer look.
Does social media really work?
In times economic uncertainty, fewer businesses are inclined to ‘take a punt’ on unproven marketing channels. The discerning MD or marketer needs to be convinced of real return on their investment, and rightly so. It is an unfortunate tradition that marketing budgets seem to be the first to be slashed during more challenging times; especially amongst SME’s. Ironically, these are the times when marketing is at its most necessary and perhaps at its best value.
The economic climate has, perhaps, driven interest in social media for business because it provides a very good value way of getting in front of the exactly the people you want to target (if done correctly, of course). Many businesses have tried their hand at crafting some kind of Facebook fan page or a Twitter account that tweets every 6 days to 104 followers. This is a waste of time. But although directors clearly realise the potential of a healthy social media presence; there are still many that require convincing of the true return on investment if they choose to outsource the beast to the experts.
This is the real nitty-gritty of the argument. For every social media agency whose business relies upon the return on investment of social media – this is the deal-breaker. Let’s try to make it simple.
“Prove to me that social media works” – Of course, all this really means is, “prove to me there’s positive ROI from social media”. Contrary to popular belief, social media is absolutely one of the marketing platforms that you CAN measure ROI. In fact, all digital marketing channels provide great scope to measure direct ROI amongst lots of other less tangible benefits.
Can I get a positive ROI from social media?
The fact is, how much return on investment is generated by social media depends on a multitude of factors; many of which are standard market and business forces, others are based on how the brand lends itself to the individual platforms. To name a few:
- Is the business B2B or B2C?
- How are you trying to influence sales? I.e. new customers, repeat buyers, increasing frequency or size of purchases?
- How visual and interesting is the product or service?
- How geographically specific is the company?
- How easy is it to target and get in front of your target audience?
- Who is tweeting for you? How good are they?
- Do they understand the brand and its voice?
- What software or management tools are they using?
- Is the brand already well-known and liked?
- How big is the company?
- How good is your competitors’ social media?
- Are the goals sales-driven or brand awareness and engagement-driven?
- Is there a market research element?
- Is it simply for SEO purposes?
Let’s look at two contrasting examples to highlight just a few of these factors:
1. Tesco. A massive national brand whose tweets will be seen by millions of followers. They have a wide target market. They can promote sales and offers and provide news and updates on the brand and individual stores. Every time someone enters the store they’re making £50 of sales. It makes the brand transparent, accountable and increases customer loyalty. Having a full-time social media manager to engage with their customers is a no-brainer – these guys turn over millions of pounds. They are going to make a return on social media investment whether it’s proven or not.
2. Mr Smith’s bakery in a small village: Very niche, local market. In competition with local supermarkets all with significant social media presence. They are tweeting to a handful of engaged people; the average age of customers is 65 – probably not even on Twitter. They probably make £2.50 every time someone enters the store. Brand awareness and loyalty are going to be marginally affected by social media engagement – probably best kept in-house.
These are two very different and simple examples of how good a value for money option social media management would be. You’re probably somewhere in the middle. The fact is, there are too many variables for anyone to guarantee any company return on investment of social media. There are also too many channels through which social media can drive sales meaning putting an actual figure on the return is nigh on impossible. There are, however, some great ways of measuring a good portion of the return on investment of social media – everything else is a bonus.
But how about at the results end? “You can’t guarantee a return on my investment so show me the return for your other clients.”
This is not a bad suggestion. Case studies prove useful, especially if you’re looking to outsource social media marketing and are unsure if your agency is reputable or has the right experience. If I can’t promise you a return; I can show that a company, very similar to yours, did. But, as I’ve alluded to already, proving this can be challenging depending on the product or service under scrutiny.
Remember, you can’t buy anything on Twitter (yet) – it’s not eBay. I can tell you how many people got to your site through Twitter, I can tell you how many people looked at the picture of your new office. I can tell you how many followers you have, how engaged they are and where they are. How highly do you value SEO? If social media has played a role in getting your business onto the first page of Google search results – how many sales is that likely to have generated? That a current customer decided to buy again because of the trust instilled in them by insightful tweeting – how do you quantitatively attribute that to social media?
It’s not easy.
But by looking at the growth in following and engagement of similar businesses, along with sales likely to be attributed to Twitter usage we can begin to paint a picture of its influence. Likewise, improved SEO for a company should be significant with good social media marketing.
There are a number of measurable factors – more depending on what the product or service is, but there are far more ‘black box’ effects. And it’s these that are hard to show to a client. Remember, Twitter is hailed as the ‘online word of mouth’ for a business; and how many businesses, for thousands of years, have relied upon that principle?
If your business is searching for a social media agency – ask to see case studies of current or previous clients that are applicable to yours. They should be honest about the stumbling blocks they encountered and how they overcame them. How will your business and its goals provide them with a new challenge? Ask to see client testimonials – do other business owners see the value in the service they received? Can they quantify it? Often it is only once a business has joined the social media bandwagon that they have realised its power and influence on the market.
Make sure that you are clear in what you want social media to achieve for your business and be prepared to prioritise these. Do you want sheer volumes of sales or traffic through your site? Is it for SEO? Are you just building brand awareness or loyalty? Importantly, be clear on how that agency is going to show you the results.
Remember that this is the time to make marketing count when your competitors don’t have the resources to do so. This isn’t the time to ‘take a punt’ on social media – it’s the time to cash in on it.