Olivier Blanchard\'s Basics of Social Media
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This document outlines the process for justifying social media investments using ROI analysis. It discusses how social media requires an allocation of limited resources like people, technology and time. It then walks through the steps to prove that social media is generating cost reductions or revenue increases for the business. This includes establishing baselines, creating activity timelines, measuring sales and transactions, identifying patterns between social media activities and business metrics, and ultimately calculating ROI to determine if the investment is generating enough returns. The example shows a company that sees increased sales, transactions and customers after implementing social media, but still needs to work on driving more store traffic to fully optimize their social media programs.
Olivier Blanchard\'s Basics of Social Media
- 1. Enough withthe Social Media BS.Give me the realz.Social Fresh Conference // 24 August 2009
- 2. SOCIAL MEDIA IS NOT FREE.
- 3. 1. It takes people.
- 4. 2. It takes technology.
- 5. 3. It takes time.
- 6. We have rocks. all of which are limited resources.
- 7. These resources=100%of your budgetE-MarketingEach resourcehas a specific costHead CountAdvertisingI.T.Inbound Call CenterEach resourceyields specific resultsMarketingSales Dept.AccountingPublic Relations
- 8. These resourcesgenerate100%of your businessE-MarketingLosing even 1% of your budgets efficiency could seriously ruin your day.Head CountAdvertisingI.T.Inbound Call CenterMarketingSales Dept.AccountingPublic Relations
- 9. Okay fine. But if Im going to take a chanceon this social media thing,it had better make good businesssense! Why should I allocateresources to it?
- 10. Reason #1:It will result in a cost reduction.Maybe in customer service?You mentioned something aboutbusiness intelligence andmarket research?Reason #2:It will generate more revenue.I want more transactions, more net new customers,more customer loyalty,etc.
- 11. Now go figure out whatProgram you have to cutto fund this Social Media thing.Remember that our bonusesare on the line.
- 12. Understand that a newSocial Media programsfunding doesnt appearout of thin air.:Which buckets do we emptyto fill this new one?
- 13. SAY HELLO TO:Business JustificationR.O.I.
- 15. THE R.O.I. EQUATIONInvestmentExpectation of return
- 16. THE R.O.I. EQUATION(GAIN FROM INVESTMENT - COST OF INVESTMENT)ROI =COST OF INVESTMENT
- 17. Truth about R.O.I.ROI is a business metric, not a media metric.ROI is 100% media-agnostic.Only measuring digital or social wont get you anywhere.
- 18. Reason #1:COST REDUCTIONReason #2:REVENUE GENERATIONRemember what Mr. Bossman said
- 19. I shrank my PR budget by 20%and my outbound call budget by 40%.Now I can afford a team of social mediaRock stars. Can I get a hellz yeah?Okay, hotshot,You have your Social Media doohickey.Now Id better see some real results!Or else
- 20. Woohoo!I have a job!!!
- 21. Dudes, we are ON THIS!!!Lets start engagin!!!I call dibs on theCorporate blog.
- 23. What about ourTwitternets?Oh my! Look at all the newvisitors to our website!and all of our FaceBook friends!Hot Damn, we even have comments on the blog!
- 24. This rocks!I never had it sogood!!!
- 26. Yeah butWhat aboutthe P&L?Monitoring to baseMonitoring to baseOur Google Analytics are throughthe roof! Even our social mentionsare wicked good!We have liftoff!
- 27. Measuring mediareally rocks myworld.
- 29. What kind of mood is The old man in today?Not good.He doesnt care how many visitorsthe website gets, or how manyeyeballs we estimate weve reached unless it means were sellingmore stuff.
- 30. But why?Our website is getting mad hits, Jack!And we have 3,000 followerson Twitter now!Im sorry, son.If your Social Media programis generating revenue, we arentseeing it. We need to allocate resources where we canmake money.Its just business.
- 31. Darn it.This media measurementstuff isnt working.We need to starttying this stuff to actualBusiness performance.Where to start?Lets seeAt the beginning?
- 32. Things happen in sequence.
- 33. Non-financial impact is not ROI (yet).
- 34. Types of non-financial impactCustomer complaintsWebsite VisitorsImpressionsPositive pressClick-throughsYouTube viewsRetweetsCoupons distributedVisitors to a brick & mortar storePositive WOMDelivered emailsNegative pressNegative WOMEmployment applicationsBlog commentsFaceBook friendsSocial mentionTwitter followers
- 35. Non-financial impact = potential.
- 36. ROI = actualized potential.
- 37. Reason #1:COST REDUCTIONReason #2:REVENUE GENERATIONRemember what Mr. Bossman said
- 38. I need proof thatwhat were doingis actually working.Start with proof of concept.
- 39. Step 1: Establish a baseline8% YoY Growth
- 40. Baselines illustrate deltas (changes)Is something happening here?
- 41. Step 2: Create Activity Timelines
- 42. Step 2: Create Activity Timelines
- 43. Step 2: Create Activity Timelines
- 44. Step 3: Look at Sales Revenue
- 45. Step 3: Also look at # of transactions
- 46. Step 3: Also measure net new customers
- 47. Transaction data should be specificF.R.Y.FREQUENCY, REACH, YIELDHow often customers transact. (transactions per month)How many customers you are reaching. (net new customers)How much they spend. ($ per transaction)
- 48. The latest numbers indicatethat our YoY sales $ are up 60%.Our individual transactions have doubled,as have our transacting customers.Somethings working! Groovy!Lets figure out what.
- 49. Step 4: Measure transactional precursors
- 50. Step 4: Measure transactional precursors
- 51. Step 4: Measure transactional precursors
- 52. We overlaid all of our timelinesand noticed that since our social mediaactivities began, our website visits are up,our social mentions are also up, andeveryone seems to love us. So is there a discernable patternin this?
- 53. Step 5: Overlay all timelinesactivitiessocial dataweb datatransactionsloyalty metricsetc.
- 54. Step 6: Look for patternsImpactUncertain ImpactImpactImpactNo ImpactBeforeAfter
- 55. Step 7: Prove relationshipsHow was this groupTouched by SM?BeforeAfter
- 56. How longwill all thisanalysis take?Its all a processof elimination, really.Isolating patterns, quantifying deltas,proving ad-hocsThen allwe have to do isfigure out what the cost savings and revenue gainsare, and plug them into the equation.
- 57. THE R.O.I. EQUATION(GAIN FROM INVESTMENT - COST OF INVESTMENT)ROI =COST OF INVESTMENT
- 58. THE R.O.I. EQUATIONInvestmentExpectation of return
- 59. Oh wow.This R.O.I. thingwasnt at all aboutmeasuring media,impressions andeyeballs!
- 60. All things remaining the sameWe may have proof ofconcept.Hot damn!ACCOUNTINGFirst things first: Prove that Social Media works
- 61. So it turns out that our Social Media program is impactingevery aspect of our business excepttraffic in our brick and mortar stores.Can you get on that? Yeah. We needto find out why we arent havingan effect there. Kthxbye. Then use what you know to make it work better.
- 62. More store traffic.Roger that.Dudes, we are ON THIS!!!Lets start engagin!!!Ill start crafting somewicked blog posts.
- 63. Finally, someone with somereal metrics for me to sink my teeth into!Good job, Sparky! You done gewd!
- 64. So I guess Social Mediais going to stick around a little whilelonger after all, isnt it?Yessir.Looks like our budgetis safe for now.
- 66. Olivier BlanchardPrincipal, BrandBuilder Marketing864.630.7398www.thebrandbuildermarketing.com@thebrandbuilder(on Twitter)www.smroi.net
- 67. 際際滷ography際際滷 # Source3, 9, 10, 11, 18-31, 37, 38, 48, 52, 56,59-6546UFO (TV series) http://ufoseries.com/http://www.minnpost.com/stories/2008/06/18/2282/this_doesnt_compute_as_more_women_enter_scientific_fields_their_numbers_in_computer_science_are_decliningKim Jong Il puppet, from Team Americahttp://blogs.rockymountainnews.com/bridget/kimjongil.jpg