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Social Media: Solid ROI

by Saul Fleischman on June 1, 2011

How would you prove to a client that investing in social media marketing is profitable?

Understand your client’s goals and how they would measure success on those goals. Then, I’d suggest you do some research for both research/studies and individual case studies that are pertinent to your client. Examples for some typical goals.

Increasing sales via word-of-mouth: see the data related to the influence of positive reviews from social sources: http://www.bazaarvoice.com/resources/stats
http://www.prweb.com/releases/2010/12/prweb4851464.htm

Increasing brand awareness–See this recent study about social media impact in Millennials http://bit.ly/etTmC7 and this one: http://www.deweekkrant.nl/artikel/2010/november/23/mandarijnen (note that this shows that social media work can increase click-throughs on your PPC paid ads)

Increasing website traffic–Some data re:blog benefits http://bit.ly/g4NCLA and this report from marketers: http://sports.yahoo.com/nfl/blog/shutdown_corner/post/Win-and-they-re-in-The-Late-Games?urn=nfl-302545&utm_source=twitter.com&utm_medium=referral&utm_campaign=br_seahawks

And here’s a nice list of some diverse case studies, though I would suggest finding one’s specific to your client’s circumstances: http://techcrunch.com/2010/07/17/how-social-media-drives-new-business-six-case-studies/

Note also this McKinsey study which just came out where businesses report benefits from different “Web 2.0″ efforts: http://bit.ly/gAycd6

I find it useful to do a couple of things in a casual presentation:

1. Start with a business case for a PR company. You and your client will find a lot of similarities.

2. Show the good case studies where companies have said “We made $X million from this” for example Dell on Twitter, Moo.com on Flickr.com etc.

3. Show how by not engaging you are still going to be impacted financially (Think of what happened with Nestle, Northwest, and American Airlines).

4. Use metaphors when explaining it to people who don’t really get it. I’ve often explained it like this. Imagine you’re at a dinner and seated at the table are a group of potential customers. Also at the table is someone who is bad mouthing your company in front of these potential customers. Are you passive or do you attempt to address the comments?

5. This advice depends on the clients business model. If they offer technical support of any kind, there is also a business case around the money they’ll save by using social media to provide support to clients – way cheaper then a phone call. If they spend any money on marketing, there is also a case for the money they’ll save marketing online which is person-for-person about the cheapest marketing you can do.

About Saul Fleischman

Founder of emerging social media tool sites. Bootstrapping innovation with lean startup development teams. I do project management, user experience, PR, marketing and community development.

su.pr size it! http://su.pr/17pptn

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  • Karalyn

    Great post Saul. I work with some recruitment firms on this as well as manage my own blog. You need to make your analogy really specific to their business. For Australia when we’re searching for skills, a recruitment company needs to be able to say to their clients – there are x number of people with the skills you need, and we know which ones of those are on Linkedin and Twitter.

    • Saul Fleischman

      Good to know. I actually had little idea that #in was becoming widely known/used in OZ. 2 yrs ago, few knew it, it seemed, right?

    • Saul Fleischman

      Good to know. I actually had little idea that #in was becoming widely known/used in OZ. 2 yrs ago, few knew it, it seemed, right?

  • Karalyn

    Great post Saul. I work with some recruitment firms on this as well as manage my own blog. You need to make your analogy really specific to their business. For Australia when we’re searching for skills, a recruitment company needs to be able to say to their clients – there are x number of people with the skills you need, and we know which ones of those are on Linkedin and Twitter.

  • Stan Faryna

    Companies will spend money if they know they will make money on that spend. But the challenge to such demonstration is that most companies will never share their financial information with you to make the correlation – even if you have the people and resources to make that evaluation.

    I remember my first three Epic clients. All of them lied to my face and told me that what I did for them didn’t move the bottom line. In fact, I know from insider information that I moved the bottom line. And one of those clients was saved from bankruptcy because of the online presence I developed for them.

    The lesson there is always be extremely good to the secretaries and executive assistants of your clients. [grin] Birthdays, Christmas, and Valentines day were never missed. Birthdays and Christmas never passed without a thoughtful gift around the $250 range. And Starbucks gift cards flowed like a river.

    Stan

    Recently on my blog: What’s next – official Yahoo! sponsored Farmville cheats?

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