Why It Pays To Listen To Online Buzz

One of the hottest debates in social media over the last few years has been centered on the concept of ROI and why measuring ROI on your social media monitoring efforts is so important. While there have been several studies concerning the ROI of social media marketing, with more companies starting social media monitoring on a larger scale, brands are now concerned with the ROI realized from their social media monitoring activities. For instance, the Corporate Manager of Consumer Generated Media at Toyota, Bruce Etrmann, believes that the company’s benefits/returns from social media monitoring include strengthening customer loyalty and improving communication with the marketplace. There are several monitoring tools available today, including Position²’s Brand Monitor, that help brands listen to conversations on social media 24/7 to make sure all relevant mentions are captured. We believe that social media monitoring best yields returns when:

• You know by how much the attendance to your company’s brand page has increased because of a certain social media marketing campaign or change in marketing strategy.
• What was the dollar value of this increase?
• How does this compare to the time and money spent by your brand while designing a campaign/creating a strategy?

Brands engaging in social media monitoring have understood that ROI comes not just by ‘monitoring the conversation‘ but also from ‘joining the conversation‘, which involves identifying and proactively engaging with key influencers. This is just one of the dividends of monitoring online buzz. Here are some more:

• A report by the Aberdeen Group, the ROI on Social Media Monitoring, shows that the best-in-class companies that have made an effort to listen to online conversations are 2.6 times more likely than industry average companies and 93 times more likely than laggards to improve their ability to generate consumer insights that drive new product/service development.



• The report also shows that the best-in-class companies that engage in social media monitoring and analysis activities are 3.3 times more likely than industry average companies to improve their ability to identify and reduce risk to their brand.
• 78% of them have reportedly improved their y-o-y customer retention rates.
• According to Gleansight’s Social Media Monitoring Report, increased customer satisfaction and better marketing effectiveness are among the key benefits of social media monitoring for brands that primarily engage with customers.
• ‘Influencer engagement‘ is one of the most important value drivers of social media monitoring; this helps identify the conversations that the brand should be engaged with, thereby increasing traffic and contributing to the ROI factor.

Metrics for Measurement: The ‘How’ and ‘What’ of Social Media Monitoring

Before getting into a discussion about the metrics of measurement while tracking online conversations and brand mentions, we must first understand that there are two ways to measure social media ROI for your business:

1. Quantitative: Helps measure quantitative data such as traffic, sales or SEO ranking, click-through rates of brands’ product pages.
2. Qualitative: Measures brand or corporate reputation, conversations, brand-customer relationships, enables brands to determine if they need to engage in meaningful dialogue with customers, brands vs. competitors analysis, engaging with and building better relationships with audiences etc.

The ‘quantitative’ aspect of measurement is simple and direct; however, when it comes to the ‘qualitative’ part we know that this can be rather subjective and requires the presence of certain ‘base metrics’. The fact is that no single metric alone is going to be a solid indicator of how engaged your community or customers are; however, there are a few things you can pay attention to, for deeper analysis:

• Comments: Studying the conversation initiated by a particular post can indicate if people are listening and whether they feel compelled to respond. This conversation thread about social media monitoring, for instance, has several posts which show that people are listening and participating.
• Time with Content & Thread Size: When a brand posts something online, the length and the size of the threaded discussion that follows and the time spent pursuing the content not just specifies how interested the users are, but also if the discussions are useful and have an impact.
• Downloads and Subscriptions: Looking at downloads can be a great indicator of engagement around a topic or subject. Similarly, it is obvious when people subscribe to your blog or website, that they are interested in what you have to say.



• Demographics: Altimeter Group’s Jeremiah Owyang stated several elements of social data, one of which is demographic data. We categorize this as one of the most important metrics of social media monitoring and measurement, as this helps create context about consumers by gleaning through data such as gender, age, profile pictures and details.
• Referrals/Suggestions and Comments: Customers are talking about certain products, both explicitly through ratings and reviews and implicitly through gestures such as hitting the ‘like’ button on their social network. The sign of a well-engaged community is when they invest their time and intellect in guiding you toward business improvements. Suggestions, product improvement ideas, innovation forums etc indicate a vested interest on behalf of the consumers your brand is trying to reach.



• Sentiment of Posts: For brands tracking their social media activities, analyzing the sentiment of the incoming posts is a crucial part of their monitoring exercise. Online marketers and brands are eager to know if customers come to the product page to vent their frustrations; are the sentiments generally positive? Do they complain about the posts as being too generic, wrong or otherwise deficient? Sentiment monitoring is more of a Psychographic metric; benefits or returns include providing brands with increased opportunities to reach these self-expressing customers and market to them based on their lifestyle. This type of data also helps in message and conversation creation, besides identifying features and products to improve or fix.
• Unique vs. Repeat Visits to the Social Media Page: A ‘casual browser’ is converted to an ‘actual customer’ when he is a repeat visitor who wants to learn more about company, looks for general updates and is eager for information related to the product or service. For a brand that is using this metric to monitor its social media presence, the gains are obvious. A one-time visitor, though, shows that the company has effectively advertised its brand.
• Page Views: Attentively monitoring this aspect of the metric makes it possible to not just determine the overall effectiveness of the brand’s webpage, but also helps gauge the site’s ability to captivate the consumer’s interest on each page.
• Click-through Rate: While this is a quantitative metric, it is nevertheless, crucial for brands and marketers to know how many social media site visitors eventually become visitors to the company’s website.

Irrespective of whether your social media data is qualitative or quantitative, creating an engagement index is a good idea. According to Katie Delayhaye Paine, an Engagement Index which is unique to your company’s goals is one way of monitoring and knowing where the returns from your social media strategy are coming from.

Conclusion

As the need to generate a measurable return on investment grows, for online marketers, the concept of ROI itself is debatable and has seen both marketers and industry experts engage in endless discussions on how to justify their expenditure. Therefore, when it comes to realizing the ROI from social media monitoring, the general consensus is that this is subjective and is perceived differently by different companies. However, no matter what your goals are, one thing above all is obvious; the need to have a clear set of quantitative and qualitative metrics that will help calculate the return on investment from your monitoring strategies. Whether it is demographics, number of repeat visitors or time spent on a particular Facebook page or company blog, most marketers agree that the social media monitoring yields maximum returns when the brand successfully engages with its customers. We believe that customer engagement is the first and integral step to realizing the ROI from brand monitoring; once this is achieved, reduction in customer service costs, improvement in marketing effectiveness, driving actionable insights, generating sales leads, identifying brand advocates , understanding campaign and design impact etc will automatically follow.

Media monitoring is a great ‘health check’ of a brand’s social media activities and the ROI realized from this process will tell you if your digital marketing strategy needs a fix or if you need to listen better and invest more resources to connect with your customers. Instead of focusing on finding only a tool to deliver charts or spreadsheets of data, companies should try looking for a social media monitoring solution that combines technology and human expert analysis to help better interpret social media data and answer business questions.

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Author and technologist Nicholas Carr says, “Twitter is the telegraph system of Web 2.0.” The New York Times has mentioned that Twitter is one of the fastest-growing phenomena on the Internet. Only a few brands skimmed off profits from Twitter and others just tweeted about some direct marketing stuff. However, there are numerous ways you can leverage Twitter for your business and improve your bottom line. Here is the one-stop Twitter guide for business.

Get started

1. Create a Twitter account

2. Make sure, that you have selected a unique vanity URL for your Twitter account

3.  Upload an image and customize your profile image using this tool: http://walterhiggins.net/projects/twixenate.html

4. Include a link to your corporate website

5. Promote your Twitter presence on your corporate website, client emails, etc.

SEO juice – Recently, Google started indexing tweets; these tips could help you optimize your Twitter account.

6. Include your brand name as the title of your profile

7. Use the Google keywords tool and shortlist important keywords relevant to your products

8. Include those keywords in your bio

9. Use keywords in the first 30 characters of your tweets in order to be optimized by Google

10. Get re-tweeted and increase backlinks for your content

A “following” strategy – This will help you to connect with your target audience.

11. Identify your target audience based on their interests

12. Use hashtags “#” (Hashtags are a community-driven convention to add additional context and metadata to your tweets) to search for your target audience using this tool: http://wefollow.com/

13. Use more directories for search such as: http://www.twellow.com/, http://justtweetit.com/ etc.

14. Follow the influencers in your industry using this tool: http://www.twitalyzer.com/

Identify local Twitter users, or tweeple – If you are a company that serves only a particular location, networking with local tweeple will add more value to your business.

15. Follow influencers in your location using this tool: http://twitterholic.com/. This tool lists all the influencers on Twitter, based on the number of followers and location.

16. Enter keywords relevant to your product and use the “near this place” option in Twitter’s advanced search to identify tweeple who are interested in your product

17. Search for tweeple near your location using this tool: http://www.tweepz.com/

18. Network with local tweeple by searching for them with hashtags, using this tool: http://localtweeps.com/

How to make your tweets effective

19. If you prefer Web tweeting, use this tool: http://twitzap.com/ for advanced features

20. Download Tweetdeck for more power tweeting from your desktop

21. You can add additional Twitter accounts in Tweetdeck and control them using a single application

22. Schedule important tweets in advance using this tool: http://www.tweetlater.com/

23. Use: http://cotweet.com/ for collaborative tweeting

What to tweet on – Starting and joining the right conversation(s) will give you more exposure.

24. Post tweets based on the interests of your followers

25. Search for topics relevant to your product(s) and talk to influencers

26. Use hashtags to power the conversation

27. Post tweets about useful links and articles

28. Use: http://happn.in/ to talk about the trends in your locality.

Twit research – Twitter is a good source for market data as prospective customers are present there.

29. Finalize the sample size of the search.

30. List hashtags relevant to your research objective

31. Get secondary data for your research based on hashtags by using this tool: http://twubs.com/

32. Analyze hashtags  relevant to your research using this tool: http://www.trendrr.com/

Get feedback –As Twitter is a real-time medium, organizations use Twitter to get direct feedback from customers.

33. Get feedback from customers and other tweeple by replying and directly messaging them

34. Use hashtags to organize the feedback

35. Get feedback from local tweeple using this tool: http://nearbytweets.com/

36. Use: http://twtpoll.com/ to conduct a simple survey in Twitter to get real-time feedback

37. Post new product screenshots in http://twitpic.com/ and get instant feedback from your followers

Twit hiring – If you are looking to hire people for your organization, Twitter is another source to find the right talent.

38. Search for job seekers near your location using advanced search features in Twitter public search

39. Use hashtags in your tweets to reach active job seekers

40. Post tweets to announce benefits such as perks, allowances, etc. for the job(s) you offer

41. Use: http://twitpic.com/ to share corporate events to show job seekers your organization’s work culture

42. You can also use Twitter to conduct background checks on employees by using the Twitter advanced public search.

Tweetup – “Is an organized or impromptu gathering of people that use Twitter.” Tweetup is an excellent platform to promote products among local Tweeple.

43. Search for a Tweetup near your location using: http://nearbytweets.com/

44. Organize a Tweetup in your locality using  this tool: http://www.twtvite.com/

45. Pitch for influencers in your location by attending Tweetups.

46. Give away promo codes to attendees in the Tweetup to spread your product virally.

Follow your competition – This can give you insights on what your competitors are working on.

47. Follow your competitors on Twitter.

48. Use Twitter public search to get more insights on competitors’ activities

49. Analyze their Twitter account and follower patterns using: http://tweetstats.com/

50.  Compare your network statistics with competitors using: http://twitter-friends.com/

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Why spend money on marketing? To achieve a positive return on investment. If I put $1 in, how much do I get out? Does the return justify the risk? This is why Google Advertising or PPC is so powerful. You can estimate your return or ROI before you get involved in a campaign. And you can track and tweak as you go.

Even though search engine marketing is results oriented and completely measurable, many sites and tools given an inaccurate analysis of profit and ROI. I have seen tools that consider new revenue to be profit, many of which do not even consider the cost of the cost of goods. If you are not going to offer an appropriate measurement mechanism, then you should not have one at all. It is deceptive.

Let me walk you through how I run the numbers step by step…

First, download the spreadsheet that I use for this.

Know your revenue per customer (Rev). This is easy if you are a mortgage broker, a consumer software firm or anyone that has a product or service with a 1 time fee. This is a bit more work if you bring in a certain stream of revenues per customer. Then you need to know churn, average time of a customer, what typically a customer buys. The best is if you understand the notion of Lifetime Value of a Customer (LTV).

Know your average gross margins (GM%). GM% = Rev – COGS.

• Average Gross Margins are expressed as a percentage and is Revenue minus Cost of Goods Sold (COGS). For a services company, COGs is the cost of producing or providing a service. This is the key missing item in most analyses. Not listing this is the difference between investing in your business and putting your money into slots. For example if someone tells you that for an average $12 cost of acquisition (CPL), you get $8 in “profit.” This is fool’s gold if the cost of producing the product (COGS) is $10 or a gross margin of 50%. You lose $2 for every product sold through this medium. That can add up to the thousands or millions fo dollars in losses.

Estimate your cost per click (CPC). CPC = Average bid price over all clicks.

• There are many tools to estimate this number – some are on the search engines themselves. Generally a less competitive arena is less than $0.50. More competitive is around $1. Highly competitive areas like mortgages can be over $2.

Estimate your conversion rate (CR%). CR% = Lead/Clicks

• This is your conversion rate to a lead. That is, what percentage of people who click, do something that you want them to do? This is typically filling out a form to be contacted, downloading software or a white paper, or purchasing something directly. This number varies substantially from 1% all the way up to 25%. I would be conservative in this number. The output this number will cost per lead or CPL.

Estimate your quality lead rate (QLR%). QLR% = Quality Leads/Leads

• Not every lead is quality. Many filled forms are garbage info, duplicates, tests, etc. Some forms are not filled out at all. Numbers vary widely here as well. We’ve seen as high as 90% and as low as 30%. Having a quality keywords, ad copy, and landing pages make all the difference in the world here. Now if someone is purchasing something directly, neither conversion rate nor quality leads count.

Estimate your close rate (CloseR%). Close R% = Sales/Quality Leads

• Every company with a different business has a number here. Some are 3-5%, others are 30-50%. As they would say in The Holy Grail, “100% is right out.”

Estimate your search engine budget (Ad Spend) and your campaign management fees (Fee).

• If you are doing this yourself, then only your monthly search engine ad budget matters. If you are paying a firm to manage this, enter this data in – typically its a percentage of ad spend or a lead based fee.

Now it is time to make some calculations:

Clicks per Month (ClickMonth) = Ad Spend/CPC
Leads per Month (LPM) = ClickMonth * Conversion Rate (CR%)
Quality Leads per Month (QLM) = LPM * Quality Lead Rate (QLR%)
Closed Sales per Month (CSM) = QLM * Close Rate (CloseR%)

Gross Margin per Customer (GMC) = Revenue per Customer (Rev) * Gross Margin (GM%)
Monthly Lead Cost (MLC) = Ad Spend + Fees
Cost per Lead (CPL) = MLC/LPM
Cost per Quality Lead (CPQL) = MLC/QLM

Now for what really matters:

New Sales per Month (RevM) = Rev * CSM
Cost per Sale or Action (CPA) = MLC/CSM

New Profit per Sale (PS) = GMC – CPA
New Profit per Month (PM) = PS * RevM

ROI% = PS/CPA * 100

Now this is something a businessperson can work with because it includes real cost per sale including your cost of good and your cost of sales. With search engine marketing these types of metrics are completely understandable and trackable. It’s why I got into this business.

Having this data in detail is very helpful to you and your search engine marketing agency, because they can control for certain steps in the process to help you arrive at your projections. Soumya (from our firm) has done a nice job defining the terms you should know about PPC or Search Advertising.

Different businesses will have to make some adjustments to fit their situation. If you need some help, please let me know.

Check out the spreadsheet I use with clients.

This is a work in progress, so comments are appreciated.

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