Circos Brand Karma

Official Blog of Circos

ROI in Social Media

with 2 comments

Will social media go from a cultural phenomenon to a commercial force?  Yes, I believe so.  If last decade’s new new thing for marketers was SEM, I believe this decade’s new new thing will be SMM (social media marketing).

However, for SMM to become legitimate its efficacy must be measurable, otherwise it’s tough to justify devoting any resources to it, particularly because in the last decade marketers learned how to calculate ROI by looking at conversion revenue from CPC traffic referred by their Google (and subsequently, other online) campaigns.  Not only did ad budgets shift, discipline was instilled.

We advise our clients to think about ROI of SMM in 4 major categories:

Brand satisfaction – how do operational improvements and investments increase your overall guest satisfaction over time?  In Brand Karma it’s the Guest Satisfaction Index, which is a composite index of your perception from various public sources, but if you don’t have Brand Karma you can also use something simple like your ranking or ratings on a review site.  When your guests post reviews about you, they’re giving you feedback on their stay.  Because their reviews are public, their words also shape how favorably viewed your brand will be for consumers researching your property.

Brand loyalty – related to overall brand satisfaction, the loyalty measurement lets you know if the guest stay experience is compelling enough that it moves your guests to recommend your brand.  Like satisfaction, this is a measurement that needs to be trended over time as well.  In Brand Karma it’s the Loyalty Index, but again, if you don’t have Brand Karma you can look at the “recommendation” rate on reviews that are written about your brand.  Different sites do this differently, but most have a way for their reviewers to recommend a property.  This index and the Guest Satisfaction Index gives you a good idea of how favorably the public perceives your brand.

Many internal guest surveys also measure satisfaction and loyalty.  Just keep in mind that the surveys guests 1) give you solicited feedback — i.e. questions you ask, not necessarily what the guests want to evaluate, and 2) aren’t viewable by the general public — so they don’t give you insights into how public perceptions may be impacted.

Guest Satisfaction Analysis in Brand Karma

Brand awareness – how do sites with social media increase the awareness of your brand?  In the social media world, in addition to the traditional metrics having to do with volume, awareness metrics must take into account the idea of relative frequency.  Relative frequency lets you know how recent is the content about your brand vs. your competitors.  This is important because if people haven’t been talking about your brand recently, then either you’re not interesting or your competitors are more interesting than you, neither of which is good.

Campaign performance – the ultimate metric that measures ROI.  Suppose you run an ad on Facebook, you’ll want to see what is your ROI for every dollar spent.  This means that you must have a way to measure what you’re advertising.  For example, to execute you can set up a landing page on your ecommerce site so that you can track the referrals and conversion rate from that specific campaign.  Use the traditional ROI formula to calculate what your return is (should be no different than your calculation for search engine marketing).  As you get more advanced, try to establish a link between your brand satisfaction, loyalty, and awareness to your campaign performance.  For instance, how much better does your campaign perform after your brand satisfaction has increased by 10 points?  If you have lower brand awareness than before, do you have fewer click-throughs?  Is there a correlation between guest loyalty to your campaign responses?

In a way, the above points are the fundamentals of marketing, and that’s precisely the point.  Brands wanting to leverage social media for marketing should measure what they’re getting out of their investments in it.  However, like traditional and other online marketing tactics, SMM takes a bit of trial and error to perfect into a strategy, particularly because the ability to micro-target is superb, and so brand owners should consider developing an expertise over a few marketing campaigns.

Some progressive brands are considering hiring a marketing manager to focus on social media in 2010.  Once again, this person’s salary minimally should be considered an investment to improve brand satisfaction, loyalty, and awareness.  List the activities that your social media manager engages in with your fans, followers, and friends, and see how much time they take.  From there, you can calculate the dollar investment (percent of time to salary).  Over time, see what activities lead to gains in satisfaction, loyalty, or awareness, and what activities don’t make a difference.  If you’ve established a link between increases in satisfaction, loyalty, and awareness to increased campaign ROI, then you’ll know how much your social media manager can help you improve your bottom line and guide him/her to engage in activities that increases your key metrics.

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Written by Morris

February 8, 2010 at 10:35 pm

2 Responses

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  1. That rss page on your website here is magnificent, you should tell people about it in your next post. I haven’t noted it for the first couple of times, now I’m using it every morning to check on any updates. I’m on a very slow dial-up link in Germany and it’s rather baffling to sit there and wait for such a long time ’til the page loads… but hey, I just found your rss page and added it to the Google Reader and there you are… I’m always up-to-date! Well pal, keep up the good work and make that rss button a little bigger so that other people can enjoy that as well 😛

    Blogging Guidebook

    March 31, 2010 at 6:04 pm

  2. Dang
    I just typed a whole long message, and when I tried to send it my FireFox freaked out.
    Was it somehow saved or do I need to redo it?

    Amanda Young

    April 9, 2010 at 4:07 pm


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