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There’s No Such Thing as Social Media ROI if You’re Doing It Wrong

Don’t just understand your brand buzz; let it drive your customer service, engagement, operations and empower your highly distributed team.

Ask any chief marketing officer about the major challenge in social media and most of them will give you one answer: results. A 2012 report by Adobe showed that 52 percent of marketers cite difficulties in accurately measuring return on investment as their biggest source of frustration in social media marketing.
The problem is that organizations focus their social on building “brand buzz” – the elusive, unquantifiable sense that someone, somewhere is talking about your product, and somehow that might turn into business for your company. It’s mushy to measure at best, and even harder to justify to the CEO.

The truth is we’re doing ROI all wrong. Buzz is worthless. Real results in social come from only two things:

  • Improving online reputation to influence potential guests and,
  • Winning new customers with targeted demand generation.

Building your social media by focusing on “brand buzz” is hard to measure and even harder to justify.

Don’t Ignore – Engage and Act

New research by Merchant Warehouse shows that 90 percent of Yelp users are affected by positive reviews. Seventy-two percent of people trust online reviews as much as personal recommendations. And four-out-of-five people will reverse their purchase decision after reading a negative review. No one can afford to just sit and hope their current online reputation is good enough. We have to take action.

Engaging with online reviewers is crucial to getting the positive sentiment you need to win guests. What’s surprising is that a little effort goes a very long way, Our studies show that a mere 1 percent increase in connection with online reviewers can result in anywhere from an 11 percent to 25 percent increase in your business’ overall online reputation – and that translates to real dollars on your bottom line.

Do you want to keep those customers and others like them happy in the long run? If so, then during and after engagement you have to promise to fix the issues mentioned by the customer and truly resolve them. You need a process to transfer the information from marketing and customer service to the people who can make a difference.

Not convinced? Consider the risk you’re taking without acting on this social media feedback – call it the “cost of social inactivity.”
Let’s say that within one year, 547 of your franchise’s customers say in an online review that they will not return to your store because of rude customer service, and 103 reviews showed the reviewer would not recommend your business. Assuming that an average customer visits your store three times a year, and spends $75 during each trip, you stand to lose $146,250 if you do not fix this issue with your staff. (You can plug in your own number into this Loyalty Analysis formula to estimate COSI for any business.)

Mulhner, K.-nBA No ROI in Social Final - IFA

The impact reaches beyond that, though. On average, an online review influences five new customer decisions, which makes the cost of your inactivity skyrocket to $731,250. That means more than three-quarters of $1 million in lost revenue simply by doing nothing.
Do you want to keep those customers and others like them happy in the long run? Then, you must engage with them. How? Identify the guests giving feedback online and listen to them; promise to fix the issues and actually resolve the problem. Tweets, blog comments and Facebook posts don’t fade into the digital ether. Use that fact to your advantage and you’ll see concrete ROI in your franchise’s social investment.

Get Laser-Focused

A recent research report from Infosys found that 78 percent of consumers agree they are more likely to purchase from a retailer again if that retailer provided them with offers targeted to their needs. But 72 percent don’t feel that the online promotions or emails they receive resonate with their personal interests.

So what if it wasn’t just a consumer’s location, but her actual need that was driving the outreach? For example, if someone in Atlanta mentions getting engaged on Facebook and starts asking brides where they got their dresses, a local bridal shop could combine that interest with geo-location data and reach out with information about a sample sale – matching location with interest for a targeted promotion that’s very relevant to that particular consumer. Or, if a customer complains on Twitter that her usual store was out of inventory, a competing retailer could be alerted so that it could engage with the consumer and offer an alternative.

This “demand tagging” approach marries geo-tagging and social intelligence to create the most focused, relevant direct marketing that franchisees have ever seen, with the ROI metrics to match. Businesses need to stop wasting time blasting out messages to an uninterested audience and praying for a 2 percent click-through. It’s crucial they start getting authentic, relevant information to consumers that actually want and need their services.

Find Real ROI

Kristin Muhlner is CEO of newBrandAnalytics

Kristin Muhlner is CEO of newBrandAnalytics

There is no shortage of advice on calculating ROI in relation to social media. Forrester Research suggests ROI can be found in financial numbers (like promotion success), increased usage of digital assets (ad effectiveness), sentiment calculations (brand buzz), and risk avoidance (PR disasters). But each of these is unquantifiable when combined with your other traditional marketing approaches. The truth is, there doesn’t have to be ROI in social media for you to know you have to use it. Where most people fail, though, is by putting social media in the marketing department and stopping short of where it delivers real value.

Social doesn’t belong to marketers alone. It should be a central part of your franchise, and used by every department. Social media engagement is more than brand promotion. It’s about letting your customers tell you how to serve them and how to make them loyal, repeat visitors. Don’t just understand your brand buzz; let it drive your customer service, customer engagement, operations and empower your highly distributed team. Don’t just blast your message far and wide; target individuals who are real prospective customers, only then can the real value of social media be revealed.

There’s no secret sauce, no genius marketing ploy. Just a commitment to really listening to guests and then acting on what you learn. Real social ROI, and business success, depends on it.

Kristin Muhlner is CEO of newBrandAnalytics. Find her at via the directory.


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