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Fast Company Doesn’t Know You Can Calculate Social Media ROI

Fast Company seems to have an aversion to math or basic research. Their latest story, Does Social Media Have a Return on Investment, says that no one is able to calculate the ROI of social media, and that large brands like Audi and Home Depot are just fumbling around in the dark on determining the ROI of social media.

This is complete and utter crap.

People have been able to calculate the ROI of social media for a few years now. In fact, as Katie Paine (@kdpaine) pointed out in the comments section to this article:

This is ridiculous. Back in 2008, Wells Fargo and SAP were calculating solid ROI from social media campaigns. Social media agencies like Organic have been using sophisiticated data analytics for years to predict outcomes.  You stumbled across a few creative types that are allergic to math and haven’t a clue what data is available who don’t care about measurement or  ROI. And if they are using Klout, the really don’t care much about the accuracy either. Other marketers, the smart ones, are embracing all the data and analytics now available and providing solid ROI on a regular basis.

It’s not that hard to calculate the ROI, or to measure anything when it comes to social media. Here are the basic steps you can use to calculate even the most rudimentary ROI of a sales page:

  • Set up Google Analytics on your website. Make sure you put the code on every page.
  • Set up Google Webmaster Tools, and use their Campaign Code Creator.
  • Append any URL you tweet out or put on Facebook with the Campaign Code Creator.
  • Shorten every link you send with Bit.ly, including the campaign code, and send it out. Assign different campaign codes to different messages, tools, and campaigns.
  • Track down the visits that filtered down into visits to the sales page. Total up the sales from those visits. Cross-reference them with the contact data that came from the sales form.
  • Subtract the cost of your campaign from your sales total. That’s your ROI.

And that’s the writer’s method of dealing with ROI. There are entire suites of tools built to answer the ROI question, and professionals like Katie Paine have been doing it for years.

With thinking like this being erroneously spread by Fast Company and writer Farhad Manjoo, it’s no wonder businesses are afraid to spend money on social media. When uninformed media — who frankly should know better, or should have done some remedial research — start spreading bad information based on their own misunderstanding, it not only shows their ignorance of the industry, it spreads bad information to the rest of the business community.

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Businesses Don’t Care About the Social Media Expert Debate

After reading a few of the different posts about social media experts, including ours, our partner and founder, Mike Seidle (@IndyMike), wrote this response:

First, I am not a social media expert. I do sit on the board for a company that has several people that I would classify as experts on the payroll. Anyone who is saying “there are no social media experts” falls into one of two groups:

  • People who can’t accept that others may have more experience/deeper understanding than they do. This argument boils down to “since I don’t understand it, or can’t keep up, you can’t.”
  • People who do not have the resume to actually be an expert that are trying to get a job or gig that is for an expert. These people will claim that no experts can exist because of massive recent change that obsoletes past experience.

In the end, anyone who claims that social media experts are like the tooth fairy, Santa Claus or the Easter bunny ends up looking pretty silly:

Executive: So, you are here for the social media director position. I see here you’ve been using social media for two years. What makes you an expert?

Social Media Not Expert: There are not experts in social media. We are all explorers at sail on an undefined sea filled with incredible wonders and indescribable dangers. You see, no one can possibly be an expert on social media since it changes so fast. What I learned last year has no application to the future, and the tools we use and strategies we build often are rendered obsolete in the blink of an eye.

Executive: So, if it’s not possible to be an expert, then why are companies shelling out bucks on social media people?

Social Media Not Expert: Well, social media can get incredible results. Most social media campaigns fail because they are not well planned and are mismanged. On top of that it’s impossible to measre the ROI on social media… so do not count on predictable ROI or even expect a return you can measure. But social media will greatly enhance your brand. That’s why most companies are doing social media.

Executive: So, most social media campaigns fail for lack of management or knowege. I can’t expect any ROI, and you are not an expert. Right?

Social Media Not Expert: Well, when you put it that way… it doesn’t sound right. I would say that I’m not an expert, but I have experience and can guide your company around making mistakes that will make your social media campign fail. While we can’t …

Executive (Redfaced, Cuts off Social Media Not Expert): The door. Use it. Use it now.

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Measure the Three Most Important Business Metrics With Social Media

Jason Falls is currently rocking the Exploring Social Media Business Summit in Toledo, Ohio, talking about measuring social media marketing, and making sure that businesses are making money from it. There are three Very Important Questions every business manager will ask of their social media manager, and you’d better be able to answer them.

  1. How much did we make?
  2. How much did we save?
  3. Are our customers happy?
Jason Falls rocks his talk about social media measurement at #ESMToledo

That’s right, social media hippies. Social media, just like every other part of marketing, is about making money. It’s not about conversations, friends, followers, Likes, fans, connections, comments, or Google ranking. It’s about sales and conversions, and customer service and satisfaction.

This is why social media monitoring and analytics is so crucial. You need to be able to show your boss that your social media campaign was not $20,000 thrown down the toilet, because you thought it would be cool to sell your bulldozers on Facebook.

Use Google Analytics to Measure How Much You Make

Google Analytics can tell you how people came to your website, what pages they visited, and whether they went to your sales page and placed an order. If 300 people visit your website because of a tweet, 30 people went to your sales information page, and 3 people placed an order, you have a close rate of 1%. If your social media campaign costs $1,000 per month, but those 3 sales are worth $4,500, your ROI is $3,500.

Use Your Accountant to Tell You How Much You Saved.

Social media is a great way to handle customer service complaints, reducing the amount of troubleshooting calls that take 20 minutes, reduce technician visits, or even the total number of calls coming in to your service center. Ask your accountant to tell you how much you saved from month-to-month. Calculate the average cost of troubleshooting calls, technician visits, and the monthly salary of a call center rep. Get with your Google Analytics person and social media monitoring person (#3) to see if you have seen an increase in social media activity. Chances are, the latter had an effect on the former, so count these savings as a win. If you spent $1,000, but saved $3,000 in a month, your ROI is $2,000.

Or, more importantly, if we combine the two, you spent $1,000, and made/saved $6,500, your ROI is $5,500.

Use Social Media Monitoring Services to Measure How Happy Your Customers Are

Radian6, Lithium Technologies, Sysomos, are some of the biggest social media monitoring services around (they’re all subscription-based services, so expect to pay a fee), and if you’re a larger brand, it’s worth doing. If you have a small company, set up a free listening post with tools like a Twitter search (like a TweetDeck column), SocialMention.com and/or Google Analytics to see what people are saying about you. Quickly respond to any complaints or queries, and make sure you’re keeping people happy (see #2 above).

Happy customers are returning customers. Measure the sales of returning customers, especially those who have complained in the past, but you managed to keep by solving their problems, and compare that to the amount you paid for the social media monitoring service, and you’ve got your ROI.

We’re hopefully moving beyond the “social media is all about the conversations” way of thinking, at least in the business world. While this was cool and froody back in 2008, businesses are starting to use this as a new marketing channel. For those companies who want to make money this way, it’s real simple: just measure how much you made, how much you saved, and whether your customers like you.

If you can’t answer these questions, quit playing Farmville and go find someone who can answer it for you.

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A Social Media Strategy for Non-Marquee Sports & Athletes

I’ve had the pleasure of getting to know Dan Clarke (@speedydanclarke), an Indy Lights racer from England who lives in Indianapolis, and learning about his struggles this off-season. He’s looking for corporate sponsors so he can race in the upcoming season.

Dan Clarke at Carb Day 2010

If you don’t know what Indy Lights racing is, then you’re starting to see Dan’s problem. Indy Lights is the developmental racing league for IndyCar — Indianapolis 500 — racing. In a sport with fewer US fans than the NHL, he’s in the minor leagues.

Think of your favorite baseball team. Can you name its AAA minor league affiliate? Can you name their players? Do you know who their best hitter was last year, or their best pitcher?

Now you understand Dan’s problem. He’s looking for sponsors for a sport outside the big three — NFL, NBA, MLB — trying to convince them that the developmental league is a great place for them to be seen.

This is where social media can help. A personal branding campaign, even for athletes, can help build their brand, find new fans, and hopefully, bring in the big sponsors. It doesn’t matter if you’re an IndyLights driver, a minor league baseball player, or even the veteran right guard for the New Orleans Saints. If people don’t know who you are, they’re not going to care, and you’re going to have a tough time getting them to notice you. But by doing some basic personal branding, you can use that network to bring in new opportunities that contribute to your total success.

Start with Twitter

Twitter is one of the easiest places to start. This is where you can immediately see your fan base (# of followers), interact with them, and even measure the impact you’re having. Turn followers into fans, turn fans into evangelists. And as more people follow you, demonstrate to potential sponsors that you carry a lot of weight with your network.

Most athletes ignore their fan base on Twitter, choosing instead to communicate with each other publicly about private issues. For example, most IndyCar drivers have only a few thousand followers and only follow a few dozen people. Helio Castroneves, one of the most famous drivers in the world today, only has 31,000 followers, Ryan Briscoe has 8,600+, and Penske Racing (“one of the most successful teams in sports history with 330 race wins”) has 9,900 followers. To put that in perspective, I have 7,200 followers, I write blogs for a living, and the last thing I won was “Best Comedy Script” in a theater script competition in 2005.

If you don’t follow people, they won’t follow you. When you’re in a small-market sport, you can’t afford to be picky about who you follow. If you’re worried about privacy, don’t tweet your personal life. If you’re worried about managing a large Twitter network, get TweetDeck and use Twitter lists. But don’t make yourself seem unapproachable. Twitter is the one place you can interact with fans and still keep them at arm’s length.

Tip: Use Klout or Twitalyzer to measure the influence you have. Show sponsors that a positive word from you can influence buying behavior among your fans.

Create a blog

The blog is really the hub of your personal branding campaign. The point of being on those networks is to drive traffic to your blog; the point of your blog is to get people to join you on the other networks.

Your personal branding campaign is a wheel, with the blog at the center.

A blog is a place where you can share a behind-the-scenes look at what you’re doing. Share your exploits on and off the field/court/track, post photos, post videos, and tell stories. Fans love feeling like they’re connecting with their favorite athlete and learning stuff the casual observer or fair-weather fan doesn’t know. This is why celebrity news is so popular. People get to learn something about their favorite stars. But since small-market athletes don’t get the rave coverage that the Peyton Mannings and LeBron James of the world, you have to make your own news.

Blogs are becoming more important and popular among the PR crowd, especially crisis communicators, because they avoid the whole filter of mainstream media. For athletes, this avoids the filter of the sports media, which only gives a scant amount of attention to your sport anyway, and even then, only to the victories of the marquee stars and screwups of everyone else.

Tip: Use Google Analytics or Yahoo Analytics to measure web traffic. Demonstrate to sponsors that you 1) can get traffic to your blog, and 2) can send that traffic to sponsors’ websites.

Social Media PR

Adopt a strategy of sharing with other bloggers in your sport. Even though I’m not a big open wheel racing blogger (I’ll get to blog from the media center of the Indy 500 for the 3rd year running, but won’t be going to any other races), I can name at least five other race bloggers who all have a decent readership. And they’ll gladly share some digital ink with anyone from the sport who will talk to them.

So, talk to them. Tell them stories, give them exclusive news, and grant interviews. In short, treat them like real journalists, and they’ll pay you back with space, exposure, and kindness. Let a few bloggers break the news about your new team, your plans for the year, or even your struggles. They’ll become your fans, and tell their fans all about you, which will make them your fans too.

I’ve been listening to Wall Street Journal sports writer Stefan Fatsis‘ book, A Few Seconds of Panic (affiliate link), about his weeks spent in training camp with the Denver Broncos as a kicker. While I have never been a Denver Bronco’s fan, Fatsis’ look at the danger and drudgery of training camp and football has me looking at the Broncos in a whole new way, and I may have to cheer for them a few times this year (something I would never have done until this week). Can you find bloggers to do that for you? What about bloggers outside the sport? When less than 1% of the country knows who you are or what you do, non-industry bloggers are a rich, untapped vein. (Just don’t blanket every blogger out there. You’ll be labeled a PR spammer.)

Tip: Let other bloggers tell your story. If they make it compelling enough, they’ll win your fans for you. If you connect solidly with 10 bloggers and they each have 1,000 readers, you’ll reach 10,000 people. Now, compare that to the effort you would need to put out to reach 10,000 people yourself.

Build a Facebook Brand Page

You may already have a Facebook page, but that should be kept private. Try not to connect with your fans on your personal Facebook profile, since that’s where you’re also connecting with family and friends. Instead, create a Brand Page, and connect with people there.

However, it’s crucial that you actually use this page regularly; don’t ignore it. Promote your blog posts there. Post status updates when you publish your tweets (but don’t feed your Twitter stream into Facebook; it’s annoying. Just rewrite them to be more Facebook friendly.)

Tip: Republish your videos and photos to your Facebook page too. Ask your fans to share them with your friends. It’s a well-known adage in social media circles that we consumers trust recommendations by our friends. Let your fans evangelize to their friends about you.

There are a whole lot of other strategies I could recommend — posting videos to YouTube and photos to Picasa/Flickr — but that’s for another post. Use these strategies as a place to start and start building your personal branding campaign as a way to get sponsors, build name recognition among fans, and add new fans.

Do you have any strategy suggestions? Anything you’ve done as an athlete, or anything you wish an athlete would do? Share your wisdom in the comments section and let’s learn from each other.

My book, Branding Yourself: How to Use Social Media to Invent or Reinvent Yourself (affiliate link), is available on Amazon.com, as well as at Barnes & Noble and Borders bookstores. I wrote it with my good friend, Kyle Lacy.

Photo credit: Just_Bryan (Flickr)

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Are You a Social Media Private, Captain, or General?

I’ve noticed that most social media books are written at one of three levels:

  • 30,000 foot view — The General
  • 15,000 foot view — The Captain
  • Ground level — The Private

Books at the ground level, that is, the Private’s level, are how-to books. They detail the step by step process you need to follow to execute a strategy. Follow those steps, and you will have done the right thing. Write a weekly blog post using these 12 steps. Add 1,000 people to your Facebook business page by using this tool. Feed your blog post into Twitter with this plugin. They touch on strategies, but they’re mostly just books on execution.

Books at the 15,000 foot level — the Captain’s level — are the strategy books. They show you how to create the plan to give to your Privates, with some statistics to back it up. They tell you to blog, because 77% of American Internet users read blogs. They tell you to use Twitter, because 150 million people are on Twitter. They tell you to use Facebook because Facebook has 600 million users. They may touch on the why, and they may cover a little execution, but they’re by and large books on the what and when of social media

30,000 foot level books — the General’s level — are the why books. They tell you to use social media, because social media is more popular than porn, or because more people use social media than any other form of entertainment out there, including television. They tell you why you need social media, maybe even tell you what you can accomplish with it, but they’re short on strategy, and they never, ever discuss processes.

A General’s book explains why you should “Take that hill,”

A Captain’s book shows you how to “Take that hill by outsmarting your enemy.”

A Private’s book explains every step you need to “Take that hill in 30 days.”

I’ve been thinking about this a lot, because I’m trying to decide the next stage of my development. I’ve spent so much time on the ground, telling other people how to do processes, and that’s working well. Those blog posts are some of the most successful I’ve written. Those talks are some of the most well-attended at any conference. But, just like the army, there are thousands of us.

I like creating strategies better. I like being the Captain. I’ve created enough marketing strategies over the last 18 years, because I get the most enjoyment out of it. Of course, with an army of two here at Pro Blog Service, I’m also the Private, carrying out the strategy I just created.

But I hate being a General. I don’t have the patience or world view to tell people how to see the big picture. I can’t even see it that clearly myself a lot of the time. I know enough to explain to a client why we need to take that hill, but once that’s done, and they’re convinced, I can’t add any more value, unless I can put on my Captain’s bars and create the strategy.

However, it’s the Generals who are seeing a lot of the success in this industry. A lot of luminaries in the business world are Generals. A lot of rock stars are Captains, but they don’t get the glory. Or the keynote speeches. Or make the New York Times Best-sellers list.

But I also know myself enough to know that I’d much rather give up that stuff if it meant liking what I do. Still, I’m wondering if I can create a new niche for myself. Maybe I can be a Major, or even a Colonel. I can tell people why they need a strategy, and then I can create it. Sort of the 22,500 foot view. I don’t want to hang out out 30,000 feet above the earth, and I’m tired of slogging in the mud.

So who are some good Majors to pay attention to? Who are some of the business leaders I should be watching, and what books should I be reading? What have you been reading lately, and why should I read it too? Leave a comment, and let me know.

My own book, Branding Yourself: How to Use Social Media to Invent or Reinvent Yourself (affiliate link) — a true Captain’s book, if there is one — is available on Amazon.com, as well as at Barnes & Noble and Borders bookstores. I wrote it with my good friend, Kyle Lacy, another Captain, who’s been eyeing a Generalship lately.

Photo credit: Virginia Guard Public Affairs (Flickr)

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The Need for Social Media Experts Grows

People are starting to trust their peers less and less, according to a the Who Do You Trust? report from MarketingPower.com.

A lab coat does not automatically make you an expert. But it helps.

Researchers attribute this drop to overfriending. We see it all the time with people on Facebook with a few thousand friends, most of whom were gathered to build an army in Castle Age (guilty!). But all these friends telling us we “should” do this, we “ought” to try that. We can’t really trust anyone anymore.

This means, says MarketingPower.com, that people are starting to trust professionals a little more:

There’s been a decline in trust in a “person like myself.” A “person like yourself” fell from 47% in the 2009 study to 43% in 2011; this represents a steep decline from 2006 levels of 68%. In addition, a regular employee increased in credibility from 32% in 2009 to 34% in 2011. When it comes to the credibility of information, respondents trusted academics or experts [emphasis added — Erik] the most (70%), followed by a technical expert within the company (64%), a financial or industry analyst (53%) and a CEO (50%).

What does this have to do with social media? Basically, it means the need for social media experts is growing, and people don’t want professionals who use goofy titles to avoid the whole social media expert controversy. They want to be able to trust people who are credible and have the information they need — 70% of us want the experts.

  • If you’re a consumer-level trainer, like Patric Welch (aka Mr. Noobie), you’re highly sought out by noobies who are looking for basic answers on how to use Facebook and Twitter, how to write blogs, or how to research, buy, and use digital cameras and laptops. These beginners want someone they can trust, because that person has high credibility. They don’t want ninjas, gurus, superheroes, or surgeons, they want experts. In short, if you’re not an expert, or your Memaw’s favorite grandson who knows a lot about “Facespace,” they’re not going to hire you.
  • Although the data points to individual trust, this kind of thinking is also starting to find its way into the workplace. People are beginning to look to colleagues and associates within their professional networks. We’ve already seen the growth of the use of LinkedIn, reading industry blogs, or looking to their Twitter feed for professional advice, and the use of “real” experts is starting to grow. If you’re still playing at being a social media guru or shaman, companies are not going to call you.
  • Websites and print publications want experts to write for them, conferences want experts to speak to them. They need people who know what they’re doing, and have demonstrated their knowledge and understanding of the issues. This is not the time and place to use goofy titles. While it will work within our industry, when you talk to people outside the industry, they don’t get our cute little quirks and they don’t understand the whole expert/not-an-expert debate.

Trust is becoming more important to people, especially in the business world. Social media as a whole is all about user-generated content. We form opinions and make buying decisions by reading reviews and comments from our friends, and even strangers. But this may give way to, ever so slightly, to the need for independent experts who have a lot of information, and are willing to share it.

Photo credit: Fawksy (Flickr)