Social Media Payoff (ROI) is tough to measure, and some will say you can't calculate it yet. It is too soon because Social Media Marketing is so new. That being said, there are definite payoffs being enjoyed by businesses of all sizes and in all markets.
We will list some specific companies and numbers below, but first let's discuss a very important consideration that will affect ROI outcome. There are many ways to implement social media marketing and some may have little or no return on investment. Participating in social media in ways that are effective involve two major components: engagement in the form of conversation (not selling), and active involvement (not a once and forget method of marketing). Companies that utilize social media in the same way that the people they want to target WANT TO BE SOCIAL, will enjoy the most success in terms of ultimately growing brand awareness and ROI online.
While there is still a place for search engine optimization (SEO), where a website is optimized to rank high in the search engines, we now have social media marketing, including social sites that are ranking high in the search engines. No longer do we have to pay thousands of dollars to buy backlinks to a business website. Today, we must spend the TIME that is required to participate in social media for the greatest payoff.
The fact that social media marketing does not have a fixed cost is true because each social media project is unique and will require varying amounts of time, tools, services, etc. A social media plan should include comprehensive use of available social media sites and opportunities for engagement, and should be targeted to the industry, product, or service. A generic plan without a focus on the business will not work.
What most people who work in the social media field understand is that trying to put a cost on conversation is hard to do. Also, social media marketing usually does not produce instant results. If this is true, how do we measure success?
One way is to measure the feedback you are getting. Are there positive responses being posted, and is there growth in terms of numbers of people engaging with the company online? If the business is getting active supporters, they will - in time - spread the word.
It is important to understand that social media marketing takes hard work, consistent effort, and engaging in ways that are helpful, entertaining, educational, or enlightening. This is the way you build a group of followers who want to take action by telling their online friends when you announce something of value.
There are tools to use that can help measure ROI in terms of: your reach, traffic to the website, influence in the market, conversions, and
retention. Google analytics is a free service that can track information for any website. There are other free services and many paid services as well. Links to the website can be tracked with backlink tools. The numbers of fans, followers, members, etc. in social sites is readily accessible in each of the individual sites.
Worthy of repeating is the idea that social media marketing is ongoing and requires active participation. People will not stay engaged if there is not regular, new content posted. There are many other websites that will pull for their attention. If you give them a reason to come back, they will not only come back but tell others to do the same.
Some numbers that testify to the ROI businesses can achieve:
BlendTec increased its sales 5x by running the often humorous "Will it Blend" Videos on YouTube blending everything from an iPhone to a sneaker.
Dell sold $3,000,000 worth of computers on Twitter.
Vaynerchuk (WineLibrary.tv) found first hand that $15,000 in Direct Mail = 200 new customers, $7,500 in Billboard Advertising = 300 new customers, AND $0 with Twitter = 1,800 new customers.
Naked Pizza, all natural Pizzeria in New Orleans, that specializes in healthy pies, set a one day sales record using social media. In fact 68% of their sales came from people "calling in from Twitter." And 85% of their new customers were from Twitter.
Safeway has 62,615 fans of Facebook.
Intuit introduced "Live Community" into their TurboTax┬« products 2 years ago. Due in part to the resulting word-of-mouth, they have seen unit sales increase +30% each year and have now integrated "Live Community" into their other products like QuickBooks, Quicken, etc.
Tweets for a Cause sent out a tweet from Atlanta to encourage support of Susan G. Komen for the Cure. As a result of retweets, the Atlanta Chapter site received 11,000 visitors in 24 hours as a result of this initiative by ResponseMine Interactive.
Software company Genius.com reports 24% of its social media leads convert to sales opportunities.
Burger King's Whopper Sacrifice Facebook program incented users to give up ten of their Facebook friends in return for a free Whopper. The estimated investment for this program was less than $50,000 yet they received 32 million media impressions which roughly estimated equals greater than $400,000 in press/media value. Which to put in context is somewhat like reaching the entire populations of 19 states (understanding this doesn't account for unique vs. repeat visitors, etc.)
One survey found that 71% of companies plan to increase investments in social media by an average of 40% because: a) Low Cost Marketing b) Getting Traction c) We Have To Do It.
The takeaway is that if you work your social media plan with integrity and the commitment to contribute value, on an every-day consistent basis, the same as you would do offline in relationships with prospects - it becomes easy and natural. That is what people are looking for in advertising and marketing - and that is what they will reward by doing business with you and referring you to others as well.