In this section, we are going to use the insight of our customers to figure out our social media return. Unlike the previous section, this is a more nebulous process because it’s pretty hard to assign a hard-dollar value to something like consumer insights! But we can derive some important information from it.
Our three step process in this method is as follows:
#1. Define goal based on the ability to generate a high number of high quality consumer insights
#2. Define our social media ROI as the value of insights
#3 Bring in hard dollars by comparing the cost to generate the same quantity and quality of consumers using a focus group.
Number 3 is of course the tricky part and the use of a focus group makes it easier. In this case, we can use the consumer insights equivalency test, using the cost of a focus group as a baseline. You should know the number of good consumer insights per focus groups and the cost of said focus group. Using these two numbers, you can estimate the cost of each insight.
First start with a focus group and see what exactly it is they are saying about your product. You can do this with a survey (or a small cluster of surveys), or even use things like the Facebook polls to get an idea. Then start tracking what users are saying to each other and to us over the course of a month. From here, you can sort out insights into groups of quality, using consumer insights from a focus group as your baseline. Once this is sorted, you can figure out the value of your social media presence through consumers.
You will be using a familiar formula at this point, though tweaked a bit to fit consumer ideas. Using the standard ROI formula, we can calculate this example:
Pretend that the return on consumer insights is about $900 and your monthly investment is $600. Plug it into the formula:
($900-$600)/$600=.5 or 50%.
So, your Social media ROI for consumer insights is about 50%.
The main problem with this system is that it’s a lot of guesswork and it relies heavily on your estimation of consumer insight value. This can easily skew the numbers, which makes this method an ok starting point, but I wouldn’t use it to get any hard numbers to show potential investors!
In the last section, we will be looking at social media ROI based on customer support calls and some concluding thoughts. Stay tuned!
To read Part I of this awesome ROI Series CLICK HERE!