Every marketer using social media to generate new business should have ROI high on their New Year's resolutions list this year. Social media has grown up and it’s time for its measurement practices to do the same. We’ve been measuring success based on fuzzy metrics of engagement and influence long enough. Calculations like return on engagement, return on trust and viral coefficient are great for showing value. But value is not the same as units sold, revenue and ROI. Business impact is a financial metric, and it must be reported in financial terms.
Data on purchase intent does not cut it in statistical models. The analysis must accurately measure isolated campaign impact with valid and industry-proven methodologies. Measurement at this level is sophisticated and must be conducted by someone without a horse in the race. Actual purchase data can be collected from retail loyalty cards and third-party measurement firms to provide the validation needed.
Measurement firms have taken proven analytic testing processes and applied them to a digital medium. Since these are proven methodologies, they give marketers confidence in the results that they are going to see. Here are three ways to measure the sales and ROI of your social shopper marketing program.
1. Loyalty Card Matched Panel Tests
Measuring sales based on actual household purchases made with retail loyalty shopper cards closes the loop and provides data on your sales and ROI. This household-level view of purchases provides a robust understanding of consumer purchase behavior. Companies like BzzAgent’s parent company dunnhumby manage shopper card programs for many of the world’s largest retailers. When card holders involved in a social marketing program make a purchase, marketers can connect the dots back to their social media activities. This not only measures purchases made by the customer, but it quantifies the influence they had on others around them.
Studies of purchases from households exposed to the social marketing campaign are compared with a control group of households not exposed to it. If the footprint of the retailer is significant enough, tracking social media sales with loyalty card transactions will be an excellent representation of your sales impact and ROI.
2. Matched Market Analysis
Matched Market Analysis looks are store level transactions. Analytic companies like SymphonyIRI use a two-celled test and control approach to measure sales lift between two geographic markets. For a social media campaign, two markets with similar characteristics are selected. People living in one market are exposed to a social media campaign and people in the other market are not.
With this level of detail, measurement firms apply statistical techniques to match store-to-store sales data to isolate the sales impact of the social media effort. Even though social media sharing occurs nationally, there is a sufficient concentration of people in the individual’s local area. Some variables can’t be controlled in the test. One of them is price and promotion. For example, if coupons are tripled at Massachusetts supermarkets but not in Los Angeles, the measurement firms adjust the data for this variable.
3. Market Mix Modeling
Market Mix Modeling (MMM) allows marketers to look at the big picture of a brand’s marketing. Firms like Nielsen analyze media effectiveness across channels to evaluate every element of the marketing mix. The analysis is able to distinguish sales volume from marketing compared to just being on the shelf. The results demonstrate the sales volume and ROI from each media channel. MMM studies are usually conducted annually to keep a pulse on the changing trends in marketing and media effectiveness.
With the right data collection practices, social marketing data can be analyzed in these models. Since social is typically a smaller media investment, it can be obscured by the large footprint of television or other media. Keys to getting social media to register in a MMM study include variation and granularity of the impressions over time. Discussion data must include weekly impression volume on a market level.
The results have been impressive. BzzAgent analyzed the social marketing ROI from a variety of MMM studies and found that for every dollar spent, social marketing returned an average ROI of $1.56. That’s on average. For some products, the ROI reached as high as $4.19.
A Resolution That's Easy to Keep
Studies show that people who explicitly make resolutions are 10 times more likely to attain their goals than those who don’t. Start the year off right. Resolve to evolve your social marketing measurement practices in 2012 and you’ll develop a habit that can change your business.
