By {grow} Community Member Eric Pratum.
I work in marketing analytics. there is nothing more fun than having a knock-down, drag-out fight over the value of a tweet, a follower, or a like. If you have the right tracking set up, I can tell you, but whether or not I can tell you isn’t that important to most businesses. The cost of getting an accurate measurement is.
But I think there are many, many creative uses of social media — and even more creative ways to measure it — that many people miss. Let’s look at that today.
Another way to measure social media
I’d like to offer a different way to look at the value created by deploying social media for an organization. What if it’s more valuable for some businesses to look at the money they save versus the money they make as a result of social media use?
Let’s imagine you run a popular coffee shop. There’s always a line, so your problem isn’t whether or not people are interested in purchasing from you. It’s throughput – how many people you can get through the cash register every hour. Your average sale takes 45 seconds and is worth $5, but you notice that 10% of your customers all have the same basic questions, and asking and answering those questions adds 15 seconds to every sale and does not increase the sale price.
Calculating social media ROI
When no questions are asked, you make 80 sales per hour and take in $400 per cash register. If just 10% of your customers ask a question when they order, you make 75 sales per hour and take in $375. That’s a 6% decrease in sales. The opportunity cost of answering those questions is $25, or the cost of 1 or 2 hourly employees — per hour, per cash register.
What if you could use social media to answer nine out of 10 of the questions asked at the cash register so that customers are prepared and don’t take up that extra 15 seconds?
I’ve actually had clients in this situation. “What’s today’s special?” Tweeted it, Facebooked it, put it up on the big chalk board at the door and above the register. “How many shots are in a grande?” We worked that into updates at least once every week. “Do you have soy?” Yes, indeedy, and our tweeted, instagrammed, and Facebooked photos make that clear. For the cost of one employee hour every day spent on social media, we increased sales per cash register almost $50 per hour.
When you’re open 12 hours per day, 7 days per week, 360 days per year, that’s additional income of $216,000 per cash register per year.
Another type of social media savings
Let’s imagine you have a call center for your kitchen appliance business. If you knew that 10% of your callers looked for an answer online before calling in, would it be worth updating your FAQ, going to forums/blogs/Twitter search/blog posts/etc, and try to answer their questions? You could cut your call center staff and put those savings toward product development, marketing, sales, profits, or who knows what else or you could just cut your wait times and make your callers that much happier.
I had a client that did this and saved hundreds of thousands of dollars every month.
Calculating the value of your social media activity
Now, should you spend your time calculating the value of a like? It’s up to you. Either way, social media has made a lot of people money in many measurable ways, and if you’re not measuring at least some of your social media in terms of dollars spent, saved, or acquired, you’re missing out on a major opportunity.
What say you? Do you measure your social media ROI?
Eric Pratum runs Inbound and Agile, a marketing research and analytics consultancy/
