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When business owners ask me, “what’s the ROI of social media?” it’s often a not-so-subtle hint that they believe that social media marketing is a big, fat waste of time and money. So, sometimes I respond (only half joking) with, “Do you give a sh*t about your customers? Yeah, of course you do. Well, what type of ROI did it get you last month?”
Some people still don’t get it.
Back in 2007, a lot of business owners were posing similar questions about search engine optimization (SEO). If you were one of the folks that didn’t invest in SEO back then, think about where you’d be today if you had known then what you know now. Of course, today there’s little debate about the (massive) potential return on investment that can be generated by well-managed SEO and PPC campaigns.
I think we’re watching history repeat itself, but this time it’s the value of social media that’s being questioned.
Business owners waiting for definitive proof that social media has value are going to spend the next three to five years learning a very valuable lesson. What they’re going to learn is that the cost of doing nothing is exponentially greater than the cost of testing a few social media marketing campaigns.
You should be using social media to:
Maximize Your Digital Real Estate
At some level, online marketing success is about cost-effectively maximizing your virtual real estate. You want to be seen as THE authority for what you do in the markets you do it. Depending on your industry, all the popular social media websites – Facebook, Houzz, LinkedIn, Pinterest, Twitter, YouTube, etc. – have the potential to represent undervalued real estate.
Being seen as THE authority is even easier when you’re an early adopter. With over 15,000 fans, this is what Four Seasons Heating and Cooling in Chicago doing on Facebook. When I asked Four Season’s president, Dave Musial if he is getting any business from their Facebook efforts, he responded that he isn’t using that as a metric for success. Right now, it’s all about low-cost TOMA (top of mind awareness).
The rewards are certainly worth the cost. Assuming you don’t do anything completely stupid (like run out of cash), the worst thing that can happen is you spend time building up authority on a social media site that doesn’t gain sufficient traction. As the kids today say, B.F.D.
Protects Your Company’s Reputation
In a blog post on Social Media Today, Amanda Green writes, “Twitter, Facebook, and online review sites have drastically magnified the online visibility of every company imaginable. More than likely, a new firm will have far more unpaid, external content online than material they have generated and paid for themselves. It’s up to you to take control of that.”
I agree. With the right strategy and implementation plan, social sites like Facebook and Twitter can function a lot like online review websites. When it comes to your reputation online, the best defense is a strong offense.
Generate Leads & Sales
Contrary to what some business owners believe, social media websites can generate a significant number of leads and sales. Would you believe it if I told you that our largest customer came from an organic update on Facebook? It’s true.
For bars, restaurants, and local retailers, social media sites can actually generate a better ROI than their primary website.
Now, the same cannot be said for the home service industry (HVAC, landscaping, plumbing, roofing, etc.). In these industries, social media campaigns will not directly generate more leads or sales at a lower cost per lead/sale than web marketing channels such as email, PPC, and SEO. But, home service businesses already “all-in” with email, PPC, and SEO, and still hungry for more leads and sales shouldn’t disregard social media campaigns.
Sharing snippets and teasers from your website across social media websites can function like having five mini sales funnels all leading to your big web sales funnel – your primary website. Just make sure you accurately track your efforts with customizations to Google Analytics as well as phone call tracking.
Get More Referrals
Virtually every home service business is familiar with Angie’s List; in fact, many of them pay extra to be prominently featured on it. What many fail to realize is that consumers have started to treat Facebook as if it were their own private Angie’s List, and you don’t need to spend gobs of money to get the Word Of Mouth (WOM) train rolling. All you need to do is show that you care about your prospects and customers and engage with them in a timely manner on a regular basis.
In terms of building an army of advocates and eager referrers, you must keep in mind that giving a referral is all downside. What I mean by that is that the best thing that can happen is that what the person giving the referral said was going to happen actually happens.
You tell your friend how great XYZ plumbing company is – how their plumbers are clean and friendly and their pricing is fair. Then, some guy reeking of cigarettes with mud colored boots shows up late and offers a price that is far higher than the estimated range they gave your wife over the phone. Disaster. If you want more referrals from social media – and in general – you have to work to minimize the downside. Create a special program – call it The President’s Club – where anyone they refer to you is handled by YOU, the president.
Measuring Social Media Success
According to a survey by Manta, an online business directory, 61 percent of small businesses do not see an ROI from their social media activities.
Does this mean that social media isn’t worth the effort? Hardly. One reason 61 percent of SMBs don’t see a return from their social media efforts is because most business owners don’t have the faintest idea about how to track their social media efforts!
To further complicate matters, ask the typical small business owner the formula they would use to calculate advertising ROI. Prepare to get a lot of responses with not many being the same
My guess is that less than five percent of the people reading this blog know what a tracked URL is and an even smaller percentage are tracking the phone leads and sales they get from sites like Facebook. I strongly believe in accurately tracking every single marketing investment you make – including every significant social media site.
Metrics worth tracking and analyzing include:
- Impressions from posts/content shared
- Community size (followers, likes, etc.)
- Engagement with shared content (typically in the form of likes, shares, retweets, etc.)
- Visits / new visits from social
- Leads and sales from social
If you only rely on lower funnel metrics like quantity of leads, cost per lead, and cost per sale, prepare to be dissappointed with social media. In my experience, social media, as a communication channel, tends to exert a much greater influence on upper funnel metrics.
Conclusion & Takeaways
The answer to the question, “is social media worth it?” is, of course, it depends. If you’re just getting started with your company and you’re operating in the red each month, I think you’d be wise to focus on building a great website, an opt-in email database, PPC, and SEO–before diving into a heavy social media campaign. On the other hand, I think you’d be crazy not to set up complete profiles on every notable social site that’s relevant to your industry–even before you open your doors for business.
If you’ve already got a business that’s profitable, you want to be around over the next 10 years, and you’re interested in growth, you’re crazy if you’re not “all-in” with testing social media. I market our clients’ businesses as if I own them myself and “all-in” with social is the route we’re going with Blue Corona. We’ve already used it to get our largest customer ever. I figure it’s only a matter of time before history repeats itself.
Check out the graphic to the right created by Infusionsoft. Pretty compelling, don’t you think?
About The Author:
Ben Landers is the President and CEO of Blue Corona, a data-driven, inbound internet marketing company. Submit an inquiry to book Ben to speak at your next conference or event.
View more blogs by Ben Landers