Category Archives: Social Media Business Plan

10 Points on How to Calculate Facebook Business ROI

My last post here was about research showing most companies track social reach but only one in five tracks ROI (return on investment) by channel. So I’ve been thinking about how to do that. And this is the result, a study on tracking ROI on Facebook.

Return on investment takes two numbers: the investment is what you spend. The return is what you get back. And both have to go from vague and intangible to specific and in dollar value.

What you spend is tricky, but manageable. It starts with the time that you spend either yourself, or people you pay. Then add in Facebook ads if you use them, time to prepare whatever ads you use, and the time and money in advertising for Facebook likes outside of Facebook. It’s a finite number. You can get a reasonable estimate. If you like jargon, we’re aiming here for the cost per social action (CPSA).

Estimate time cost per hour spent by dividing annual gross salary by 1,000. So the person grossing $50K per year costs the employer $50 per hour. Click here for details. Include yourself.
Add the cost of related marketing programs. What you spent on Facebook ads is obvious. Also what you spent on coupons, or downloads, or freebies to generate likes. And if you market elsewhere for Facebook likes (like posters, or trade shows) add that in. Make a realistic estimate for what percent of a marketing program cost is owed to Facebook.

What you get back, the return, is harder. It takes some judgment, estimations, and hypotheticals.

The most valuable Facebook likes are those that start a relationship. For example, I like your page to get an ebook I want to download, I do, I like the book, and I become a customer. Other examples would include a Facebook like that generates a visit to a restaurant, or one that starts a trial subscription to a publication that ends up with renewal.
The least valuable Facebook likes are fake likes, when programmers create false Facebook accounts and then program them to go like pages that pay them money for the service. A recent NPR piece said fake likes were selling for about $75 per thousand. They’re toxic, worse than worthless. Your business looks good at first glance but bad on closer inspection, when somebody decides to dig deeper. A fake like costs $0.075 but is worth a negative number when it exposes a business using sleazy tactics.
Somewhere in between most and least valuable are the less defines Facebook likes that come from a real person clicking a link and liking a page. Maybe they are customers, maybe not. It depends on the type of business, the page, the call to action, and a lot of factors we don’t get to know for sure.
Knowing the customer lifetime value (CLV) helps. This Wikipedia entry or this Google search will show you how to calculate CLV. I’ve dealt with two real-world examples lately: a gym has CLV around $450 and a subscription website has CLV of about $300. That’s not industry rules of thumb, those are two specific businesses.
In theory you could calculate the value of a Facebook like by taking the percent of likes that end up as customers and applying the CLV. If CLV is $450 and 10 of 100 Facebook likes become customers, the value of a like is $45.
Facebook likes can generate web visits that generate conversions to sales. It’s relatively easy to know overall conversation rate based on calculations that divide total traffic by units of sales. It’s also relatively easy to know how many web visits came straight from Facebook.
But we don’t get to measure everything. The data gets fuzzy fast. What if my wife found the restaurant on Facebook, liked it on Facebook, but when we eat there we use my name and credit card? Remember the old days when the restaurants had cards with the bill asking where you heard about them? That doesn’t work. Even web analytics fall down when people bounce around the web a while before following up on something they saw on Facebook. There are lots of measurement gaps.
Things that can’t measured can still have value. John Jantsch defines marketing as “getting people to know, like, and trust you.” A Facebook like might be an indication of that happening; but we don’t get to know. We have to guess. What’s the value of a negative comment on a Facebook site that alerts a business to a problem it might not have seen as quickly? We have to guess.

Granted, some of these metrics are less than exact. But at least this gets you thinking about inputs and outputs, costs and benefits, and real business ROI.

(Image: courtesy of marketingsherpa.com)

Developing Your Social Media Platform Focus

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(Note: this is the third in a series on developing a social media business plan. The first was about the market-defining story and the second about a social media SWOT analysis.)

So, as a business owner looks into the world of social media, there are five big social media platforms: Facebook, Twitter, LinkedIn, Pinterest, and Google+. How do you sort and select? Do you deal with all five, choose one and focus, or what? I get this question a lot.

My answer depends on several fundamental principles of all business strategy:

Everything is rooted in context. There are no valid general best practices. It’s all case by case.
Everything you do rules out something else that you can’t do. You have limited resources. You can’t do everything, so you have to do the right things.
My favorite quote, from Bill Cosby: “The secret to failure is trying to please everybody.”

And then it depends, obviously, on the business specifics. And no generalizations work all that well. But there are some general indications that help. For example:

Each of these main platforms is busily copying what’s good about the others. They are growing closer together.
Facebook tends to be more about people, individual consumers, products, events, fashions (except where pictures are the key; Pinterest = pictures.) Facebook is not giving up on pictures.
Twitter tends to be more about content, ideas, links, topics, and opinions. Experts do better on Twitter. Bloggers, consultants, and publishers tend to like Twitter.
LinkedIn is about companies and careers. That’s changing especially fast with LinkedIn’s latest interface, which is adding the more popular features of Twiter. But if you want to reach businesses, and business owners (classic B-to-B) they might be in LinkedIn.
Google+ is new and exciting. Techies love it. It’s built from ground up to do social media better than the other biggies. Detractors say it’s for Google employees.
Pinterest is pictures. It’s more women than men. It’s full of great photos, plus posters, mottos, humor, and pictures of products. I saw an infographic saying Zappos gets more web visits from Pinterest than from Twitter.

So what do you do with all this? Do all five? Here’s what we say about that:

Focus on two or even one of the main platforms. Put the effort there. Post, read, engage, curate content, represent your business. For most businesses, that’s either Facebook and Twitter, or one of those two.
Yes, a real business has a presence on all five. It’s business, and people will search for you where they like to search, not where you want them to search. Don’t be absent. We’d recommend differently if you couldn’t post a profile on each of the big five without having to develop new business graphics, or new messaging. Just accommodate what you already have. It’s a matter of hours.
For the non-priority platforms, don’t just set up a profile and let it go. Take a minimum effort to maintain a presence. That could be as easy as five or ten posts per week on each, requiring a total of 20 minutes per platform, a half a morning per week.

And which work for you? That’s a strategic decision. It depends on goals, business type, resources, people, and your specific identity, strengths, and weaknesses.

Developing Your Social Media SWOT

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(Note: this is the second in a series of posts developing the components of a useful social media business plan: the social media SWOT. The first was about the market-defining story.)

SWOT — strengths, weaknesses, opportunities, and threats — is my favorite framework for getting into strategy. I’ve used it for years. In groups, it generates good discussion, brings people into the process. And it brings out all three of the main elements of strategy: identity, market, and focus.

To do it yourself, remember the basic rules of SWOT:

Divide a piece of paper, whiteboard, or tablet computer drawing space into four parts as shown in the illustration here.
Collect your thoughts in each of the four categories. Use bullet points. Jump around the categories because some thoughts will generate other thoughts. For example, our virtual locations in Oregon and the Silicon Valley are both strength, in our case, and weakness.
Remember the classic rules of brainstorming: collect a lot of points. Don’t criticize and argue and refine and select only the best. First, get them all down. Filter and digest later.
Consider the division down the horizontal middle: above the middle, strengths and weaknesses are internal. They are attributes of your business. They’re like your own personal strengths and weaknesses; they can be changed, but not easily. It takes time. And effort. Opportunities and threats, on the other hand, are external. They are out in the market. You can predict them, analyze them, work towards opportunities and away from threats; but they aren’t something you control.

Remember that in this case we’re talking about your business’ online presence. It’s not the business itself, or the entrepreneur; it’s just the online presence. Think of it as your website and your position in the social media big five (Facebook, Twitter, LinkedIn, Pinterest, and Google+).

Examples of strengths: good site, good profiles, good content, lots of likes, followers, tweets, pictures, links retweets, friends, etc.

Examples of weaknesses: no presence in some of the big five, no content, poor content, inconsistent content, no focus, no strategy.

Examples of opportunities: something you can give away in exchange for likes and follows, easy freebies, readily available content, curation of content (my favorite is Rebelmouse), events, promotions.

Examples of threats: competitors’ pages, content, engagement, branding, presence, success.

The SWOT is a great entry into strategy. And a social media SWOT is a great first step to a social media business plan.

3 Silly Reasons To Quit Social Media

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This is just so silly it’s fun: the 3 Reasons You Should Quit Social Media In 2013 are, according to a Forbes.com post over the weekend:

It harms your self esteem.
Your blood pressure will thank you.
Online is no substitute for offline.

Two of these are just fun — bad research, obviously — and one just silly.

Harms your self esteem, supposedly, because of research the post author cites…

… a UK study from the fall found that over 50% of social media users evaluated their participation in social networking as having an overall negative effect on their lives. Specifically, they singled out the blow to their self-esteem that comes from comparing themselves to peers on Facebook and Twitter as the biggest downfall.

Now that’s obviously bad research. Poorly phrased questions, a non-random list, or some other flaw. And, by the way, proof that these days you can find research to prove any crazy assertion you want to make.

And as for social media being bad for blood pressure, that’s because …

Social media a hotbed of bad behavior – flame wars, bragging, bashing and crimes against grammar, among other misdeeds.

So if that’s a worry, then don’t drive a car, don’t talk to people, and, well, don’t get out of bed. Don’t read news. Don’t turn on the television. Sleep a lot.

As for the third reason, online being no substitute for offline, the post makes a good point.

Almost a quarter of Americans say that they’ve missed out on important life moments in their quest to capture and memorialize them for social media. Think about that the next time you’re Instagraming your anniversary dinner at P.F. Chang’s.

So there’s a good lesson in that, and a good reminder. We’ve all seen that happening, most of us have done that. But wait — is it really all or nothing? Either quit social media altogether or get lost in your phone when you’re with people? That’s not great logic. How about take the real nugget out of that one, and draw some borders.

Final thought: that’s a good title, though: 3 reasons to quite social media. It got my attention. Contrarian titles work.

The Storytelling at the Heart of Future Marketing

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My thanks to Social Media Today for embedding this video on their post titled 4 ways to prepare a Facebook content plan. That’s a good post, too. Especially this, prepared by Coca Cola, on what they call “passionate storytelling.” regarding future marketing. This is golden.

And what about a company of the size and scope of Coca Cola, one of the grand old brands that made traditional advertising great, a warlord of major media, sharing the intellectual highlights of its new-world thinking?

I’m impressed.

Q&A: Who Do I Follow For Business Twitter

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Here’s another good question I received from my Ask-me form on my Timberry.com website:

If I’m trying to build my Twitter presence to support my [omitted] business, who should I follow? How do I find them? How to decide?

I’m happy to answer that one because I think it could be useful to a lot of people starting to look at real-world business use of Twitter. Following in Twitter is important for several reasons:

Who you follow determines what you see. Your Twitter stream is the collection of tweets from the accounts you follow.
Who you follow is who you are. Other people can see how you follow. That means they see what you like, believe in, care about, listen to, and so forth. c
Who you follow is who’s likely to follow you back. For most businesses, following is the best way to be followed. About a third of your follows will follow you back — more if your tweets are interesting, less if they aren’t.

So, with that as background, here’s who I think you should follow for your business twitter account, in order of strategy value:

Leaders. The influencers you respect, want, and need. The people, businesses, and organizations you’d like to have knowing and liking and trusting you. It’s hard to generalize so think strategically for your specific business. For example, a restaurant would want local media, local organizations, hotels, food blogs, night out blogs, restaurant guides, travel guides, reviewers, and local people who comment on restaurants and have followings. The chamber of commerce, restaurant association, chefs’ schools, local university groups might be good targets too.
Media, writers, bloggers, and experts in your field. Authors whose work you like and respect. People who you’d like to see writing about you. Our sample restaurant would look for food, dining, restaurant, travel media.
Social media stars who turn up in keyword searches. Search the web, search Twitter, using important keywords. The restaurant example might search for #dining, #gourmet, #organic, #vegetarian, #chefs, #fastfood, #slowfood, #meals, for example. And if it is located in Eugene, OR then it would search for #eugene and #oregon too. See who tweets with those hashtags. See what content they tweet. Decide whether you are compatible with them.
Local organizations, groups, and institutions. The schools, universities, community colleges, public theater, development groups.
Some general news and bloggers and information sources on idea, places, topics, and people that interest you. This is just because you want to see what they’re offering. They’re not strategic.
Friends, family, and compatible business associates.

10 Business Social Media Mistakes to Avoid

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Everybody involved with business social media (or flirting with it) ought to read 10 Ways We’re Being Rude in Social Media and Don’t Even Know It by David Spark. Here’s his list (explanations are either mine, or in quotes):

Friend collecting. David makes the point that friends and followers aren’t necessarily a measure of engagement or value. You can buy them. You can collect them with software-driven scripts and special tools.
Asking people to “like” your content-free Facebook page. What’s to like when there is nothing there? Put the content up first, then engage.
Requiring app installation to consume a message. For example, that greeting card that requires you install something.
Auto DMs on Twitter. He’s referring to the practice of setting your Twitter to automatically send a direct message to every new follower, thanking them, or — worse still — asking them to buy something from you.
Happy Birthdays on Facebook. David says: “Only typing ‘Happy Birthday’ is truly the least you could do outside of doing nothing.” And he adds that there is no extra credit for remembering when Facebook is reminding you.
Sharing without consumption. “We all have the ability to share any piece of content without looking past the headline.” Read it first.
Photo overdose of your kids and your wedding. “Your kid may be cute to you, but you’re the parent and that’s how you’re supposed to feel. The rest of us are not supposed to feel that way.”
Posting bad photos.
Follow Fridays. Hmmm. Honestly, I’ve been follow Fridayed and I’ve liked it. I thought of it as mutual back scratching. The #FF in a tweet followed by listing handles is a recommendation to your followers that they follow the people you list. But David points out that it’s really about getting the attention of the people you list. I think it’s kind of faded as a behavior anyway.
Automatically cross-posting contentless information across social networks. This should be higher on the list, in my opinion. Having foursquare post when you check in, or Spotify post what you’re listening to, for example: That’s just clutter. That stuff gets in the way. Don’t do that.

A Good Social Media Business Case Example

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One of the things we almost always recommend in a social media business plan is a proactive thoughtful promotion to generate engagement from your strategic target market. Give something those people want. Ask them to engage with you to get it.

This morning I posted about this on Up and Running. But it also belongs here.

It’s about Intuit’s Small Business Big Wishes promotion going on right now. It ties into social media engagement, small business, and even the holiday season. Write about your business wish, win the vote, and win a $5,000 grant.

It’s one winner a day for … (quoting the rules):

… a wish that Sponsor [Intuit] is legally able to grant and is reasonably feasible to grant for your small business (that is valued at approximately $5,000 or less) and how it will transform your business in five hundred (500) characters or fewer.

And it’s neatly designed to develop Intuit in social media. To win, aside from your 500-character text, you also have to …

…visit www.loveourlocalbusiness.com and sign into one of your social networking sites, including Facebook, Twitter, Instagram or Google +.

And …

You will also be required to complete a registration form including your first and last name, email address, business name, and other details about your small business.

So look at what this promotion does:

It addresses a specific target market: Small business.
It motivates people in that target market to take engage over social media.
It gets attention (I’m posting about it; you’re reading that post).
It connects them with specific target market businesses.

I suggest you think about how you might apply the same kind of thinking to your own business and its presence in social media. Maybe you can’t afford the $5,000 per day that Intuit is investing, so offer something you can afford that interests your target market. And give that away for social media engagement, including names and contact information.

Very slick.