Before I wrap this Social Media ROI discussion together for you with a neat little bow, I have to give credit where credit is due: I didn’t come up with this stuff all on my own. I adapted this simple methodology over time to meet the needs of clients who needed real, actionable, simple metrics to determine whether or not their marketing activities were hitting the mark or not.
The real credit belongs to Microsoft for introducing me to these concepts back when I was working in the Distribution Channel. (Big shout-out to @robmoyer and Lisa Williams, by the way, without whom I would have never learned this stuff.)
Originally, F.R.Y. (Frequency/Reach/Yield) wasn’t meant to be applied to Social Media (or any media, for that matter). But as it turns out, it adapts super well to just about anything, so I kind of lucked out by being exposed to it in the first place. Pretty handy stuff, really, when you grasp just how portable it is.
Anyway, you guys have been very patient, so I won’t drag this out any longer. Here is the wrap-up of this week’s R.O.I. discussion with a basic overview of F.R.Y. (You’re going to love how easy this is):
So let’s recap:
Frequency Increasing sales revenue by shortening the interval between transactions.
Reach (breadth) Increasing sales revenue by increasing net new customer count.
Reach (Depth) Increasing sales revenue by helping customers buy deeper into the product line.
Yield Increasing sales revenue by driving customers to want to increase their average per transaction spending.
Getting comfortable with this effectively kills the argument that SM has no real ROI dead. As in: “Yeah? Well how about a mouthful of F.R.Y. there, Mr. social media skeptic?”
Bullet-in-the-head dead.
As in let’s move on and get back to work – at least those of us who know what we are doing.
Does any of this change the way you should engage with your customers? Not one bit. Does any of this make your engagement strategy any less honest, transparent or authentic? Absolutely not. All we are talking about here is giving skeptical (or even full-bore Social Media-agnostic) executives a real end-game ROI they can understand and get behind so you can get the okay to launch a kickass social media practice and blow everyone’s socks off. That’s it.
Oh… and make you accountable for results, which ought to weed out about 99% of so-called “social media experts” whose expertise in using Social Media is about on par with their expertise in eating sushi. (And just as valuable to their unfortunate clients.)
Aside from that last comment, the beauty of F.R.Y. is that it is simple, specific and highly adaptable. Social Media, PR, Advertising, Product releases, incentives campaigns… It plugs into everything. F.R.Y. is the ultimate app. for R.O.I. measurement. Once you understand how it works, you can apply it to just about anything.
One final note:
Do you know what’s really, really cool about this? You didn’t have to spend $400 to attend a Social Media e-seminar. You didn’t have to send a P.O. Box 3 payments of $39.99 plus S&H for a super top secret DVD filled with “Social Media Secrets the pros don’t want you to know”. You didn’t have to fly some overhyped blogger to your HQ to have them regurgitate some tired Social Media For Dummies presentation for a mere $15K per day. This stuff is WAY too basic to warrant that, and unlike many “consultants” jumping into Social Media these days, I wouldn’t feel right taking your money for sharing simple business advice without actually helping you implement it.
Yet, far too many companies get suckered into paying “social media gurus” substantial bank to essentially do little more than flap their mouths and state the obvious without ever delivering any actionable advice. Don’t become one of them. If all you want is a great motivational speaker, buy a set of Tony Robbins CDs. He’s good and you’ll get your money’s worth. But if you want to help your business – and I mean REALLY help your business – make sure you don’t fall into the Social Media “expert” trap: 99% of them are basically just motivational speakers with a Social Media theme. Find someone who knows how to a) measure real ROI and b) tie those metrics to engagement programs. Anything less than that is a waste of your time.
Thanks for hanging out this week. As always, feel free to comment or reach out to me. Have a great Memorial Day weekend. 🙂
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There should be a contest for g’ville peeps to guess all the locations of your videos.
I know this one, but the others have me guessing.
That’s a great idea! 😀
Part 1 was the lobby of the Westin Poinsett.
Part 2 was a corridor in the Hyatt.
The footnote post was the lobby of the Carolina Expo Center.
Part 3 was the railroad tracks across from Zen (in the West End).
Part 4 was under the Main Street bridge on the Reedy River
This could be fun. 🙂
Wow Olivier. I really appreciate these videos. I am in a totally different field, but they make me want to be a “social media practitioner” just to play in a fun, competitive way with the ROI aspects to see what can be done. (I will be doing that for my own ventures.) I hope people are *listening* to what you’re saying. I have never heard people talk about Social Media + ROI in this specific way before, though I may have missed it elsewhere. Applying what you’ve learned in the field to social media marketing in a nice package that can be delivered to executives/decision makers is just so very valuable. If I were a consultant (I sort of am reluctantly one in this area) who did this for my dayjob I’d be over the moon with excitement about how I can better frame presentations, storyboards, ideas, whitepapers, blog articles and the like around this topic.
That said about your debut video series, I’d like to take the opportunity to also add something about your personal style. You are one of a handful of bloggers that touch me deeply when I read your words (and now get to hear you speak.) This medium was *made* for you. Shannon Paul and David Armano are two others that sustain me. Gary Vaynerchuk is another, with his business-related videos. You all actually touch my heart with your wisdom and advice, and I don’t know if it’s that I think like you, or you’re just exceptionally gifted writers/speakers (both, I guess) but it delights me to learn what you’re teaching. I am growing smarter every day, hanging out with you. So thank you, thank you! 🙂
Olivier
Love this approach and the FRY argument. While I haven’t given it a memorable name like you have, basically sing from that same hymnal when I speak with clients. But here is the big question I have for you because it is the one I get and as of yet, can’t really answer.
How can you really, directly link SM activity to sales for any product that isn’t sold online. How can a retailer for instance show that their SM activity has increased Net Customer, Avg Transaction, or anything else? Unless you’re using some kind of coupon, how can you prove that your Twitter account or Facebook Fan page is driving these metrics?
Would love to hear your thoughts and if you covered this in a previous post/video — apologies for not seeing.
Thanks
@TomMartin
Tom, great question. I will share that with you guys very soon.
What I can tell you now is this: There is no way to empirically prove that anything you do has an impact on sales. Even with coupons and discount vouchers, there is no way to know whether the customers redeeming them wouldn’t have bought the product at regular price even without the special offer. Anyone who tells you that they can is either lying or delusional.
That being said, you can show VERY strong correlations by a) looking at trending, b) overlaying timelines, and c) monitoring conversation channels. I will explain how to do this very soon. It’s a little 3-dimensional (think Minority Report, minus the fancy holograms), but not hard to figure out. Tools like Radian 6 offer fantastic capabilities in this regard – and it is a shame that most users/social media “experts” only go skin deep with it and measure “the obvious”. (Not a whole lot of creative thinking there. Regurgitate what the dashboards/reports tell you, but don’t take it any further than that.)
So anyway, hang tight, the HOW posts are coming. 🙂
One more mental illustration:
Imagine a sales chart that shows steady 6% growth YoY for 3 years. Visualize the curve.
Now add all of your bizdev and marketing activities along the same timeline. PR, product launches, etc. (Drill down into the daily and weekly numbers of that sales curve, and notice the spikes around specific events like campaigns, special offers, press releases, etc.)
What you are after is an upward shift in the curve. Not a spike, but a shift. (From, say, 6% YoY to 8% YoY.) All things remaining the same with your other marketing and biz dev, if the only thing you’ve added to the equation is a social media presence, and that curve starts shifting upward a few weeks or months after launching it, that should be an indication that you are having an impact. That is the very first (and very superficial) layer.
Obviously, it goes waaaaay deeper than that, and you have to also overlay online mention trending across all channels, qualify positive vs. negative impressions, etc. It requires a little bit of an ability to visualize and interpret data (yes, in your head) in 3D, but that’s what guys like me are for. ;D What’s easy for me might not be easy for you, and vis-versa. But it can be learned, so don’t fret. 😉
One key point here is that the timelines are very important: As attention and conversation metrics increase or decrease, you want to see a corresponding effect on your sales and demand curve for the same timeframe (allowing for specific delays, as needed). So looking at this data has a pretty crucial visual component to it. It isn’t as simple as looking at an excel spreadsheet and divining equations that will magically infer 100% causality. You actually have to combine the data in a way that is much more organic than what standard issue corporate bean-counters have been trained to do over the years.
New tools, new thinking, new applications for what are actually very basic and old school principles. 😉
I hope that helped a little. If all I managed to do was confuse you even more, let me know. (I need to know that before I fall flat on my face trying to explain all of this the wrong way.)
Thanks, Tom.
Olivier
Thanks. Agree that you can’t directly correlate…but can infer… just wanted to see if you had a silver bullet I had missed. None-the-less, will look forward to your Minority Report. Always glad to find a better widget. If you’re working of Radian6 data I’m even more intrigued as that is what we use.
@TomMartin
The thing about the “magic bullet” is that it’s “magic.” So… it doesn’t exist. (If a social media “expert” tries to sell you a magic bullet, run.)
But I have to tell you, as far as its application, this is the closest thing I’ve run into so far. I am sure that there are better, smarter, easier ways to look at this out there somewhere, just waiting to be discovered.
… Which makes the need for these types of discussions so important. The dialogue around marketing ROI (not just social media) desperately needs to be elevated, and I hope this will start the process. The ratio of hot air to common sense in this “industry” seems to be gravely disproportionate (not in a good way), and that needs to change.
Hopefully thanks to people like you who actually ask the right questions as opposed to settling for the same old BS we all know doesn’t work.
😉
Olivier
Now if I could get my clients to only move 1 variable at a time, life would be grand. 😉 Thanks for the thoughts. Good stuff.
@TomMartin
Olivier, thank you for these ROI posts. My marketing expertise is in higher education where at first glance the nature of FRY is different. Yet, as your company name so well states, universities should be in the business of building their brand to attract students who then become alumni. It’s lifelong and it’s about lifestyle and brand loyalty (so it’s really not that different). As author Daniel Pink would say, it’s a high touch relationship-oriented world now, but unfortunately, many decision makers are stuck with left brain only perspectives. Your series helps to deal with that. I have found your blog and this series to be very helpful as I am establishing my blog and brand. Thank you.
Thanks for the comment, Rick. Every Left-Brain decision maker whose perspective we can “broaden” is a huge victory, in my book. They’re the gate-keepers of change, and getting them onboard with… well, left-brain logic might not be a bad way to go. 🙂
Great stuff Olivier. Dude, you should write a book…that comes with a video version. Seriously.
thanks you for the videos and the ideas,good luck
Достаточно интересная и познавательная тема
I resent that!!! I eat sushi with the best of them!!!
Unclear on how a skeptic is somewhat better than an agnostic, as it would seem that the skeptic is further to the left on the scale….
And, that would be the -10 to 10 scale. Some would use -8 to 8, but I saw it as ten first….
What am I talking about? For you to decide 🙂
Mine goes all the way to 11. 😀
Hey Olivier,
Sorry it took me a bit to get over here and comment, but as always, you’re leading the discussion with thought-provoking content. And really appreciate how much you’ve embraced Radian6 as a strong platform for providing measurement and a basis for ROI.
We’re striving this year to create tons of great content on this topic, so I’m looking forward to continuing the discussion with you. 🙂
Cheers and thanks,
Amber Naslund
Director of Community, Radian6
Looking forward to it. 🙂
(If only Radian 6 had been around 6 years ago. Wow. I’ve been waiting a long time for this kind of functionality, Amber.) 🙂
Regarding the discussion that Tom and Olivier were having above about not being able to directly link SM activities (or any other marketing activities for that matter) to sales I wanted to add something that, while not exactly related to it, helps me when explaining SM’s potential impact.
Think of “Cheers”. Not the toast but he fictional bar from the TV show. Where Everybody Knows Your Name.
Or, more personally, think of your favourite restaurant.
When you first went there it wasn’t your favourite restaurant. You were just trying it out (how you found out about it is a whole different discussion). But the food was great and the service was friendly. So you made a mental note to come back. And when you did, the experience was the same again: great food, service, atmosphere. So you came back again but sooner this time and some of the staff recognised you, remembering you from the last time; maybe you met the owner, were introduced to some of the wait staff. You came back again, even sooner this time, and they remembered your name and you remembered theirs and they knew what sort of things you like to eat and drink so they made good recommendations and you remembered what was happening in their lives so you asked how things were going at home, etc.
So now you’ve built a relationship with the people who work there, they are friends. You eat at the restaurant even more often (increasing your frequency). You celebrate big events in your life there and bring special friends there for special evenings (increasing your average spend [yield]). You start having lunch there occasionally, maybe even holding breakfast business meetings (reach/breadth increases).
Because the restaurant took the time to build a relationship with you (and created an experience that was enjoyable, fostering the relationship building), you rewarded them as a customer with increased custom. You probably also introduced many of your friends and associates to the restaurant helping expand its customer base. To paraphrase Seth Godin, you have gone from being a customer to a friend to a sales person for the restaurant.
How does this relate? Well, Social Media can extend this sort of relationship building and the resulting opportunities outside of the four walls of your business. By building your conversations and community through SM, you can create a following of customer-friends who are loyal to you, who want to spend their money on your products/services, and who want to tell other people about you.
However, don’t forget, if you don’t have a positive atmosphere inside your four walls, if you don’t have a great product and fantastic customer service, then you will never be able to create positive, vibrant conversations and communities through SM (or any other means) outside your four walls.
E
Hey Oliver,
Thanks for all your posts they have been very informative and usefull. Just about to crack on with the rest of them.
Thanks again
Ben Pitman