Now that we’ve talked about Reach (Breadth and Depth) as well as Frequency, let’s chat about Yield. The simplest definition of yield (in the context of sales and metrics) is this: Yield = the average dollar amount per transaction.

Watch the video to get a clearer explanation of what that means or how it relates to our real world R.O.I. discussion:

One of the cool things about yield is that of the three measurable elements of the ROI equation we have been talking about this week, it is the one that most clearly relates to customer loyalty and brand valuation. What could possibly cause a customer to start increasing the amount of money they spend (on average) every time they buy something from you? I’ll give you a hint: It isn’t a discount coupon. The real insight here is this: Somehow, your products and your brand have to become more important in their world.

What we are really talking about here is capturing more wallet-share (a topic we will cover in greater detail next week). What’s wallet-share? Here’s a quick illustration: Every customer has a finite amount of money they can spend on any given set of products and services. Let’s say that amount of money is $100. If that customer normally spends $25 of that $100 on your products, then you have 25% of their wallet share.

Still with me? Okay. Here’s more:

So the trick isn’t really to get that customer to spend more money on your products. The real trick is to get that customer to CHOOSE to spend less money on someone else’s products in order to spend more money on yours. The thing about gaining wallet-share is that you have to help a customer ignore the opportunity cost of not spending money on something else in order to spend more money with you. That is exceedingly difficult to do, especially without incentives like rebates, discounts or BOGO offers. Yet that is exactly what we’re talking about accomplishing here with Social Media. Not only that, but doing it in a way that is sustainable and consistent over a period of months and years.

Tall order? You bet. Nobody said it was going to be easy. But using Social Media to help set the stage for increases in customer loyalty can lead to positive deltas in yield IF you understand from the start that this is a crucial measurement you need to track regularly.

Increasing yield, just like increasing frequency and reach = growth in revenue. The thing is… you can’t have an impact on yield unless you understand a) what it is, and b) the mechanism behind it.

As with my previous video posts this week, I don’t expect you to walk away from reading this knowing how to apply any of this yet. If you can, great. But if you aren’t super clear as to how this all fits together yet, don’t worry. What’s important is that you understand that yield is another solid basis for goal-setting and R.O.I. measurement.

Tomorrow, I will help put all three R.O.I. elements together in a way that will make sense to a P&L-focused manager who wants you to explain to them how an effective Social Media presence will impact their business in a measurable way. You can talk to him/her about the value of conversations and community engagement later. For now though, if you can focus on solving real business problems using Social Media platforms, you will be doing what most other “experts” in the field still haven’t managed to deliver on. 😉