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    Wednesday
    Jan252012

    Memo to the CEO: "What is our social media ROI?"

    Everyone, especially CEO's, are asking: "What is the ROI on our social media efforts?".

    Here is a sample memo in reply to that question that might come from your marketing, membership or online community management departments. It also helps to illustrate how to define and calculate social media ROI.

    The next time you send that inevitable email asking "What is our social media ROI?" your people can be better prepared to answer that question!

    p.s. Want to learn more about how to define social media goals, measures and results? Visit the SOCIALSTRAT events page for more info.

    ---

    Memo

    To: The CEO

    From: Online Community Director

    Date: 1/31/2012

    Re: “What is the ROI on our social media?”

    Dear Tom,

    Thank you for your email last week asking: “What is the ROI on our social media?”. Here is the answer to that important question:

    Expenses: We are spending $125,450 on our social media efforts based on a.) 1.2 FTE’s - $95,450 (includes pension and taxes) and b.) applications and tools - $25,000 for our private social community network application and $5,000 for subscriptions and applications we use to track and manage our social media programs.

    Revenues: We have realized $156,250 in sales as a direct result of our social media campaigns based on our tracking:

    • Membership – Improved member recruitment, retention and renewals by 1% = $34,500.00
    • Registrations  – A 5% bump in conference registrations this year from our social media campaign which equates to an incremental increase of $116,250 in revenue.
    • Certification – Our Twitter campaign to promote the certification study course produced sales of $5,500.

    Cost Savings: We were able to substitute social media campaigns for some of our traditional marketing expenses, saving us $22,000 as follows:

    • Direct Mail: Eliminated 1 direct mail piece at a savings of $10,000
    • Display Advertising: Dropped 1 display advertising piece at a savings of $12,000

    Summary:

    Based on the above we realized a total of $178,250 in revenue and savings compared to an investment of $125,450 yielding a net positive return of $52,800.

    This means the positive ROI for our social media is 42.1%

    Let me know if you need more information or detail!

    Online Community Director

     

    Want a PDF copy of the Memo?

     

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