CEO and CMO's guide to social media ROI. This white paper provides a)overview of thought leadership on the topic social media ROI, b)shows how listening & engagement leads to ROI and c) provides recommendations on how to maximize impact of social media on your business

1. The CEO & CMO’s Guide to Social Media ROI
How Listening and Engagement Leads to a Better Social Media ROI
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2. The CEO & CMO’s Guide to Social Media ROI
How Listening and Engagement Leads to a Better Social Media ROI
I t’s well-accepted that social media can have
a transformative effect on businesses. We
hear stories every day about how social media
empowers companies to leap ahead of their
competitors virtually overnight. But while many
organizations are eager to profit from this new
medium, they often make the mistake of ap-
proaching social media as though it followed
the same rules as other, more traditional mar-
keting strategies. This leads many compa-
nies to focus on metrics that are inaccu-
rate, incomplete or simply irrelevant. The
elusive nature of social media’s ROI often re-
sults in a distrust of social media.
The reason for this challenge is clear. For most
organizations, social media represents a new
and unproven strategy, and aligning the expec-
tations of the management, marketing and fi-
nance teams is no small challenge. CEOs and
Above: An analysis of traffic patterns for the phrase
directors insist on receiving hard data, such as “social media ROI”. Source: MutualMind
ROI, before committing their resources. But convince management. And as marketing
without an appreciation for the complex and departments around the world can attest,
diverse insights to be gained from social me- without buy-in from the rest of the com-
dia, it becomes difficult to reach a verdict on pany, social media campaigns may never
social media’s viability or effectiveness in terms make it off the ground. If they do, they are
of ROI. typically unfocused, underfunded, and
Some choose to ignore the social media ROI ineffective.
1
problem altogether, but It is important to un-
derstand both the costs and potential value of ROI is more than
customer interactions in social media. To help an equation
weigh these values as a form of ROI, many The question of social media’s ROI re-
marketers attempt to quantify the insights and mains popular in part because financial
relationships gained through social media concerns are so critically important to a
campaigns, but often, these efforts do little to company’s well-being. In fact, 65% of
© 2011 MutualMind 2

3. The CEO & CMO’s Guide to Social Media ROI
How Listening and Engagement Leads to a Better Social Media ROI
firms (Fodor and Hoffman, 2009) indicated feel- problems that might arise in the future.
ing greater demand to show ROI, with one in Among those companies that have seen
three marketers indicating that the demand was the most significant results with social
“significantly greater” than in prior years. media, a report by Aberdeen Research
In 2010 the term “ROI social media” (Zabin, 2009) found that only 32% made
presented 2.5 million hits. The “increased revenue and other financial
same search now, less than a year outcomes” a top priority. The majority of
later, yields over 8.6 million results.
successful social media campaigns
While we understand the need to weigh the fi- focused on listening to and learning
nancial repercussions before engaging with so- from their customers. And they are not
cial media, doing so can be dangerously short- merely sitting back and monitoring the
sighted. On the other hand, successful use of conversation. Over 82% of the highest
social media has been proven to increase performing companies indicated that they
brand awareness and encourage far greater were actively involved in discussions with
customer loyalty. One other non-financial ad- customers.
vantage of social media is the reduction of The results of this approach speak for
reputation risk for your brand. In this sense,
themselves: these companies reported a
social media serves as an insurance policy for
75% increase in customer advocacy and
a 78% increase in year-over-year
customer retention.
How might we learn from such
performance?
Companies that produce successful so-
cial media campaigns are not superhu-
man. Their success cannot be chalked up
to experience (in fact, 44% of the top per-
formers engaged with social media for the
first time within the last 12 months: only
27% have been at it for more than two
years.) Rather, these impressive cam-
paigns have one thing in common: they
focus on the customer first.
Having accurate, up-to-the-minute keyword analysis
helps uncover related questions and topics your cus-
tomers are interested in. Source: MutualMind.
© 2011 MutualMind 3

4. The CEO & CMO’s Guide to Social Media ROI
How Listening and Engagement Leads to a Better Social Media ROI
2 The importance of
listening
In order to make the most of customer insight,
relationships, which many companies
have found to be their most valuable as-
sets.
it is critical to tap into the conversation your The reality is that today’s customer wants
customers are already having. to feel that you are on their side. When a
company treats social media merely as a
The ability to listen and learn from con-
megaphone, consumers lose their trust
sumers around the world is a strong ar-
and respect for the brand.
gument in favor of social media. By paying
3 You must win your
close attention, you can quickly discover mis-
understandings, service opportunities, potential
customers’ trust
partnerships, competitive threats, and even the
Consumers cannot simply be “advertised
specific events, people and situations that mat-
to” as they were in the past. Instead, they
ter most to your audience. This knowledge
demand to be active and willing partici-
empowers your company to stay responsive
pants in your brand. For this reason, it’s of
and relevant to their needs.
vital importance that consumers both
When companies refuse to listen, the opposite trust and respect your intentions. No mat-
happens. Approaching social media as just an- ter how large your organization is, your
other venue for broadcasting the corporate customers will interact with you one-on-
message leads to a distorted view of what the one—and they must feel that your com-
public thinks about and wants from your brand. pany cares about them.
It also prevents building constructive, long-term
Social Intelligence: A Key Competitive Advantage
A Fortune 100 company always needs up-to-date information about their competition—but when
launching a brand-new product, they need even more.
By leveraging MutualMindʼs social intelligence system, one client was able to track key listening
metrics and emerging trends across Facebook, YouTube and Twitter, and quickly adjusted their launch
strategy in response to insights about a competitor's campaign.
Monitoring the social web allowed the client to remain responsive to customer feedback and the
competitive landscape. When mentions of a competing product flared up across social media, the
company was able to act quickly and understand its source.
Result: Arming the campaign with accurate and actionable data allowed the client to quickly uncover
its competitorʼs marketing strategies and tailor the campaign in response. These real-time insights
gave the company a complete picture of their customers, their competitors, and their campaign
performance, leading to a successful launch and a tremendous ROI.
© 2011 MutualMind 4

5. The CEO & CMO’s Guide to Social Media ROI
How Listening and Engagement Leads to a Better Social Media ROI
It might seem discouraging that customers For these reasons, it’s clear that being
now have so much power, and that marketers able to accurately track customer
are less able to control their relationship to the engagement—including their actions,
brand. Rather than bemoaning their diminish- discussions and behaviors— is critical in
ing control over consumer awareness, many determining how to reach them.
savvy marketers have discovered that custom- Know when to engage, and when to
ers still respond positively to a campaign that listen. The results will speak for
inspires their engagement and empowers them themselves.
to build an authentic, personal experience with
the brand.
Why? Because in social media,
the customers are in control.
4 Use frameworks to
understand social
media’s ROI
As we’ve discussed, two of the biggest
Fortunately, marketers have grown in their abil- challenges in making social media suc-
ity to drive direct action from customers. New cessful are a) aligning the expectations of
media tools allow companies to quickly build multiple departments and b) demonstrat-
signature videos, multimedia offerings, crowd- ing the return/value of this investment.
sourced creative projects, and online/offline Without a solid approach and communi-
communities. These kinds of campaigns have cation across departments, many social
been shown to lead to an increased affinity for media metrics can be misinterpreted,
and engagement with a brand. leading to confusion and a lack of clarity
Social media also allows marketing teams to about ROI.
identify and engage directly with key influenc- But there is a better way.
ers and their audiences in order to leverage
Rather than focusing exclusively on short-
their authority and attention. Building trust in
term profit and financial aspects of ROI,
this way is remarkably cost-effective, but
companies are better-served when they
produces big results. In fact, nearly 90% of
integrate their social media roadmap
the top performers in Aberdeen’s study build
with frameworks that can capably ad-
brand by seeking out thought leaders in social
dress multiple timeframes, non-financial
media.
Above: An analysis of social media sentiment for the phrase “social media ROI”. Source: MutualMind
© 2011 MutualMind 5

6. The CEO & CMO’s Guide to Social Media ROI
How Listening and Engagement Leads to a Better Social Media ROI
measures of success, and risk man-
agement.
We recommend using social media
frameworks when planning and
executing your social media strategy.
Aligning to a solid framework greatly
improves your ability to compare
social media metrics on their own
terms, and provides a complete
picture of your campaign’s
performance. Since frameworks act
as guidelines, you must adapt them to
your organization’s needs. This is an
advantage as it forces you to think Above: Diagram of Augie Ray’s framework based on the Balanced
Scorecard. Source: Forrester Research.
through the specifics of your initiative.
There are two frameworks that we feel are the company’s digital and created as-
sets.
worth studying.
✴ In the long-term, compare the con-
The first is based on a well-known sumer perception of the brand with
methodology called the balanced scorecard. the ability of the company to weather
Augie Ray, former analyst at Forrester risk over time.
Research, advocates evaluating a campaign in The second framework that we
terms of its financial impact across both a recommend is by Jeremiah Owyang, an
short-term and a broader risk-management analyst at the Altimeter Group. This
perspective, and evaluating the brand in terms framework differs from the balanced
of the immediate value of its campaign assets scorecard: it focuses on using
(such as a website, Fan
page, or Twitter stream) as
well as long-term shifts in
consumer interest and
engagement.
✴ In the short-term, con-
sider the financial impli-
cations (profit, cost re-
duction, revenue) along
with the value added to Above: Diagram of Jeremiah Owyang’s framework based on organizational roles.
Source: The Altimeter Group.
© 2011 MutualMind 6

7. The CEO & CMO’s Guide to Social Media ROI
How Listening and Engagement Leads to a Better Social Media ROI
appropriate social media metrics for each role able to develop the specific and relevant
within the organization. Owyang believes that metrics needed to monitor your cam-
each participant in the company requires paign. These metrics will be different
different information to be effective: business for every organization: in order to show
stakeholders, for example, need wholly and predict consumer engagement accu-
different metrics from those of a C-level rately, they must be customized to your
executive, who in turn need different data from audience and your specific business
those of marketers. Tailoring campaign metrics goals. Craft your metrics in order to an-
to a range of perspectives and providing each swer a specific question, not merely to
role with only the data they can use collect data.
6
immediately helps companies make sense of a
complex social media strategy. Insist on actionable
Analyzing customer interest is often improperly
data—from day one
To develop a stronger understanding of
reduced to a numbers game: it’s tempting to
campaign performance, we suggest di-
focus on Facebook friends, Twitter followers, or
viding your chosen metrics across a few
newsletter subscribers to get a sense of cam-
key objectives:
paign performance. However, while these met-
rics can certainly prove helpful in seeing a ✴ Brand Awareness: mentions of
campaign’s scale, we encourage marketers to the brand, number of return visi-
tors, social bookmarks, down-
avoid over-reliance on them. Often, they tell
loads.
only part of the story.
✴ Brand Engagement: Followers,
For instance, having more Twitter followers is Friends, and RSS subscribers, sur-
certainly valuable, but if users do not take ac- vey respondents, @replies, page
tion, their number is irrelevant. This metric, on views, relevance of comments, and
average ratings;
its own, tends to be a poor predictor of overall
✴ Word of Mouth: number of
performance. However, it becomes much more
“Likes”, embeddings, retweets,
useful when combined with metrics of con- number and quality of incoming
sumer action, such as Retweets, @Replies, links, and references to the work
wall posts and comments. across other media.
5
By segmenting your social media metrics
Engagement is more according to these objectives, you’ll
than a number uncover a much clearer image of the
It is essential to know your customer and know
channels your prospects prefer . By
how and why they engage with your brand. By
knowing what customers think of your
studying your customers’ behavior, you’ll be
© 2011 MutualMind 7

8. The CEO & CMO’s Guide to Social Media ROI
How Listening and Engagement Leads to a Better Social Media ROI
brand, where and how they communicate it, The world’s top-performing brands have
how strongly they feel, and where they are found that access to comprehensive,
impacted by your message, you will be able to actionable data makes the difference
build a more engaging and constructive between an informed decision and a wild
dialogue with them. This can help identify guess.
important and necessary shifts in your product Which would you choose?
strategy, resource allocation, or customer
service.
Key Takeaways
7 Staying responsive in
social media
Every company’s social media strategy is dif-
• ROI determination is both an art and a
science: you’ll need to combine
quantitative and qualitative metrics.
ferent, leaving little room for a “one-size-fits-all” • Establish metrics for your social media
comparison. When beginning a social media ROI: it is imperative to know how well
campaign, it’s important to ensure that you the strategy is working. At the same
have relevant metrics and the measurement time, overanalyzing only complicates
matters. Use a best-in-class analytics
capability to identify what is and isn’t working.
system to rapidly focus on relevant
Without frequent assessment and review, signals.
marketing results cannot be adequately ex-
• There isn’t a “silver bullet” or a formula
plained or adjusted. You must be ready to react that works for everyone, so it’s essential
quickly in order to stay on top of consumer to tie metrics to your specific business
concerns, put out public-relations fires, and objectives. Make sure your teams
chase down new ideas. This ability to rapidly develop metrics that are specific,
measurable, and meaningful to your
iterate is essential to navigating social media’s
goals.
unique challenges—and to grasping its unique
advantages. • Employ solid frameworks such as role-
specific metrics or the Balanced
Marketing effectively means making good Scorecard in order to achieve cohesion
decisions at every turn. But as technology and among your teams and create a unified
social frameworks evolve at such high speeds, social media strategy.
it’s become easy to make poor or even
• An ROI for social media can be
catastrophic choices due to a lack of usable calculated, but isolating its effects can
data. Without a system that provides be challenging. Plan for measurement
actionable analytics, your ability to iterate, track from the start, and be ready to rapidly
or predict profit in the modern marketplace iterate your approach. Make sure your
becomes much harder. campaign produces actionable data from
day one.
© 2011 MutualMind 8

9. The CEO & CMO’s Guide to Social Media ROI
How Listening and Engagement Leads to a Better Social Media ROI
About MutualMind
Join the conversation your customers are already having.
MutualMind brings detailed, up-to-the-minute measurements and analysis to your entire social
media campaign, giving you the clear, actionable insights your business needs to leap ahead.
Built from the ground up to empower campaigns of all sizes, MutualMind’s proprietary software
maps consumer sentiment across the Web, filters out the noise, and delivers relevant metrics and
information directly to you.
MutualMind’s proprietary social intelligence engine integrates both listening and engagement
insights with built-in, best-in-class tools for managing multiple social channels, one-click
engagement and followup, team-based collaboration, and social customer relationship
management.
To learn more about how your business can unlock the social web, visit MutualMind.com.
References
Armano, David. (2009) The Collective Is the Focus Group: Norton, Dr. David P. and Kaplan, Dr. Robert S. (1996) The
Revolutionizing ROI Through “Return On Insight”. http:// Balanced Scorecard: Translating Strategy into Action. Boston,
www.scribd.com/doc/9931464/The-Collective-Is-The-Focus- MA: Harvard Business School Press.
Group
Owyang, Jeremiah. (2010, December 13) Framework: The
Blanchard, Olivier. (2011) Social Media ROI: Managing and Social Media ROI Pyramid. http://www.web-strategist.com/
Measuring Social Media Efforts in Your Organization. blog/2010/12/13/framework-the-social-media-roi-pyramid/
Indianapolis, IN: Que.
Ray, Augie. (2010). The ROI of Social Media Marketing. http://
Fodor, Marek and Hoffman, Donna. (2010) Can You Measure blogs.forrester.com/augie_ray/10-07-19-
the ROI of Your Social Media Marketing? Cambridge, MA: MIT roi_social_media_marketing_more_dollars_and_cents
Sloan Management Review.
Zabin, Jeff. (2009). The ROI on Social Media Marketing: Why It
Lenskold Group (2009). 2009 Lenskold Group / MarketSphere Pays to Listen to Online Conversation. Boston, MA: The
Marketing ROI and Measurements Study. Manasaquan, NJ: Aberdeen Group.
Lenskold Group.
© 2011 MutualMind 9