Your Brand Has Thousands of Facebook Fans—What Is the ROI?

Following up on the previous post, we will focus on ROI methodology and look specifically at how it would apply to Facebook.

How Do I Calculate ROI on My Facebook Activities?

Ultimately, all consumer touch points are about one thing--driving sales. Whether it is a near term or long term strategy, marketing is designed to influence consumers to convert. As such, the most appropriate measure is still a marketing mix model to quantify the impact of key marketing activities and develop a ROI platform. And, it can be equally applied to both direct response and brand building messaging. A properly applied ROI platform allows quantification of the impact of interactive touch points, social media, and site side activities on offline customer conversion. Using this type of ROI platform, I have seen product devotee sites, such as Facebook, related to retail sales and social media campaigns to new product sales and Twitter activity to product sampling.

The basic form of the social ROI model is this:

Sales = Industry / Econ + Media + Pricing/Distribution + External Interest + Website Data
Website Activity = Industry / Econ + Media + Pricing/Distribution + Social Data

While this basic form seems overly simplistic, the actual incarnation is rather complex. These are two separate models executed consecutively, and the issues we have previously discussed in this blog like lagged effects, decays, diminishing returns, and saturation points all come into play. The key aspect for measuring Facebook ROI is the inclusion of web data. The web data transforms standard ROI models into social media measurement models. Since we know how fans are acting, we can use modeled relationships with website activity to understand the sales impact (both short term and long term). The combination of the sales ROI model and the website activity model provide the most direct way to quantify your Facebook fans.

How Can I Segment My Fan Base?

We previously discussed the five fan groupings: brand enthusiasts, 'loves everyone', 'average' user, 'sweepstakes fan', and the 'issue fan'. But the question remains, how do you segment fans? Today we will discuss four methods for doing this: timing, engagement, reach and sentiment.

Timing:

Whenever you have a large influx of new fans in a short timeframe, it can be traced to a likely influence. This could be a Facebook ad, positive PR, a sweepstakes or a new product launch. Fans gained during these post event timeframes can be grouped into cohorts. Analyzing these cohorts and the difference in activities between (and within) them allows you to take the first step in your segmentation scheme.

Engagement:

If you are accessing the full potential of your fan base, then Fandom should be the lowest level of engagement. Do they 'Like' your status updates? Do they post on your wall? You can utilize the various levels of Facebook interaction to cluster consumers based on their engagement with your brand and how their engagement evolves over time.

Reach:

Reach is relatively straight forward. How many friends does your fan have? Is their Facebook account linked to other social media platforms? Do others comment on their posts about you? The more connected your Fans are, the more their interest in your brand matters. Segmentation based on reach will constantly need to be redefined as the privacy / openness status of the social space evolves.

Sentiment:

Text analytics has become all the rage in the media research. With the wealth of user generated content on the Internet, marketers need to utilize technology to wade through the enormity of the data. Data mining techniques, such as CHAID and regression trees, allow marketers to link certain keywords to desired outcomes. Do words like 'love' and 'always' signify consumers who are more engaged? Should you filter out mentions that use words like 'cheap' or 'dangerous'? Once you develop a keyword set, you can further segment consumers based on their actual conversations.

Developing a segmentation strategy based upon any or all of these criteria helps you better understand not only the value of your fans but how you can best communicate with them.

How Do I Commercialize It?

In a short amount of time, Facebook fans have proven to be valuable assets for companies. Users tend to grow rapidly in number, and have greater potential to become product advocates. When guided properly by a Community Manager, they can quickly develop into brand evangelists. This works best when brands have a storehouse of interactive creative assets to accompany user generated content and peer-to-peer dialogue. And, the best part is this can be done effectively with a relatively low amount of overhead.

Marketers have a choice: they can make their message social media-friendly--that is, fluid and easily digestible--or they can continue communicating through the same channels their customers expect. In coming years, leading brands will take advantage of the opportunity to harness and cultivate the power of this audience and use it to drive widespread customer loyalty.

There are a number of successful ways to commercialize your fan base, including:

  • Utilize your fan base to identify a group of key influencers / evangelists to drive new product trial and support launches.
  • Utilize your fan base as a cornerstone of your CRM efforts.
  • Incentivize evangelism in your fan base by making fandom payoff with the value of "in the club" benefits, such as early trial of new products and occasional fan-only promotions.
  • Use the fan base as a free source of consumer-panel study. As fans, they most likely want to feel like part of the product and contribute to the "club".

Steve Kerho is the Senior Vice President of Strategy, Analytics, Media and Marketing Optimization at Organic, Inc.

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2 Comments

  • Bryan Fuhr

    Great post, Steve.

    The way I read your article, the words "fan base" could easily be substituted for "database." If you buy that substitution, the change opens up a number of strategic questions that would be interesting to answer. For example:

    1. Why have these Facebook users chosen to be in your database?
    2. Is liking your brand a strong measure of commitment, or are there better, more quantitative/qualitative measures of loyalty?
    3. Is Facebook really the right environment to engage your fans? Are there better, more private environments to convey exclusivity and special treatment?

    Food for thought. Don't get me started on the creative issues!

  • Yvonne Ashton

    Great article, but how? How do you measure timing, engagement, reach, and sentiment on an ongoing basis? I know there a tools out there, but they are pretty pricey and seemed geared toward very large companies with big budgets.