So far we have covered how people find your business and we have discussed how to convert people that contact you into paying clients… now I would like to discuss how to measure success and determine ROI.
To recap we found out that social media, if you are doing all the various traditional and online marketing, generates a small fraction of your business… but, if you are like me, Social Media is the majority of your marketing initiatives; thus generating the majority of your leads.
We also discussed that people that you are attracting to your business through social media are better informed than other clients, thus making you work harder to make them paying clients…
So now, for argument sake, you have sold them. The money is in the bank and you’re on to the next potential sale… not so fast… shouldn’t you truly understand how that client came to you, what it cost you to get that client; then determine if it was cost prohibitive to even make the sale?
If you are investing too much time, spending way too much money, and it is resulting in minimal sales is it really worth it? After all, the definition of insanity is, “doing the same thing over and over again and expecting a different result”.
The purpose of this BLOG entry is to just make you think. I am not going to be the guy that says you should not sell something, or you should sell something. I just want to give you options and create opportunities to help your business grow. Heck, in one of the examples you will see below about my “Twitter” efforts is an example of an ROI loss that I am willing to take because of the increased exposure I get.
I want to take a look at something I was just exposed too; it’s called the “Social Media Money Formula”. The formula looks like this:
(R – Cg) * (F * Cr * Or * Pr) – (h * T) = Profit
R = Revenue per sale
Cg = Cost of goods sold
F = Number of friends/followers (SM reach)
Cr = click rate on SM links (% of followers that click)
Or = Opt-in rate) % of clicks that opt-in)
Pr = Purchase rate (% of opt-ins that buy)
H = Hourly rate for your SM efforts
T = Amount of time you spend on social media
The translation is (Revenue minus cost of goods) * (Number of friends times click through rate times opt in rate times purchase rate) less (your hourly rate that your time is worth times your total time spent on social media) equals your net profit. Or for you business types, “Earnings before Depreciation, Taxes and Amortization”, “EBIDTA”
Let’s look at a real world scenario for me. I have 431 followers on Twitter and have tracked all the sales I generated because of Twitter in the month of December. FYI, I always ask how people found me so I can track ROI back to my individual efforts.
I am going to determine the ROI for a sale of a few images to a client that found me on Twitter during December… This was the only revenue that I generated through my Twitter initiatives during December, so it will be simple to show you as an example.
($250 in revenue less $40 in cost of goods, travel and editing time) x (431 followers on Twitter X 50% estimated click rate X 4% opt-in rate to enquire about images X 10% conversion rate of people opted in to who bought) – ($50/hr for my billable hours X 4 hours of my time per month working on Twitter)
Net profit after hard costs ($210.00) x Conversion of my Twitter followers (0.862) – my time doing social marketing ($200.00) = -$18.98 Profit for the sales of a few images from my efforts on Twitter. So I lost money on in my efforts on Twitter but I expanded my network, had a few people sign up for a newsletter and did a decent job creating brand awareness.
My true bottom line showed a net loss when I did the ROI equation, but overall I actually put money in the bank and more people found out about my “Brand”… aka, Me. It may have not been a smart move, and maybe I should have walked away like i said in the post after this one... but I made the conscious decision to sell them for less than I normally would have.
If I want to increase the ROI I know I have to do a few more things to increase my brand awareness and create better conversion… and you may want to try these as well.
For those that blog tips and tutorials, create more compelling information and schedule the releases at the same time each week. These BLOGs for instance are always released at Friday at 5:30pm. People are starting to know that about my blog and will come on the weekend to read what I posted.
At the end of each blog entry put in a web form or contact form to let the reader get more information and get on your mailing list. This further bolsters your follower base and increases your chance of conversion for whatever it is that you sell.
For those that just post out photos that you have taken… make sure you have links to blog tutorials that you may have written on how to take that type of image, post a link to your price list or post a link to other photos you have taken. Offering alternative options for the web browser to look at keeps them on your website and will increase your chances at converting them as clients.
Whatever you post online on your website the formula is quite simple…
1)Create compelling and interesting content
2)The content must lead them to an opt-in form so they can see more valuable content
3)Share all your content via social sites
4)Capture the leads
5)Follow up immediately when they enquire
6)Sell them…
7)Ask for referrals to obtain more prospects
If you would like more information or would like to receive my newsletter please contact me through my website here.
Have a great New Year’s celebration with your friends and family,
Kev
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