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On Measuring Social Media ROI For Real Business

By Tim Berry, Guest Blogger
Published: November 2, 2012

Warning: this post is all about the questions. It doesn’t include the answers. Asking the right questions is a good first step to getting the answers.

Theoretically we should be able to measure the ROI (return on investment) of anything we do in our business. We talk about ROI, and return, and payback when we look at an ad campaign, direct mail, product development, purchasing some big-ticket item. We make assumptions about ROI all the time. But it’s not always easy, and our assumptions are not always correct.

What about social media ROI? I’ve been searching the web. Some smart people are working in this area, of course. But it’s a hard nut to crack. Everybody seems to like the idea, but is there a formula to apply? I’m not sure.

I think of social media as 1.) amplified word of mouth; 2.) earning a voice instead of buying a voice (a reference to the fact that with social media you can engage large numbers of people based on the value of your content, rather than on how much you paid for the advertising); and 3.) a new addition to business marketing that should follow basic fundamentals.

Wikipedia defines ROI as:

(gain from investment - cost of investment) / cost of investment

We talk about ROI in percentages. For example, if we bought the share of stock for $10 and sold it for $20, then ROI is (20-10)/10 = 100%. Or if we spent $25,000 on a direct mail campaign that generated $35,000 in sales, the return is (35,000-25,000)/25,000 = 40%.

Technically, ROI calculations ignore time. Doubling our money in a day is 100% ROI, but so is doubling it over 10 years, also 100% ROI. But the return on the 10-year doubling is only about 7% per year. So that’s why the more technical measurements, like net present value and internal rate of return, take the amount of time into account. In this post, however, I’m talking just about ROI, not those more sophisticated analyses.

Problem 1: Measuring the gain

What’s the measurable business impact of social media? In dollars? Ultimately it’s obviously an increase in sales or a decrease in costs. But how do you measure an increase in sales if social media generates new customers walking through a physical door? How do you measure a decrease in costs if you can’t track which parts of the costs were cut by using social media? Maybe the advertising you didn’t do?

Take the example of the taco truck using Twitter to broadcast locations hour by hour: Obviously this increases sales, but can you pin that down to specific numbers?

There are some business types that lend themselves to measurement: Web traffic leading to web visits and conversions, for example.

Some businesses build measurement into the social media content, by using promotion codes or specific ties to Facebook likes or ads.

Problem 2: Measuring the costs

The social media platforms are mostly free. Facebook, Twitter, LinkedIn (depending on options), Google+, and Pinterest. But the time you spend isn’t free.

As a general rule of thumb, an employee costs a company per hour but 1/1000 of the annual gross salary. That’s because the overhead costs double the annual cost, roughly; and then you divide by 12 months, 52 weeks, and 40 hours per week. Overhead costs include payroll taxes, work  space, computers, electric power, bandwidth, etc. So the $50,000-per-year employee costs the company roughly $50 per hour.

So, if nothing else, the cost of social media is the cost of the time invested.

Conclusion

  1. We can’t measure everything that’s valuable in business.
  2. We can’t rule out social media because it’s hard to measure
  3. But we can, if we focus on getting the right information, and using realistic estimates, get a very useful estimate of social media business ROI. 

About the Author:

Tim Berry
Tim Berry

Guest Blogger

Founder and Chairman of Palo Alto Software and bplans.com, on twitter as Timberry, blogging at timberry.bplans.com. His collected posts are at blog.timberry.com. Stanford MBA. Married 46 years, father of 5. Author of business plan software Business Plan Pro and www.liveplan.com and books including his latest, 'Lean Business Planning,' 2015, Motivational Press. Contents of that book are available for web browsing free at leanplan.com .

6 Steps to Assess Your Small Business’ Readiness to Export

By Caron_Beesley, Contributor
Published: November 1, 2012 Updated: March 2, 2014

export plannerBetween 2009 and 2011, U.S. exports grew by 40 percent and the federal government is pressing to provide programs and resources that help U.S. companies succeed internationally.

Making the decision to export, however, is significant. Is your product marketable overseas? Can your business tolerate the benefits versus the trade-offs of exporting?

To help you assess your exporting readiness, take a look at SBA’s Export Business Planner. This invaluable, hands-on exporting guide provides a roadmap for creating an export business plan, discovering foreign markets, developing a marketing plan, exploring financing, costing your product and more.

Here’s what the Export Business Planner has to say about assessing your business’ readiness to export – backed by a series of useful worksheets to help you work through this important exercise.

1. Determine the Benefits and Trade-Offs of International Market Expansion

Start by brainstorming a list of benefits and trade-offs for expanding your market internationally. For instance, one benefit might be a reduced dependence on domestic markets. Trade-offs? You may need additional financing, or be willing to use short-term profits to ensure long-term goals, or hire additional staff.

Your list of benefits and trade-offs should be based on your current assumptions about 1) your company, 2) your company’s products and 3) market knowledge.  

2. Perform a Business/Company Analysis

Next, you’ll need to perform an in-depth analysis of your existing business to determine the feasibility of growth. This entails evaluating your company and its attributes. Check out page 32 of the planner for a worksheet that can help you with this exercise.

3. Conduct an Industry Analysis

Once you have examined the status of your own company, the next area for consideration is your overall industry. How is it currently involved in the global marketplace? This review will help you to capture key aspects of your industry that will affect your exporting decisions. Again, check out the worksheet for this exercise on page 34 of the planner.

4. Identify Products With Export Potential

Part of the overall analysis of your current business involves identifying products that may have export potential. These have sold successfully domestically or maybe have had marginal success in the U.S. but potential for high demand overseas. Many small businesses make 100 percent of their sales in foreign markets.

Start by listing the strengths and weaknesses of products/services you believe might have export potential. Then, select the most exportable products/services to be offered and evaluate them. The worksheet on page 36 can really help you narrow down your product focus.

5. Marketability: Match Your Product/Service with a Global Trend or Need

Once you’ve identified products/services with export potential, the next step is to identify the most profitable foreign markets for those products. This means gathering foreign market research. Work through the worksheet that starts on page 39 to narrow your choices to the three most-penetrable markets. Ask yourself:

  • Which countries are best-suited for your product?
  • Which foreign markets will be easiest to penetrate?
  • How does the quality of your product compare with competing in-market goods?
  • Is your price competitive?
  • Who could your major customers be?

To help you with this exercise and to continue to explore these top three markets in-depth, pages 25-27 of the planner provide links to essential resources that can help you determine your product’s marketability overseas. There is also information about regulatory and political considerations that can affect your exporting decisions.

6. Define Which Markets to Pursue

Once your research has revealed the largest, fastest-growing and simplest markets to penetrate for your product or service, the next step is to define which markets to pursue. Here are some tips to bear in mind (and refer to the worksheet on page 42 of the planner for guidance):

  • It’s best to test one market and then move on to secondary markets as your expertise develops. SBA data shows that new-to-export businesses often tend to choose too many markets at first. For most small businesses, choosing one to three foreign markets initially is recommended.
  • Focusing on regional, geographic clusters of countries is more cost effective than choosing markets scattered around the globe, especially when you undertake trips or marketing events.

What’s next? Once you’ve determined your export readiness and investigated foreign market options, refer to the SBA’s Export Planning Guide for more tips and worksheets to help you plan, finance and execute your small business exporting strategy.

Additional Resources

 

About the Author:

Caron_Beesley
Caron Beesley

Contributor

Caron Beesley is a small business owner, a writer, and marketing communications consultant. Caron works with the SBA.gov team to promote essential government resources that help entrepreneurs and small business owners start-up, grow and succeed. Follow Caron on Twitter: @caronbeesley

How to Avoid Losing Money on Your Next Coupon Campaign

By Caron_Beesley, Contributor
Published: October 29, 2012 Updated: September 28, 2016

Think you can build your business with coupons? Think twice.

Coupons have their place for many businesses, but they also carry the irksome problem of attracting the wrong kind of buyer. We all know them – the over-eager coupon clipper who stalks only those businesses that offer a special deal. This customer is often a one-time buyer and not the kind of consumer who is going to help you build your business. Even worse, you may incur couponing losses.

So when is couponing right for your business? How can you protect yourself against extreme couponing? Here are a few simple guidelines that can help protect your business.

Are Coupons a Good Fit for Your Business?

in themselves coupons are not money-makers for your business. However, they can be useful to help you build awareness of your in new markets and to new customers. Build awareness and you can hope to up-sell and generate repeat customers. Here are some other considerations:

  • Is your business a good fit? – Coupons work best for location-based, product-oriented businesses where local customers can realize quick and easy savings. Good matches are restaurants, hair salons, hotels, spas, pet grooming services, yoga studios and so on.
  • Can you scale quickly? – Can your business scale up to meet the potential demand surge the coupons may trigger? Whether you operate online or street-side within four bricks and mortar walls, it’s important that your staff is trained and your operations can scale quickly and seamlessly to deal with a jump in new foot traffic.
  • Can you afford the discount? – Make sure you can afford the discount for the duration of its validity. Weigh your long-term goals and how coupons can benefit them. Do you have enough profitable business coming from other product lines or time periods to overcome the costs of offering a discount or special offer? This is a top consideration, especially if you are exploring social or group-buying coupon sites that typically take 50 percent of the revenue you get from your advertised offer.

Develop a Firm Couponing Policy so You Don’t Incur Losses

Once you’ve weighed the pros and cons of couponing and determined that special offers have a place in your marketing strategy, be sure to develop and communicate a coupon policy. This will help keep you from being a slave to coupon clippers, losing money and undercutting your brand value.

Entrepreneur magazine offers these excellent tips from Bob Phibbs, author of The Retail Doctor’s Guide to Growing your Business, for doing just this:

Don’t Allow Combined Promotions – This is a biggie and one that many larger brands have clamped down on. The biggest to avoid is accepting buy-one-get-one-free promotions (also known as BOGO) combined with other coupons. Accepting multiple combined coupons simultaneously is a huge risk for small business owners who may find they are literally giving merchandise away.

Eliminate Identical Coupons – Suppose a customer walks into your restaurant with four $5 off coupons – how do you deal with this? Or perhaps that customer chooses to use the coupons over several visits? Either way, you’re going to lose money on that customer. There are a number of ways for dealing with this:

  • Limit the number of identical coupons that a consumer can use per purchase.
  • Limit the number of identical coupons per customer.
  • Limit the number of identical coupons that a consumer can use over a certain time period (although this can be harder to track).

If you can, use your point-of-sale system to track coupon code usage, and don’t forget to advertise your policy and the expiration date on the coupon

Accept Your Competitor’s Coupons Cautiously – Many large stores such as Walmart, Home Depot, Petco and Staples gladly accept competitor’s coupons. If you accept other retailers’ coupons, make sure you develop a policy outlining limits for their use at your store. For example, are you going to match the coupon or tighten up the conditions? Always check expiration dates and other limitations that your competitors may have placed on the coupons to ensure you don’t get burned by out-of-date or invalid offers.

Post Your Policies and Educate Your Staff – Make sure you advertise your couponing policy on the coupons themselves and at the point of sale. This can help deter extreme couponing practices before they happen. Educate and train your staff on these policies and how they should deal with potentially over-zealous coupon clippers.

For more tips on using coupons in your small business and how to build a coupon-based campaign, check out my earlier blog on coupon practices as well as How to Build Exposure for Your Small Business with Social Coupons.

  

About the Author:

Caron_Beesley
Caron Beesley

Contributor

Caron Beesley is a small business owner, a writer, and marketing communications consultant. Caron works with the SBA.gov team to promote essential government resources that help entrepreneurs and small business owners start-up, grow and succeed. Follow Caron on Twitter: @caronbeesley

7 Holiday Marketing Tips on a Limited Budget

By Caron_Beesley, Contributor
Published: October 25, 2012

When we think of holiday marketing – which can be critical to your business success – we often think only of promotions and discounts. But you don’t have to cut your margins or break the bank to stand out from the crowd any more. Here are seven budget-friendly steps you should consider to promote your small business while meeting the needs of your customers this holiday season.

Host an “Open House”

If you operate a retail business, restaurant or any gift-oriented business, why not plan an open house event in mid-November? Use it to showcase holiday season gifts, menus and merchandise. Offer up a glass of warm cider or mulled wine, and really get people into the spirit of the holidays. This will give customers an opportunity to check out your merchandise or holiday menus in advance. You could throw in a special offer or coupon that customers can redeem anytime up until December 24.

Work the Holiday Magic for Your Faithful Customers

Think of ways to generate repeat holiday business from your existing customers. Special offers, sneak previews, free shipping, or secret sales are all great ways to make your faithful customers feel special without breaking the bank.

Feature Product/Services of the Day or Week

I love this low cost marketing idea from Ivana Taylor at SmallBizTrends: why not create 12 days of “your product” or a product or service of the month? Feature and market a product or service every day or every week during the holidays. Think about focusing on high margin products or items your customers don’t know about. “Companies in the food business use this strategy a lot,” explains Ivana. “Think beer of the month, cheesecake of the month, or coffee of the month… Maid service companies could feature an extra cleaning detail each month, trainers or consultants can offer featured webinars, reports or newsletters.”

And don’t forget to communicate this themed promotion on your website, social media, email, posters, and flyers.

Offer Gift Certificates

Whatever your business, selling gift certificates, gift cards and e-certificates is a great way to give your customers a convenient gift option. They also help you generate sales well into the New Year, with recipients often spending more than the value of the certificate.

Partner With Other Businesses

It’s likely that many of the businesses in your community also rely heavily on the holidays for a good chunk of their income. Is there a way you can partner with complementary stores or restaurants to cross-promote each other’s businesses? For example, a cosmetic store and a hair salon might develop a promotion that offers a time-limited discount off each other’s respective goods and services, if the customer frequents both. SBA guest blogger Rieva Lesonsky offers more tips in her blog: Forget Competition It’s Time for Co-Opetition.

Get Involved in Community and Charitable Events

Getting out there and supporting charities or sponsoring or getting involved in community events is a great way to generate awareness for your business during the holidays. Even if you don’t have the budget to donate large sums of money, think of other ways to get involved, such as offering volunteer services, equipment or even space.

Use Your Website and Social Media to Promote your Holiday Activities

Your online presence, email marketing, and social media networks are a great way to target and connect with local consumers through timely updates and compelling calls-to-action. Develop holiday themes for your email templates and update your website and Facebook profile picture with a festive look.

Then be sure to channel any offers or promotions through social media. You can even offer deals or events exclusively to your social media fans to help drive foot traffic and generate leads. And don’t forget to engage in two-way dialogues. Ask your fans about their holiday activities. For example, a restaurant might highlight a holiday dish of the day on Facebook and ask fans to chime in on their favorite dish or items they’d like to see on the menu.

What lost-cost holiday marketing tips and tricks have worked for your small business? Leave a comment below!

About the Author:

Caron_Beesley
Caron Beesley

Contributor

Caron Beesley is a small business owner, a writer, and marketing communications consultant. Caron works with the SBA.gov team to promote essential government resources that help entrepreneurs and small business owners start-up, grow and succeed. Follow Caron on Twitter: @caronbeesley

8 Ways to Strengthen Your Email Marketing Offers and Calls to Action

By Caron_Beesley, Contributor
Published: October 18, 2012 Updated: September 15, 2016

Are you worried you’re not getting tangible results from your email campaigns? Wish your emails stood out more in a crowded Inbox? Email marketing is a core asset in any lead generation activity or campaign, even a good old email newsletter usually has one or more calls to action. But if you’re finding that your click-through rates are falling short, what can you do?

Here are eight tips to help you get strengthen your emails and get customer to act.

Start with a robust and engaged list

Before you do anything, stop and take a look at your email marketing list. Do your contacts want to hear from you? What’s your opt-out rate? How long has it been since you’ve refreshed your list? Check open rates (20 percent is average). If it’s low, you may have a problem. If you find that your click-throughs and conversions aren’t where they should be, freshen your list by segmenting it out. You could send an email only to those who haven’t opened your emails for a while.  Make it catchy, and try to win them back! Consider purging the unresponsive names – send them an email and ask them if they still want to hear from you and give them a clear option to opt out. Whatever you do, be creative, do the opposite of what you normally do and test the results.

Give your subject line the attention it deserves

Long gone are the days of formal subject lines laden with marketing speak. In today’s social media world, consumers are tuned in more to messages that speak directly to them. Cut the jargon and use subject lines that are clear, concise and answer the question: “What’s in it for me?” Use conversational language and address your reader as “you” or “your.” One of my personal favorites comes from the UK online clothing retailer Boden, which also operates in the U.S. Their subject lines reflect the quirky and customer-oriented nature of their brand and stand out in a crowded Inbox of discount offers. Here are three examples:

 “Don’t dilly dally. 20% off plus free shipping ends soon”

 “20% off loads of lovely styles – 1 week only”

“Your VIP SALE invitation: nab the best bits first”

Test your subject lines. Keep an eye on open rates and click-throughs and adjust your messaging strategy accordingly.

Use action-oriented words

Looking at the subject line examples above, do you notice how the limited time offer is clearly stated in the subject line? This compels readers to act now before it’s too late. If you have a special offer, make sure you clearly mention this several times – use action-oriented words in the subject line, in the body of your email and in any graphic elements. “Urgency” words like “now” and “this week only” can be far more effective than “free,” which is a red flag to SPAM filters.

Don’t be afraid to ask questions. Put your social media cap on and have a dialogue with your readers that motivates follow-through. Use questions in the subject line, as Boden does with its post-purchase review request: “How did we do? Review your Boden purchase today.

Be confident, but stay on brand

Be confident in the tone of your call to action language, while staying consistently on-brand. Don’t be afraid of telling your readers what’s in it for them. Boden’s “20% of loads of lovely styles – 1 week only” does this perfectly.

Use graphics to enhance calls to action

The call to action button is a great way to draw attention to your offer or call to action. Most email marketing software lets you add this option. Play around with it and pick a design that’s eye-catching without being overwhelming. Position the call to action high up, centered on the page. Use your brand colors and clear, bold text. Avoid wordiness and leave lots of white space so your call to action pops. Then test your emails. Come up with several designs and ask your staff which grabbed their attention the most.

Get your content right

Content is an area that creates most concern for small business owners. How do I try to make a sale without sounding “salesy?” How can I make my call to action compelling? There are many ways to do this, and your copy and graphics go hand-in-hand:

  • Target your content or offer to specific audiences. At the simplest level, segment your lists by existing customers versus prospects and tailor your message accordingly. Geotarget if you can (especially if you are promoting an event or in-store offer). Adapt your message to specific locations.
  • Make your offer beneficial, relevant and timely. For example, are there any newsworthy (e.g. the Presidential election, Super Bowl, etc.) or seasonal activities going on that you can spin your offer around?
  • Feature images of your product.

Declutter

Have you ever received an email that was so cluttered you couldn’t decipher what was being offered or how to take advantage of it? A truly great promotional email is one that’s light on copy (shoot for 50 words or less) with a clear message and simple call to action. Your email is a teaser piece; you want to hint at what’s offered while enticing your readers to click through for more details. This can be achieved in under 50 words with good graphics and a stand-out call to action. Don’t omit too much though. For example, if you are hosting an event, you’ll need to include dates and prices in your email.

Pick the right email software

Lastly, revisit your email software. Does your current email software let you easily build custom templates? Can you add or delete content blogs and edit graphics without having to know web coding? What about social media integration, email personalization and other features? All these can help take the pain out of creating compelling content while automating your email campaign.

Related Blogs

 

 

About the Author:

Caron_Beesley
Caron Beesley

Contributor

Caron Beesley is a small business owner, a writer, and marketing communications consultant. Caron works with the SBA.gov team to promote essential government resources that help entrepreneurs and small business owners start-up, grow and succeed. Follow Caron on Twitter: @caronbeesley

Do You Copy?

By Rieva Lesonsky, Guest Blogger
Published: October 16, 2012

 

We learn in grade school that it’s not right to copy others, and even as adults we know copying is usually frowned upon. But when it comes to business marketing, there’s nothing wrong with being a copycat—in fact, it’s downright good business. Looking at how your competitors market themselves can teach you what to do (and what not to do) with your own marketing strategy. Here’s how to be a successful marketing copycat.

Start by determining your major competitors, and include both big companies and small ones. Pay attention to their marketing campaigns—including print, radio, TV or cable TV, outdoor advertising and online advertising. (You may want to put someone at your business in charge of gathering and maintaining this information, since it will be an ongoing job.) Create a database or record of where each competitor is advertising, ad size, frequency and any other information you think is important. 

Next, assess the actual ads themselves. Start from a consumer or customer standpoint. If you were looking for this product or service, what would you think of this ad? Be objective; if you can’t, enlist a friend or family member to look at or listen to the ads for you.

Then assess the ads from a business standpoint. What benefits and features do the ads highlight? Do they rely on special offers and discounts, or are they touting luxury or premium products? What types of customers are they targeting (Moms? Seniors? Teens? Businesspeople? Value shoppers)?

Don’t forget social media. It’s easy to keep tabs on what the competition is doing on Facebook, Twitter or Pinterest—just follow or like your competitors, then regularly check out their posts and how customers respond. You’ll get a window into exactly how successful their marketing is and what customers like to see.

Once you’ve got all this information, you’ll need to do some serious thinking. Ask yourself (and brainstorm with your team):

·         What do I like and dislike about my competitors’ ads? If something in an ad bugs you, it probably bugs potential customers, too. Conversely, if something resonates with you, it’s likely to hit home with prospects as well.

·         What tactics could I copy or learn from? Of course, you shouldn’t directly copy your competitor—and if your ads are too similar, it could even cause confusion among customers. But you can do things like advertising in the same places your competitors are or promoting similar benefits in your ads. 

·         What can I do differently to make my business stand out? Is there a media outlet your customers care about that no competitors are advertising? For instance, if you’re targeting teens, maybe you could advertise on an Internet radio service like Spotify.

·         What weaknesses do I see that could create opportunity for my business? For example, if all the competitors in your community are promoting their low prices, you could take the opposite tack and promote your personalized service, premium products or other benefit that differentiates your company and makes what you offer worth a higher price. If no one else is advertising out-of-home, but your target consumers frequently use public transportation, there’s opportunity for you to advertise on bus stops or in or near subway stations.

Of course, marketing isn’t all about ads. If possible, visit your competitors’ stores or offices (or have a trusted friend or family member do so) to get a feel for how customers are treated and other elements such as signage, window décor and employee uniforms. Ask yourself the same questions about what you like and dislike as a customer, what’s missing from the marketing, and what opportunities you see.

Once you get the hang of copycat marketing, you’ll be able to apply it outside your immediate competitors. Start paying attention to ads you like (or don’t like) for companies in your industry, even if they’re not directly competitive with yours. Create an “inspiration folder” with ads that help you generate ideas. You’ll soon find that learning from others takes your marketing to new heights.

About the Author:

Rieva Lesonsky
Rieva Lesonsky

Guest Blogger

Rieva Lesonsky is CEO and President of GrowBiz Media, a media company that helps entrepreneurs start and grow their businesses. Follow Rieva at Twitter.com/Rieva and visit SmallBizDaily.com to sign up for her free TrendCast reports. She's been covering small business and entrepreneurial issues for more than 30 years, is the author of several books about entrepreneurship and was the editorial director of Entrepreneur magazine for over two decades

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