In a 2014 study of CEOs and CMOs, IBM found 63% wanted social strategies which generate business metrics while only 20% of businesses worldwide actually have them. This means strategies which not only grow your company’s social footprint but link to your sales and marketing systems. With this critical linkage, your social and mobile strategies will provide you with the ability to engage consumers at a 1-to-1 level and measure your social investments in terms of costs, revenues, profits and ROI. In this fifth MOOC of the Social Marketing Specialization - "The Business of Social" - you will learn how to transform your organization's social marketing from an untracked investment to an integral part of your company’s marketing strategy. You will learn the legal considerations involved as well as proven performance metrics and management tactics for success. Additional MOOC 5 faculty include: * Rich Gordon (Professor & Director of Digital Innovation, Medill, Northwestern) * Tom Collinger (Executive Director Spiegel Research Center and Senior Director Distance Learning, Medill Integrated Marketing Communications, Northwestern) * Seth Redmore (CMO, Lexalytics, Inc.) * Jeff Davidoff (CMO, Donuts.Domains) * Matt Krull (Business Unit Executive, IBM Security) * Frank Mulhern (Associate Dean, Department Chair, and Professor, Integrated Marketing Communications, Northwestern)
Justification Metrics
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Do curso por Northwestern University
The Business of Social
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Performance
In this module, you will learn how to create a performance funnel and the key performance indicators necessary to create a sustainable, budgeted program.
Conheça os instrutores
Randy HlavacLecturer, Medill IMC; CEO, Marketing Synergy Inc
[MUSIC]
Let's recap where we are in the process of building and
justifying our social marketing program.
Remember, this works with any strategy.
But is easiest with nurture marketing or social IMC, the embrace strategies.
Because they link to bottom line performance.
You first created your budget to pay for the staff, technology, and
talent required to execute your social IMC or other social strategy for a year.
Next, you developed your performance funnel.
Because this is a new strategy.
You use optimistic, average, and pessimistic scenarios
to create all of your KPIs from the total market through to sales.
Now, you are ready for the final step, building your justification metrics.
Before we start developing the justification metrics,
let's consider what senior management will want to see.
We are going to convince them to invest in a marketing program which is unproven.
They are likely funding other marketing initiatives.
So were are asking for
increased investment to expand our marketing programs to social.
Or we are asking them to reallocate funds
just start this new social marketing venture.
From their perspective, their decision is a relatively simple one.
They want to know the risk they are taking by backing this new venture.
If is too risky, they will find better places to allocate their investment funds.
To evaluate risk, they want to see the reward.
The organization will receive if they go ahead with your social marketing plan.
They want to know If the rewards outweigh the risks.
If they do and show the organization will make money,
then they will likely green-light either the entire program.
Or, at the minimum, the pilot project.
To obtain their approval, there are two types of business and
program metrics we need to evaluate the risk reward for a marketing program.
First, let's talk about them.
And what they provide the senior management, and
then we will explore an example.
And show you the way you calculate each metric.
As you will see, they will draw from the numbers you developed
in the first three steps in the justification process.
Program metrics are measures which show senior management
the performance of the social marketing program.
It demonstrates that your plan and
its performance assumption will be a low risk endeavor.
For program metrics, there are three majors we will want to show them.
First, we will want to show them the performance funnels for
the three performance assumptions.
In doing the calculations in this video, I will use the every performance assumption.
But you will do it for all three.
From the performance funnels,
we will show the steps from total market to first sales and maybe beyond.
And the efficiency and effectiveness KPIs we generated in the process.
Because we have already done these calculations,
I won't detail them again in this video.
The second set of calculations is market share.
You are developing a social marketing program
that will draw a percentage of the total market to your community pages.
Market share represents the percentage of people or businesses you will go to,
and who will join your community and eventually make a purchase.
For each of these events, we want to calculate market share, why?
In most marketing programs, the high value market is large.
If your marketing program attracts a small percentage of the large market,
and is by itself profitable.
Senior management will view this as a risk worth taking, why?
Because the program could continue to grow in size profitably
while growing the organization's market share in the target market.
The second program metric is break even.
Break even is the minimum number of orders we need,
to entirely fund the social marketing program.
Go below this number, and the social marketing program is not even paying for
itself.
For the CMO, this is a risk you want to avoid.
To calculate break even, we need two numbers.
The first is the budget.
The second is a contribution made from the sale of one item.
What is contribution?
If we sell a product for $150 and it costs us $50 to manufacture,
package, and warehouse the item, then it will contribute $100 to the organization.
The organization will then use it to pay for
marketing programs, other fixed costs, and obtain profit.
While I will show you one calculation, we will do the break even for
both the total budget and the pilot budget.
Because the pilot budget will be much lower.
The break even will also be lower.
This shows the program metrics from the performance funnel.
We see that the social market has 14 million members.
From our average scenario,
we see there will be 200,000 registrants from our marketing program.
Dividing the registrants by the total social market, we get 1.47%.
This means that over the year, we will penetrate only 1.47% of the total market.
That means there is a vast market.
We can continue to penetrate for a long time once the program is a success.
Thus far senior management will view this new social program with favor.
[MUSIC]
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