Social Lead Generation is Measured by ROE

Given today’s economic climate, companies are more concerned with the bottom line than ever before.  Executives obsess over the ROI for their marketing and advertising budgets, demanding to know the value of every dollar spent. While ROI is an extremely important measurement method, a new approach has surfaced; Return On Engagement (ROE). ROE is not an entirely new concept, but in the past 24 months it has become a popular way of measuring social media marketing efforts. ROE follows the principle that customers and prospects must be socially engaged before, during and after the sale.

To demonstrate the social media ROE concept, let’s take a look at a typical consumer’s buying decision process. In the early stages of consideration, a consumer will research products or services on the Internet to learn as much as possible about price, quality, dependability, what other people think, and anything else they can find that is helpful. During this process, the consumer often continues their research on the website for the company that offers the product or service in order to further qualify their purchase decision.  Throughout the research and consideration process, a company’s social media marketing efforts can do much to persuade a purchase. By providing the consumer with clear options to connect with them via different social media channels, like Facebook, Twitter or YouTube, the company extends itself to consumers in a more authentic, personal way that can deepen the relationship and build trust, thus positively influencing the buying decision.

To demonstrate how ROE is used to measure the value of social media efforts, one example may be where a prospect decides to click a Facebook icon on the company’s home page to see what more they can learn about them. The prospect is taken to a Facebook landing page that has a welcome video from the company along with brief information on their products and services. Also present on this page, is an option to become a fan, perhaps with an accompanying incentive to receive exclusive offers and coupons through the Facebook Fan page. In this scenario, the consumer can’t resist the temptation to save money, so they click and instantly become a fan. At this moment they’re taken to the company’s Facebook Wall page. Here they can view outgoing updates from the company as well as comments from other fans. Most importantly, they can also view questions asked by other customers (fans) and the answers provided directly by the company. Taking it one step further, the company can directly engage with this consumer (now a fan) by sending discount opportunities to them through Facebook. The company can also message the consumer with helpful tips, product information, advice and even ask them for feedback.

At this point in the relationship, the consumer has become a fan, and the company has engaged directly with the consumer. The consumer has received cost savings opportunities, while the company has gained credibility and a direct channel to communicate with the consumer. Now the company is able to track the consumer’s actions as follows:

• Viewed the company website
• Viewed the company Facebook landing page
• Viewed the welcome video
• Became a Facebook fan
• Viewed the company Facebook wall

Considering this information, the company can now work to calculate ROE. To do so, the company must attach a value to each interaction the consumer has with the brand. The more interactions that are realized, the higher the value and the more likely a positive outcome (a transaction) will occur. The values assigned to interactions are subjective, but it is important to establish some point of reference. Having a means to measure the value of an action in addition to documenting the action itself, provides a stronger indication of the potential to realize the final desired outcome, and it provides a means to measure results against costs.

To further illustrate this point, consider this; if a consumer is debating between making a purchase with two comparable companies, but one actively engages with its customers through social media and the other doesn’t, which company do you think the consumer will buy from? If both companies engage, the one that employs the stronger social strategy with multiple touch points will most likely win the battle.

This is why ROE is an important measurement. It is a tell-tale indication of how effective your social strategy is and how well it’s working to engage prospects and to retain existing customers. The more touch points you have, and the higher the quality of the interactions at each touch point, the higher the ROE will be. The higher the ROE, the higher your chances will be to achieve a desired transaction. For some time, a slow, steady shift in power has been occurring from brands to consumers. In today’s world, consumers expect brands to be social, accessible, transparent, authentic and relevant. Social media is a powerful channel that provides companies with tremendous opportunities to build awareness, generate leads, increase sales, gain loyalty and deepen their relationship with customers and prospects. Companies that don’t include this strategy in their marketing mix run the risk of being overshadowed by their competition as consumers gather online and connect with brands. The ones that do it well will employ ROE as a method to gauge the results of their efforts and adjust their approach over time to maximize return.