Practical Social Media Measurement: Leads, Conversions, Sales

One of the chief things that managers seem to want is the ability to draw lines and connect dots between their social media participation and sales (or other conversion metrics). There are two ways to do that, and one is much more difficult than the other.

Cause and Correlation

First is attribution or direct cause, which would indicate that the social media initative is the sales channel itself. Much like Dell claiming that it has reaped millions in sales via their Twitter channel, here you’re saying that your endeavors in one channel or another are the primary driver for a particular revenue stream. The tricky bit here is that a) there will *always* be external factors that influence sales transactions and b) you have to track and control how you output information in these specific channels in order to accurately attribute the revenue.

Moreover, Dell was successful here because they’d built up a platform of trust and familiarity over a long time, across several other channels: their blogs, IdeaStorm, their more support-focused Twitter presence(s), and their longstanding e-commerce. They had an entire ecosystem of social media presence working in their favor here, and many businesses don’t yet have the track record, the deployment, or the commitment to replicate that. That’s what makes direct sales through social media such a sticky wicket.

The second and more realistic way to track the impact of social media on revenue is by correlation. In other words, you track your sales in aggregate, or perhaps in the more global online environment (inclusive of your website and how leads funnel into your pipeline through the web overall).

Then, you overlay trends in your online activity – say, the establishment of your community or the building of your blog – and look at them alongside your sales activity. If they go up together, you can indicate a positive correlation, or the likelihood that the social media stuff is helping to drive the sales. If social media activity goes up but the sales stay flat or go down, something isn’t working, or the social media bit isn’t effective from a sales standpoint.

Likewise, correlation can also be in *ratios*, so for example, a $50,000 investment in social media (including time, money, or both) correlates with a $25,000 increase in sales over the same time period. Note that this is NOT precise ROI, because you’re talking an investment in a single channel against TOTAL sales. But you can look at the proportion in sales or lead traffic increase over the time period in which you track your social media activities, and extract a relationship between the two.

So. With all of that nuance out of the way, let’s look at a few of the things you might measure, in detail.

Value Per Fan/Follower

Quick distinction here: if you want to track the value of a fan/follower in monetary terms, you have to be attributing that value to revenue in the same channel. So if you want to establish the dollar value of a Facebook fan, you need to be tracking the revenue generated via leads and traffic originating from your Facebook efforts. (If you’re trying to establish the more intrinsic value of a fan in brand value or other qualitative terms, that’s different and more complex). That means, in a simplistic fashion:

• Build in landing pages for your website that are only accessible via a specific URL not accessible from anywhere else on your site.
• Use that URL to generate unique parameters through your analytics software (Google URL Builder or parameter tools in your paid platform), and use shortened links based on those URLs that are unique to the landing pages you’ve designed for Facebook, Twitter, etc. Keep them separate when sharing them, and track which ones you use when and where. You can use a spreadsheet for that.
• Use your analytics software to track referral traffic that originates on the specific social network you want to track, either by generic url (like Twitter.com) or through the unique links/landing pages you’ve set up, or the aggregate of both.
• Look at the percentage of either conversions to leads from that referral traffic (i.e, they filled out your contact form or emailed you for more information), and then through your sales/CRM database, track which ones become customers.
• OR, if you have ecommerce on your site, track the completed transactions that originate from those referral sites.
• Take the total revenue generated in a 30 day period from these traffic paths, and divide it by the number of fans you have at the end of that same 30 day period to arrive at an *approximate* dollar value per fan or follower. Remember that this number will change as the ratio of revenue to potential reach changes.

Note that this is attempting to say that the value of a fan or follower is *directly* tied to the revenue produced by that social network. It doesn’t take into account factors like business those fans may do with you offline (and therefore influencing the larger sales picture), those that have combined online experiences with you through several channels (because in this case their revenue would be attributed to single behaviors), or things like brand lift, reputation, awareness, or reach (which we covered yesterday).

You may wish to take a more holistic approach to this if you have the means and the (significant) time: cross referencing your fan and follower lists with your sales database, and looking at their sales volume/value over a quarter or a year.

Then, if you compare the annual value of a customer who overlaps with your social media efforts against customers who are NOT part of those followings, you can compare and see if there’s a difference. In this case, you’d be saying that a customer who is ALSO connected with you on social networks is worth X amount more in a given time period to your business.

It’s a bigger picture metric, but in my mind, perhaps more valuable since you’re looking at the social media picture more strategically.

Lead Generation

Here, you need to do a lot of pathing and tracking from the contacts that originate on social networks and make it somehow into your pipeline. Whether you’re using a spreadsheet to keep track of your database or a sophisticated CRM system, you’ll want a way to designate a lead source, and tag it in a way that you can reference later. If you have the time and energy, you can even split that source into specific social channels: blog subscribers, Twitter, LinkedIn contacts, etc. For example:

• For email leads that come in, if the source is obvious (i.e. I found you on Twitter), tag it as such. If not, consider asking in your reply.
• Include a field on your contact/website form that asks people how they found you and include your social presences.
• Tag leads that come in from offline events that tie to your social networking efforts, like Tweetups or conferences
• Path referral traffic to your site from social network URLs and map a contact form submission or clicking on a “Contact Us” email link as a conversion to a lead, and track accordingly
• Track direct leads from unique URLs and lead capture landing pages with the social networks they were shared on.
• Track requests for content downloads behind email signups that are shared on social networks. Do the unique URL trick for the links on separate networks, too, to get a better idea of where the downloads are coming from.
• Overlay names on your fan list with your lead pipeline (hint: If you do this from the start and do it on a regular basis, it’s much easier to handle just the new stuff as it comes in and cross reference accordingly).
• Cross reference names in your community membership database with those in your lead pipeline.

The first thing to do is look at these in total. How many leads do you generate each month that are somehow tagged with a social media-related source? What percentage are they of your overall lead pipeline?

For the last two or similar efforts with other social networks (or, say, your blog email subscriber list), you can look at how many leads per month you generate that are unique to those channels and give a percentage (for every 25 LinkedIn Group members we have, we get an average of 3 leads per month). A twist: look at leads that have languished or aged in your database and are inactive, and which might be reactivated via a social media touchpoint.

Something else to consider is lead stages; many CRM platforms allow you to track the lead stages themselves, whether it’s brand new, or whether they’re in deeper consideration and talks with your sales team (B2B folks, this is for you). You can also now look at the leads that originate in social networks and see how they’re distributed across those stages over time.

Conversion Rates

Leads are great, but what we want, ultimately, is action of some kind.

The real value here is in looking not at each channel (blog, Twitter, Facebook), but at the aggregate of all social media efforts. And conversion doesn’t have to mean sales; it can mean anything you would qualify as a successful interaction according to your goals: email newsletter signup, blog subscription, contact form submission, content download, contest entry, or of course a purchase.

The hypothesis for that is that your social media approach should be strategic overall, so that you aren’t looking at one specific tactic (i.e. your community platform) but the aggregate of all of them.

• Track the website traffic from social networks using some of the methods above: unique URLs shared on social networks, web analytics.This is the key step, because you want to isolate as much as possible the traffic that comes from your social networks.
• In your analytics platform, learn how to set up conversion criteria. For example, in Google Analytics, you can set up Goals, which are essentially specific landing pages on your site that indicate to you that someone has fulfilled what you want them to do. That could be a purchase receipt, submission confirmation, or  “thanks for signing up” page for your newsletter  page.
• Look at the percentage of conversions that originate from social network URL referrals vs. other sources (like search or direct traffic).

Cool thing (and blatant plug for my company): Radian6 has an integration that combines WebTrends analytics with our social media tracking and measurement. It allows you to look at specific pieces of content on the web – including ones that you didn’t create – and see how many of them actually drove traffic and conversions on your website. You’ve got to have WebTrends and do some setup of conversion criteria and tracking codes on your website, but MAN is it cool when it comes together. The fusion of social media and web analytics is going to be really key in the future of social media measurement.
Another way to look at this is conversion of leads to sales that have a social network affiliation or touchpoint with you, but that didn’t necessarily originate there.

• When a lead comes in through any channel, cross reference it with your email subscribers for your blog, twitter list, or facebook fans. (Don’t have a database specific to people in your social media audiences? This might be a good reason to start building it).
• Indicate the association(s) in your database
• Look at the conversion percentage of those that have social network associations vs. those that do not.
• The overall percentage/value difference can be positively correlated to social network activity.
• Bonus: do leads associated with your social networks convert to sales more quickly or more slowly than those that aren’t? That would be time from the date the lead is opened in your database to the date of sale.

Like we discussed above, this is more looking at the potential influence of social media participation on a prospect’s buying likelihood and overall transaction value.

Direct Response Sales

The key to this is very simple: you have to provide a unique mechanism for people to buy from you that is exclusive to either all of your social media channels, or specific ones if you’re targeting individual communities. This is what Dell did, with specific deals that were only available to Twitter.

That can be a promotional code you distribute only inside your online community, a specific and unique landing page you create only for your Twitter followers, or a coupon only available to your Facebook fans (and that they can share with their friends, perhaps). Then, you have to deliberately and carefully track the sales that are generated through those initiatives.

This is one place you can calculate true ROI, or the monetary return on your investment in something. You’d have to:

• Account for the time and expenses you put into a specific social media effort, such as your Facebook fan page. That means people hours, costs for infrastructure, and a percentage of overhead that’s relative to the time and human capital investment.
• Account for the direct sales that come from that effort, by tracking them as specifically as possible.
• Take the sales, subtract the cost, divide the resulting number (the net profit) by the cost figure again, and get a decimal figure. Multiply it by 100 to get a percentage. A positive percentage means that you made more than you spent, or a positive ROI.

Keep something in mind though: information on the internet is rarely without bleed into other avenues. I can get a code on Facebook, email it to 10 of my friends, and they can use it too. I can share a specific Twitter link off Twitter, and instead to my friends on Yammer at work.  Or I can retweet it, and therefore it’s not just sales via your Twitter followers, but the Twitter community overall.

The point here is to evaluate the sales not as only initiating (or caused) from the specific social network, but as a result of your presence on that network (because people will see it there first, and if they share, you have extended reach). See the difference?

Wrapping Up

You’ve no doubt noted the heavy burden we’re putting on web analytics as a part of the measurement equation and there are several valid reasons for that.

First, web analytics have had a longer time to mature, and are a very solid indicator of active behaviors on a critical element of your online strategy (or at least it should be): your website. Second, it’s home base for you, and since social media is an online thing, a hefty chunk of your results and actions are also likely to occur online.

Are their offline indicators of social media success? Sure. You can track them, too, if you’re diligent enough to connect the dots (i.e. finding out how many of your event attendees also follow you on Twitter, even if they bought their ticket elsewhere). But remember this.

Measuring itself is not the goal. Don’t get stuck in the rabbit hole of trying to track everything that’s interesting. Track the stuff that helps you realize if you’re edging toward your goals, in this case goals that align with lead gen, online activities, or sales through online channels. You want a reasonable level of confidence that what you’re doing is having a positive impact, or some data to hint that you might need to adjust your approach.

Few measurements are bulletproof. They’re most often gauges, indicators, signs, and probabilities. Use the measurements to make business decisions, and not the other way around.

Tomorrow, we’ll talk more about potential cost savings you can track that might be impacted by social media. See you here?