The Three Stages of the Social Media ROI Cycle

By BKV in Media Strategy on March 10th, 2011

Jamie Turner, who is the Chief Content Officer of BKV’s 60 Second Marketer, recently developed a concept that helps frame the stages companies go through as they set up, launch and manage their social media campaigns.

The concept, called the Social Media ROI Cycle, helps businesspeople get a clear picture of the social media ROI landscape. Better still, it helps guide and direct businesses towards a final destination – a return on their investment.

Jamie is the co-author of How to Make Money with Social Media. We asked him to do a short write-up on the Social Media ROI Cycle and here’s what he told us.


The Social Media ROI Cycle

There are three stages to the Social Media ROI Cycle. The first stage is the launch stage, the second is the management stage and the third, and most important, is the optimization stage.


Measuring Social Media ROI



Stage 1: Launch

During this stage, 100% of a company’s focus is on launching the Big 4: LinkedIn, Facebook, Twitter and YouTube. Some companies focus on the Big 4 Plus More, which include things like Flickr, e-newsletters, blogs, SlideShare and other social media platforms. But most companies kick things off by quickly getting into the Big 4 simply as a way to have a social media presence.

The approach during this Launch stage is very executional with very little long-term planning. The primary objective is simply to get started.

Of course, the best way to dive into any marketing initiative is to start with an analysis of your target market’s needs and how your initiative might meet those needs, but the Social Media ROI Cycle is based on reality, not best practices. In other words, most companies just jump into social media with very little forethought, even though best practices would be to do some advanced planning.


Social Media ROI Stage 1

Unfortunately, the results of the Stage 1 process are negligible. Oh, sure, you’ll be able to claim that you’ve “got a social media campaign” but you won’t really see much traction unless you move onto Stage 2.


Stage 2: Management

During this stage, roughly 60% of a company’s efforts are focused on the Big 4 (or the Big 4 Plus More).  About 10% of the focus is on creative (content creation) and offer development, 20% on tracking quantitative metrics such as traffic, inbound links, Facebook likes, etc., and about 10% on qualitative metrics such as brand sentiment, survey results and customer polls.


The approach during the Management stage is still very tactical, but the focus is on mid-term instead of short-term results, which is good. The objective at this stage is to engage prospects and customers in some way that gets them to connect with the brand. Ideally, this would mean buying something, but it can also mean downloading a white paper, Liking a Facebook page, responding to a survey or any other tangible evidence that they’re connecting with your brand.


Social Media ROI Stage 2

The results during the Management stage are typically a little better than the results during the Launch stage, but they’re still not as good as they can be. Which brings us to Stage 3: Optimization.

Stage 3: Optimization

Most companies today are still at either Stage 1 or Stage 2. But many of the companies BKV works with have started to reach the Stage 3.

About 25% of the focus at this stage is on the Big 4 Plus More and about 30% is evenly split among creative and offer development, quantitative metrics and qualitative metrics.

About 25% of the focus is on improving conversion and optimization of campaigns. What do I mean by that? Improving conversion and optimization means tracking inbound leads and traffic across social media platforms using Atlas and Dart tracking and watching those leads turn into customers, either on e-commerce landing pages or through B2B lead generation programs.

It also means testing your way into success with our social media campaigns. This can be as simple as testing two different landing pages and seeing which one is the winner. Or it can be as complex as doing multivariate testing that tests more than one component of your website at a time.

The final 20% of a company’s efforts in Stage 3 include measuring the success of your campaign on an ROI basis. And, yes, you can measure a social media campaign on an ROI basis, despite what some social media experts will tell you.

The process involves understanding your Customer Lifetime Value (the total revenue the average customer generates for your business during the lifetime of their engagement with you), then using your CLV to compare it to the results generated by your social media campaign.

For more information on using Customer Lifetime Value to calculate the ROI of a social media campaign, read my post on the 60 Second Marketer called “How to Avoid the Great Social Media Crash of 2011.”


Social Media ROI Stage 3