There’s been a good amount of buzz on the internet lately about a helpful little concept I developed called the Social Media ROI Cycle.

I created it to help people understand three distinct stages companies go through when they launch a social media campaign.

I’ve included a SlideShare version below with additional details on the concept. You’re free to download the presentation and use it for your own purposes with attribution. (To download it, just click on the “SlideShare” link above.)

In addition, I’ve included a 60 Second video of the Social Media ROI Cycle, which can also be viewed on our YouTube Channel.

The Social Media ROI Cycle

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.

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.

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 I work with have started to reach the Stage 3.

As you can see in the InfoGraphic and video below, 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 previous post called “How to Avoid the Great Social Media Crash of 2011.”

Action Steps:

Here are a few action steps you can take to incorporate the Social Media ROI Cycle into your efforts.

  1. Watch the 60-second video below, then figure out where you are on the Cycle: Stage 1, Stage 2 or Stage 3.
  2. Start tracking the results of your campaign on a quantitative and qualitative basis
  3. Read some of the blog posts on the 60 Second Marketer that provide insights into calculating the ROI of a social media campaign. (You’ll also find in-depth description of this process in my book, How to Make Money with Social Media.)
  4. Set a timeline for your program to reach the next stage. Better still, go public with the timeline — things seem to get done when there’s a public deadline. (Download the Social Media ROI Cycle slides on SlideShare and incorporate them into your public declaration.)
  5. Keep me posted on your thoughts, comments and reactions to the Social Media ROI Cycle. This is a living entity, so we’ll be doing more updates as we go

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Posted by Jamie Turner, Chief Content Officer of the 60 Second Marketer, the online magazine of BKV Digital and Direct Response. Jamie is also the co-author of How to Make Money with Social Media.