ROI of Social Media? · The ROI of Recommendation via WoM and Social Media “A recommendation from...
Transcript of ROI of Social Media? · The ROI of Recommendation via WoM and Social Media “A recommendation from...
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What’s the
ROI of
Social
Media?
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The ROI of
Recommendation
via WoM and
Social Media
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“A recommendation from a friend is
the most trusted source of information
when it comes to making a purchase decision” David McCallum,
Global Managing Director
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“Word of Mouth is 9X effective as
advertising in converting unfavorable or
neutral dispositions into positive attitudes. ” David McCallum,
Global Managing Director
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Recommendation
flows through
relationships
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Likely to buy based on
recommendation from a friend
78%
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Key driver for
business growth
Brand Advocacy
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“The most recommended
company in its category
grows 2.5x category average”
NPS is a registered trademark of Bain & Company, Satmetrix, Inc & Fred Reichheld
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How to measure
advocacy?
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NET PROMOTER SCORE
“Research shows that there is a
strong correlation between a
company‟s growth rate and the
percentage of its customers who are
„extremely likely to recommend the
company to a friend or colleague.”
NPS is a registered trademark of Bain & Company, Satmetrix, Inc & Fred Reichheld
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How likely are you to recommend us to your friends and family?
Net Promoter Score
Net Promoter Score = % Promoters - % Detractors
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But who uses
Net Promoter Score
as a metric?
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Advocacy equates to success
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“A 12% increase in NPS
correlates to a doubling in growth”
NPS is a registered trademark of Bain & Company, Satmetrix, Inc & Fred Reichheld
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The Economics
of Advocacy
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Proving the model:
a telco case study
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Source: Satmetrix Net Promoter Benchmark
B2C Telecommunications:
Wireless Industry Segment
Number of Companies: 7
( respondent N = 1,445)
Proving the model: a telco case study
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Proving the model: a telco case study
Objectives:
Quantify the impact of loyalty on buyer economics
Calculate the economic value of WOM behaviors
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5 Year Trend2007B2C: Wireless Providers
NPS = 14%
Promoter
41%
Passive
32%
Detractor 27%
B2C: Telecom: Wireless
B2C: Telecom
Wireless Providers: Net Promoter Performance
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TOTAL CUSTOMER WORTH
Referral Economics
Buyer Economics
PROMOTER DETRACTOR
NET PROMOTOR®
Likelihood to
Recommend
( 0 to 10 Points )
Customer Experience
NPS and Total Customer Worth
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TOTAL CUSTOMER WORTH
Referral Economics
Buyer Economics
PROMOTER DETRACTOR
NET PROMOTOR®
Likelihood to
Recommend
( 0 to 10 Points )
Customer Experience
NPS and Total Customer Worth
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TOTAL CUSTOMER WORTH
Referral Economics
Buyer Economics
PROMOTER DETRACTOR
NET PROMOTOR®
Likelihood to
Recommend
( 0 to 10 Points )
Customer Experience
NPS and Total Customer Worth
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Relative Spend for Promoters and Detractors for Wireless Providers
Buyer Economics for Wireless Providers
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Tenure for Promoters and Detractors for Wireless Promoters
Customer Retention for Wireless Providers
Takeaway: NPS Question can predict churn – at an individual level
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TOTAL CUSTOMER WORTH
Referral Economics
Buyer Economics
PROMOTER DETRACTOR
NET PROMOTOR®
Likelihood to
Recommend
( 0 to 10 Points )
Customer Experience
NPS and Total Customer Worth
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TOTAL CUSTOMER WORTH
Referral Economics
Buyer Economics
PROMOTER DETRACTOR
NET PROMOTOR®
Likelihood to
Recommend
( 0 to 10 Points )
Customer Experience
NPS and Total Customer Worth
![Page 36: ROI of Social Media? · The ROI of Recommendation via WoM and Social Media “A recommendation from a friend is the most trusted source of information when it comes to making a purchase](https://reader035.fdocuments.net/reader035/viewer/2022062607/60236a12e1d5b51e5064f641/html5/thumbnails/36.jpg)
TOTAL CUSTOMER WORTH
Referral Economics
Buyer Economics
PROMOTER DETRACTOR
NET PROMOTOR®
Likelihood to
Recommend
( 0 to 10 Points )
Customer Experience
NPS and Total Customer Worth
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Calculating Total Customer Worth
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Positively Referred Number Referred Conversion Rate Referral Impact
Made a positivereferral in thepast 12 months( yes/no ) ?
# positive referralsin the past 12
months?
% customersacquired throughreferrals
# customersacquired
( per Promoter)
75% 3.24 23% .559
Referral Impact x Average Overall Spend = Additional Revenue
Generated from
Promoter Referrals
0.559 $1,144 $639
Calculating the value of Positive Recommendation
=x
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Negatively Referred Number Referred Conversion Rate Referral Impact
Made a negativereferral in thepast 12 months( yes/no ) ?
# negative referralsin the past 12
months?
% customerslost
throughreferrals
# customerslost
( per Detractor)
32% 4.33 92% 1.275
Referral Impact x Average Overall Spend = Additional Revenue
Generated from
Promoter Referrals
1.275 $1,144 $1,459
Calculating the value of Negative Recommendation
=x
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Economic Impact of Promoter and Detractor WOM for B2C Wireless Providers
Referral economics for B2C Wireless Providers
Each Promoter’s PWOM behaviourbrings in an additional in $639In revenue
Each Detractor’s NWOM behaviour is responsible for $1,459In lost revenue.
+$639
Promoter
Detractor
-$1459
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Total Customer Worth for Promoters and Detractors for B2C Wireless Promoters
$1784
-$304
$2,052
$639
$1145 $1144 $1155
-$1459
Calculating Total Customer Worth for Promoters and Detractors
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Is ALL
Profit
Good?
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Good
Profit
Bad
Profit
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Good Profit
Earned while also
earning positive
advocacy
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Bad Profit
Earned while also
earning negative
advocacy
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What are they
saying about
your brand
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Return
On
Customer
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Structuring a Social
Media Strategy
ADVOCACY
AMPLIFICATION
ADVOCACY
MANAGEMENT
ADVOCACY
MEASUREMENT
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U nique
S ales
P roposition
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U nique
S haring
P roposition
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The Importance of
Being Liked
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The Importance of
Being Liked
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The Importance of
Being Liked
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The Importance of
Being Liked
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1
Billion
Buttons
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Summary
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Advocacy is King
Advocacy is
Measurable
Good Profits vs
Bad Profits
Be Shared / Liked
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Thank
YouIan McKee
CEO - Vocanic
Email: [email protected]
Blog: www.thepowerofinfluence.com
Twitter: www.twitter.com/vocanic
Facebook: www.facebook.com/ian.mckee