We all know there are essentially 2 ways to increase ROI.

Here's a quick review:

1. Get new customers to buy your product
2. Get existing customers to buy more product

The way to do this; combination of increased message reach and increased message frequency.

Assume, for every 10 people I reach with a message, I get 1 conversion. (1 person buys from me).

Reach: If I reach 20 people with a message, I'll get 2 conversions.

Frequency: If I hit the 10 people with 2 messages, I'll get 2 conversions.

Pretty straightforward. Everyone understands that.

ROI is different in the social media universe. Why? Because reach and frequency are, in majority, controlled by the community.

Example

If I reach 4 people; but 2 of the people are 'gate-keepers' who can influence 25 people each; my total reach is 54. In addition, because 50 of the people received my message via a trusted advisor, the likelihood that they'll buy increased. (And that doesn't even speak to how many times the 'gate keepers' decide to repeat the same message; or if the 50 people who were influenced decided to repeat the message to their network.)

Ok, so ideally, I'd like to spend money to reach 'gate keepers' who can influence lots of people, and convert more of their audience than if the message came straight from me. How?

Enter niche marketing & DM best practices. Market to the right people & market in a personal meaningful way. This combines CRM with social media marketing. It's no big secret; but a well-thought-through CRM strategy takes time, testing, and smarts. Combining that with social media can be trickier, because the measurement tools are sometimes harder to integrate with some social media channels.

I apologize in advance to professional CRM strategists. My explanation of developing a typical CRM strategy:

• Develop a 360 view of your typical customer. Try to identify media touch points.
• Develop a communications strategy that attempts to track individual interactions at each touch point.
• Refine your communications strategy to include personal messaging at specific touch points.
• Continue a personalized, targeted, approach to drive individual customers through the buying cycle.

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How can this be adapted for social media? Instead of targeting a typical customer; target the people who have the most influence & interact with the highest number of your typical customers. "Gate Keepers"
So the first 2 steps are the same:

• Develop a 360 view of your typical customer. Try to identify social media touch points.
• Develop a communications strategy that attempts to track individual interactions at each touch point.

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But then,

• Analyze who your customers are interacting with the most; and on which channels they're interacting the most.
• Identify common influencers, and the most common channel of interaction.
• Develop a 360 view of common influencers. Identify touch points.
• Develop a communications strategy that attempts to track individual interactions at each touch point.
• Refine your communications strategy to include personal messaging at specific touch points.
• Continue a personalized, targeted, approach to drive individual influencers to engage their network.

(click to view full size)

Back to ROI

Like any strategy; it takes upfront time and effort to develop; but once developed, it optimizes the conversions & if done properly, will track purchases at an individual level.

Quick Diagram:

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In a typical scenario; it would take $10 to get a 'gate keeper' to engage his network, which would convert 5 customers, which would lead to $30 in profit. You spend $1 to make $3.

I claim this would provide a higher ROI than targeting each customer (or a group of customers) & would provide better metrics. (Click here if you're interested in a quick diagram illustrating tracking.)