Cost-effective tweets and posts make millions

Savvy business use of social media can result in a healthy return on investment, writes Charles Orton-Jones

Lots of firms use social media. But very few firms know what they are getting in return. Do hilarious Twitter tweets actually lead to sales? Are Facebook “likes” worth anything in cash terms? Or are you wasting your time?

Sportswear maker Zaggora uses social media as its main tool for marketing and is fanatical about the way it tracks return on investment. Zaggora sells sports-leggings which get hot during exercise to burn more calories. Since launching 23 months ago, Zaggora hit sales of £10.7 million in its first year and will double that in year two. Impressive.

Founder Malcolm Bell says: “We started out using social media as we had a limited marketing budget. It soon became clear how cost-effective it was, so that is where we concentrate our efforts.”

And the numbers? The firm has more than 30,000 followers on Twitter and more than 400,000 Facebook fans. “Using Google Analytics we can see that 40 per cent of our traffic of 250,000 visitors a week come through social media channels,” says Mr Bell. “Around 30 per cent of our sales come from Facebook, which is by far the biggest channel, though we do get significant traffic from Pinterest, our blog and Instagram.

You may have a million fans on Twitter, yet generate no revenue, or a few dozen followers each of whom turns into a valued client

“The value of orders derived through social media is higher than organic traffic; they are typically $150 compared to $100. The reason is confidence; 30 per cent of our customers have at least one friend of Zaggora on Facebook.”

This equates to approximately £8 million, of the firm’s estimated £20-million turnover, arriving through social media.

And at what cost? “We have two full-time staff reacting to comments on Twitter and Facebook. One is in Hong Kong to handle stuff in that time zone. That’s £3,000 a month. And we place Facebook ads – our spend is £200,000 a month.” Conclusion? “We have a return on investment of three to four times on Facebook.”

Curiously, this isn’t as good as Google AdWords. “We get a return of seven to eight times. But the volume of inquiries isn’t high enough on Google. There are only so many people searching for ‘Zaggora’ or ‘Hotpants’. With Facebook we can target a much larger number of people.”

If you want to conduct a similar cost-benefit analysis, you’ll need to know how to track activity on social media. This is tricky. Just look at the number of tools used by travel website

HostelBookers.com:

  • comScore – reports on traffic to HostelBookers.com originating on Facebook, Twitter and Pinterest, plus orders and revenue made from channel referrals
  • Facebook Insights – gives data on how messages on Facebook have been consumed; clicks, shares, reach and impressions
  • Facebook ads platform – provides data on reach, clicks, impressions from promoted posts
  • Google Analytics – measures traffic to the website or blog. HostelBookers uses affiliate tags on urls posted to social channels which permit analysis of assisted conversions and revenue
  • HootSuite – helps manage the Twitter platform and audience, and reports on number of re-tweets and clicks
  • Social Mention – looks at user sentiment around the brand, showing whether you have positive or negative keywords attached to the brand from social mentions, and top hashtags/users
  • TweetReach – measures reach and impressions of a particular hashtag, which is important when running a campaign around a certain hashtag
  • Statigram – offers insight into reach and shares from an Instagram account
  • Kred/Klout – both understand the top influencers in the sector in order to connect with these key players.

And what does HostelBookers learn from this smörgåsbord of tools? A spokesperson tells me: “The bottom line is that customers referred to us from social media account for 10 per cent of HostelBookers’ revenue.”

With these tools, it is possible to conduct a mathematically rigorous return-on-investment (ROI) analysis. But what about the less tangible benefits? One social media channel is notorious for being hard to quantify: LinkedIn.

Many users wonder what LinkedIn is for. It is the only social channel which is exclusively professional. Lots of executives have a profile, which they may rarely check. So what’s the ROI?

The first return is visibility. If your staff have LinkedIn profiles they can be seen and evaluated by potential clients. This is an invisible gain; unless you pay for and actively use the “Who’s viewed your profile” function then you may never realise which clients checked you out.

The second big win is recruiting. All 14 people in the Dixons Retail HR team use LinkedIn’s Recruiter tool. It allows a recruitment professional to search the 225-million profile database for talent. Dixons Retail reports it has made more than 300 hires for its head office, call centre and stores via LinkedIn Recruiter.

The tool has changed the way the firm hires. “When I started three years ago, we did 95 per cent of our recruitment using agencies and now we’re below 4 per cent,” says Bridget Hutchinson, head of recruitment. “Everything we do now is directly sourced. LinkedIn has been fundamental to that change. It’s been brilliant.” A licence for LinkedIn Recruiter costs $8,000. And there are other ways to target talent, such as LinkedIn’s Talent Pipeline tool and on-page ads.

Perhaps the biggest misnomer when talking about the benefits of using social media is that there must be a standard “going rate” for a Facebook “like” or a Twitter follower. The blunt truth is that there is not. You may have a million fans on Twitter, yet generate no revenue, or a few dozen followers each of whom turns into a valued client. It comes down to how you use social media.

Take the example of achingly hip burger bar Meat Liquor, when it launched in 2011. The whole launch campaign was based on Twitter. The PR firm, W Communications, teased food bloggers and writers for weeks, leveraging founder Yianni Papoutsis and Scott Collins’ formidable reputation. Tweets included “111111” – the date of the opening and the co-ordinates of the location. No other materials were used. Not even a press release.

The London Evening Standard reported: “For weeks now, Tweeters, food bloggers and around 700 Facebook users have been drooling over their iPads, waiting with bated breath for the grand opening of this ‘chop up’ burger joint.”

The result? Huge press coverage and a PR Week award followed. Six months after launch, customers were prepared to queue for 90 minutes to get in. Turnover in year one was projected to be £5 million. The cost of the whole Meat Liquor campaign: £10,000.

The return to the business over the next few years as it expands can only be described as incalculable.

CASE STUDY

Tweeting tax advice?

Accountants on Twitter? It is hard to think why they would need to be. It’s pretty hard to talk to clients or provide tax advice in 140 characters or less. Yet Grant Thornton, which employs 4,500 people in the UK and 31,000 worldwide, is leading the industry in using Twitter. It is also big user of Facebook, YouTube, Flickr and LinkedIn. And is even flirting with housewives’ favourite Pinterest.

Why? “We use Facebook for recruitment, particularly for trainees,” says Grant Thornton’s social media boss Paul Thomas. “We have essentially outsourced our trainee communication to our trainees. Students can ask them what it’s like to work for Grant Thornton and what the training is like. The channel is ideal for this type of direct conversation.”

Twitter is vital too. “Even if you don’t tweet anything, Twitter is a great way to build your understanding of clients,” says Mr Thomas. “You can hear their news and listen to their views. If you want to be more active, you can take part in a conversation with them. We can use Twitter to talk about things such as the brand we created last year. By listening to clients we show we are open to their ideas and input.”

Perhaps the most fruitful channel is LinkedIn. “We are close to the stage when having a profile is mandatory for partners. When a potential customer is researching advisers, the first thing they’ll do is do a Google search. We need our partners to have visibility online as clients will instinctively trust people they can see.”

YouTube is used for hosting the firm’s videos. Photos from Grant Thornton’s events are put on Flickr.

But the firm’s social media goal goes way beyond that. It’s about positioning Grant Thornton as an active, intelligent voice on the web. “On LinkedIn we started a group called VAT Club,” says Mr Thomas. “This was a place for Grant Thornton tax experts to discuss best practice and issues around VAT. It was experimental, but it worked. It generated market awareness. Partners were invited to meetings and on to panels which they might otherwise not have been.

“We soon found partners at rival firms wanted to join the group. We were resistant at first, but when the group hit 600 members we opened the door. Grant Thornton’s name is on the group and it proves that we are owning this conversation.”

Mr Thomas also notes that a US contract was won because of VAT Club. That’s provable, traceable return on investment (ROI).

And the price of this participation? “The cost of social media is zero, apart from time. We expect partners to spend a few minutes a week, no more,” he says.

But what of the risks? A firm like Grant Thornton needs to be squeaky clean. A single foolish tweet could bring the entire firm into disrepute. “Our people know there are rules and regulations,” says Mr Thomas. “Look, the best way to mitigate the risk of something idiotic is don’t hire idiots. We don’t.”

The result is a culture where employees are free to tweet, blog and post on Facebook under their own names. Head of sustainability Nathan Goode (@nathangoode2) is a prolific tweeter, as is leader of people and skills Sacha Romanovitch (@romanovsun). Even the chief executive Scott Barnes is a social media participant.

The total ROI for Grant Thornton? “Hard to calculate,” says Mr Thomas. “It’s like asking for the ROI on e-mail. You have just got to accept that it’s part of modern business, is not going away and you need to engage.”