Measuring Social Media

Social media metrics are all the rage, but I still think people are asking the wrong questions. More often than not, I get asked how to measure the effectiveness of a Facebook page, a Twitter feed, or even a blog. The problem is not in measuring those tools, but in what to measure. Most of the time, we focus on the tool, and not the strategy or the thing that we're trying to effect.

For instance, the other day I was asked by one of our departments if our health plan could use Facebook. My response was "Sure, but why?" There is this overwhelming sense that we need to be using social media, but no real reason why. Without fully understanding the why a tool gets used, the measure of effectiveness is always going to fall short of usability.

I had the privilege of interviewing Jim Sterne, an international and seasoned veteran in the relationship between marketing and customer interactions. For 25 years he's been working with companies, helping them measure the value of the Internet as a medium for creating and strengthening customer relationships. He's written six books, the latest being Social Media Metrics: How to Measure and Optimize Your Marketing Investment. You can listen to my podcast interview here.

Sterne reinforces the need for having solid business objectives. If a marketer fails to start with a clearly defined problem they're trying to solve, or a quantifiable gain/achievement they're trying to make, then measuring social media tools as a means to achieve those objectives is going to be difficult at best, and likely less actionable than you want.

All that said, I did ask Sterne what he thought was the single most important thing to look at when evaluating social media as a tool. He offers three things: 1) Did the tool help you to earn more? 2) Did the tool help you to spend less? 3) Did the tool make your customers happier? Though this sounds pretty basic, I have to agree that this approach is fundamentally the best. Social media doesn't have to be complicated, and it can be measured -- we just need to start with clearer objectives so we know what we're trying to measure.

Lastly, I asked Sterne who should own social media in the organization. You'll appreciate his answer in the podcast. But I'll hint at his response..."who owns the telephone?"

-- David Kinard, PCM

Showcasing Marketing ROI

One of my favorite non profit marketing bloggers, Nancy E. Schwartz, was recently asked a question on her blog from a reader who wanted some professional help in creating a strategy for her declining organization. Like Nancy, I’ve been asked the same question myself many times and I was interested to see how she would answer.

Her 6 Steps to Showcasing Marketing ROI are below:

1. Stop asking marketing firms to call your decision makers and stop passing on firm materials as well.
2. Build understanding of what marketing is and the value that it will bring to the Council — and, most importantly, what the Council will lose if it continues without strategic marketing.
3. Come to the table with a succinct plan including a budget.
4. As you implement your initial marketing project, keep management and board posted on progress.
5. Serve as an ongoing marketing mentor to your management and board.
6. Once you have one or two successful marketing projects under your belt, then it’s time to develop a comprehensive marketing plan, derived from the Council’s goals.

Nancy is spot on and I suggest you read her entire column. However, I think there is a critical element that needs more emphasis. The biggest problem marketers face today from the Board or C-level suite is not a lack of funding or support but rather their own inability to connect marketing to the strategy of the business and demonstrate top- and bottom-line impact. In other words, marketers continue to run programs, campaigns, and tactics that spend money and create a flurry of activity, but those efforts are not linked to the things that are important to the CEO, Executive Director, or even the Board.

I’ve been marketing for more than 20 years and I’ve never run into a CEO that turned down a good investment in growing the business. But I consistently see CEOs turn down marketing plans that fail to demonstrate ROI. And the ROI I am talking about is NOT on how many calls were generated, or how many column inches were earned in the media, or even how many brochures were mailed out. Those are all activities and related to expenses. They’re not results. What the executive leadership wants to know is did you move the needle on the dial that is important to them. Those dials could include:

• New member acquisition
• Member retention/churn
• Brand loyalty as an indicator of referrals
• Income generated from fundraising
• Number of new donors
• Number of recurring donors
• % of fundraising to donor base and change from effort
• Share of wallet for donors

And we marketers must be better at financially analyzing the impact of our marketing efforts. It isn’t that we run a marketing campaign and say we spent $5,000 and generated 108 new enrollments. We need to know what the cost per new enrollment is, how one campaign performs against others, and what campaigns are more profitable and contribute to the margin.

Good for Nancy for identifying her top six steps. Good for her reader for asking what she could do better. And good for you if you begin to think in terms of investments from the perspective of the C-level suite.

But, what else would you add to the list of six from Nancy? Would you have a different list? And what is keeping you, or marketing, from getting the support from your executives?

-- David Kinard, PCM

[photo: Gavoon Products]

From Garbage to Great – Advertising Rating Metric

I am one of those people who actually likes to watch the commercials. I enjoy advertising and always have. Um, well, I should qualify that a bit. I enjoy good advertising.

There is a tremendous amount of garbage being thrown at us that amounts to nothing more than noisy wallpaper. We as consumers screen and filter out this noise pretty well, too. So, with the power of the remote to skip over what we see, and the power of our own filters to screen out the advertorial noise, it’s no wonder that companies are finding it very hard to see any return on their advertising investment.

Though the current situation is bleak in terms of advertising effectiveness, it doesn’t have to be so. There is a lot of great advertising being done today, and in this week’s Metric Monday I thought I’d give you some pointers on how to evaluate your own advertising to ensure it is in the great category, not the garbage.

When it comes to developing and measuring your advertising, there are five key elements to keep in mind: Attention, Read-through, Cognitive, Affective, Behavior. Each is described in more detail below.

Attention: How well does your ad catch the attention of the target audience? Contrary to popular practice, key to getting attention is not to be obnoxious or blaringly loud. Rather, getting the attention of your target audience relates to one thing – are you pertinent?

Read-through: How well does your advertisement lead the target to go further into the ad itself? In other words, once you’ve got their attention what are you going to do with it? This is where most ads fail. In short, they’re boring and lack interesting qualities that deepen interest.

Cognitive: This has to do with the clarity of the central benefit of your message. What are you offering and is it clear to the target audience? How clear? Are you being overt or is your benefit-laden message hidden amongst jargon? (I like to ask my kids (ages 8 and 12) if they can pick this out. If not, it’s back to the drawing board!)

Affective: This relates to the appeal of your message and its overall emotional impact. My friend Martin Lindstrom noted in his groundbreaking book Buy-ology that every decision we make has an emotional component to it. So, you need to ensure you have an emotional (affective) appeal in your ads.

Behavior: It’s often said the number one failure of sales people is that they forget to ask for the sale. What is your ad specifically telling the target audience to do, think, or feel? What behavior are you hoping for and does your ad support that goal?

So here is the easy way of putting this together. Each element is worth 20 points. Begin to rate each element and add up your score. I’ve included a rating sheet for your use. Of course, this is a subjective tool and should be used in conjunction with a financial metric, but it will help you to ensure that what you put out has the greatest chance of achieving your goals.


Bottom line: Whether you are placing print ads, radio spots, or banner ads on Web sites, your job as a marketer is to fully understand your target audience so that your whole message (visuals and words) is relevant and important to them. Remember, advertising is NOT about you, but about what your target needs, wants, and demands. Take the ad rating sheet I’ve provided and have a group of customers rate your ads on a regular basis. This will keep you on track and effectively stewarding your marketing dollars.

-- David Kinard, PCM

[image credit: riptheskull]

Measuring How Well Your Brand Performs: Using the BDI

It is a given that every product or service your organization offers does NOT appeal to everyone. In fact, it is likely that there are specific customer groups that are more interested in particular offerings than others. In today’s Metric Monday, I am going to explain how to do a Brand Development Index which will help you identify strong and weak segments (usually by demographics or geographics) for a particular product/service or type of products/services.

The application of this awareness can help you determine if there are pockets within your customer community that tend to purchase specific things more often than others, or why some pockets are under-purchasing compared to their peers. Ultimately, this will help you to create targeted communication strategies to encourage more usage/buying, or to create a product improvement plan to fill in any value gaps.

A Brand Development Index is a pretty straightforward calculation. Again, it is an measurement of how well a product/service performs within a given market group of customers, relative to its performance in the market as a whole. To begin with, you need to be able to specifically identify a target group. The more homogenous that group is the more likely it is your data can be acted upon with confidence. For example, choosing to select only by women may not give you the same confidence as selecting women who are frequent users and who have children in the home between ages 1-9. (NOTE: Whatever criteria you choose by should be linked to your overall research goal.)

Okay, once you have this group identified add up all the sales for a particular product/service by that target group and divide it by the total number of people in that group (you can also divide by households if you don’t have individual data). Hold on to this number. Now, in a separate calculation divide the total product/service sales by the total persons/households. Take your first number and divide it by this new number.

Your calculation should look something like this:

Because your BDI is a measurement of sales by a particular product/service per person (or per household) within a specific demographic group, compared with the average sales per person/ household in the market as a whole, you’re able to quantitatively see how parts of your customer community are buying what you’re offering.

Bottom line: Measuring the total sales, registrations, etc for a product, service, or event is sufficient if you’re needing only a top line number to work with. But if you are interested in creating specific strategies for groups within your community, you need to understand how they’re using your products and services. And because you’re creating an index number that can be benchmarked, now you can test to see if specific marketing messages or campaigns are making an impact.

-- David Kinard, PCM

Metric Monday: Satisfaction and Willingness to Recommend

How do you know if your customers are happy? How do you know if they’re not? How do you figure out the intensity of their feelings? Understandably, most customers who are really happy will tell you. The same goes for those who are not. It’s the unwashed middle that you should be worrying about. They represent the part of your customer base most susceptible to the competition.

Whether your customers are actual consumers of your product or service, donors to your cause, or partners with your organization, understanding what they feel about you – and how intense those feelings are – is an essential metric that when used can help your bottom line. In today’s edition of Metric Monday I am going to offer a few perspectives on how to assess satisfaction and willingness to recommend.

Most marketers know they need to measure customer satisfaction, but not the real reason why. Satisfaction serves as a predictor of future success. It is one of the few forward measurements that can be taken whereas most metrics are latent in nature. Willingness to recommend serves in this same function, but is a good measurement of the intensity of satisfaction. Both metrics quantify an important dynamic. When a brand has loyal customers, it gains positive word-of-mouth marketing, which is free and highly effective (see my radio interview with Andy Sernovitz, founder of the Word-of-Mouth Marketing Association).

Customer satisfaction is generally measured on a five-point scale allowing for two positive ratings, one neutral rating, and two negative ratings. I hate this and think it is a misguided way of looking at satisfaction scores. Here are my problems with this approach:

1. Customers are either satisfied or not. You can’t be half in love, or half anything for that matter. You either are, or are not.


2. It’s nearly impossible to quantify the difference between what a score of 4 or 5 is in either direction of satisfied or unsatisfied. What does it mean to be a 4 and not a 5?


3. Giving customers a chance to select neutral only provides people the opportunity to not really make a choice. That ambiguity doesn’t help you one bit. You WANT to know if they’re happy or not.

Okay, so I suggest that your surveys or whatever tool you use to say, “Hey, are you satisfied with your experience?” use a YES or NO response. You can certainly add a skip logic question if the answer is NO to find out what the problem was. I also don’t see any harm in doing the same for a YES response – find out what worked for that customer.

Then for both YES and NO respondents, ask the willingness to recommend question. This gives you the insight as to how deeply they feel about you. In asking this question I suggest you use a three point scale: No, Maybe, Yes. If you set up your survey correct, you should be able to do some cross tabulations to see how many unsatisfied people answered yes, no, and maybe, and how many satisfied people chose those same options.

Here is an example of what the data might mean to you. If you get a bunch of satisfied customers who say they are not willing to recommend you, then your problem could be that although you’re meeting expectations you’re not very exciting, inspirational, or are seen as an undifferentiated commodity. Basically it means there is no energy behind your brand. In another example if you have a bunch of unsatisfied customers who may be willing to recommend you, then you have a major opportunity to fix something and generate a bunch of advocates for your organization. I’ve created a simple matrix below for you to consider as possible action plans. (Click on the image for a larger view.)

Bottom line: Measuring your satisfaction scores is a must. Collecting and analyzing the data over time will help to identify trends that are critical not only to your competitive success but also to your ability to identify problems and fix them before they become serious problems. Measuring your audiences’ willingness to recommend your organization, or products, is a great tool for identifying action plans to retain customers while growing your base of grass-roots evangelists.

How is your organization measuring customer satisfaction or willingness to recommend? How is it working for you? What actions are you able to take from that metric?

-- David Kinard, PCM

What's the Right Price?

How much is the right price to charge for something? Not only have volumes been written on the subject, but doctorates have been earned just by studying one type of metric around price, pricing, price elasticity, and the economic impacts of prices on consumer behaviors. Well, I am not going to try and cover all those issues in today’s Metric Monday, but I thought it would serve us well to cover two basic price metrics – Reservation Price and Percent Good Value.

Reservation Price is the value a customer places on a product or service and subsequently the maximum price that individual is willing to pay. Percent Good Value represents the proportion of customers who believe a product or service is a “good value” at a specific price. When combined these two metrics provide a marketer an evaluation of pricing and customer value.

To calculate your Reservation Price you need to know the maximum price a customer will not go over. This is going to require some research of your target market (i.e. customers, prospects, etc) and is no easy matter to do. Most market researchers will suggest doing a conjoint analysis (a fancy way of relating variables to one another) but I suggest some basic surveying on your part. It won’t be perfect, but you should get some basic information to use – such as a range of maximum prices your target is willing to pay for something. In doing this, you are essentially combining Reservation Price with Percent Good Value.

In your survey you can ask a two-two part question to get to this data.

1. Considering the [product/service], would you attend if the price was set X? (your control question).


2. Considering the [product/service], please indicate the point at which the price goes over what you would be willing to spend.

The first question can be considered your control question and I suggest testing three or four prices using common industry prices, or aggregates of what the competition is charging. By way of testing, you only want to ask their answer to one price, so in essence you’ll have a couple of different survey editions. The second question asks the respondent to provide their maximum price (reservation price). DO NOT ask these questions back-to-back in your survey or you’ll likely get a lowball number or one equal to the control question. Separate them by at least three or four questions.

Now you have two data sets. Take the range of respondents from the second question and associate the number of respondents to each value. For simplicity, you may want to make some minor adjustments in the scale to make the data set more manageable. You also need to know what your variable cost is for the product or service so that you can understand the price as it relates to your organization’s contribution margin (see earlier post for more on this).

When you map out the range of respondents to the second question you’re getting something called a demand schedule. In another column subtract the variable cost from the price you’re charging. This basically shows you how much you lose or make at each price level, and at what point the price becomes high enough that your demand starts to go down.

In the example below I’ve created a sample chart to explain how this looks. Let’s assume that you want to price your conference, workshop, or charitable gala. You want to know what the right price per ticket should be. After doing your survey you get a range of Reservation Prices between $25 and $325. You’ve listed the number of people who said that is the maximum they’d pay, and you’ve also listed your variable costs for that event (I have mine set at $40).


The math from here on is pretty simple. You subtract your variable cost from the price you sold a registration for, and multiply it by the number of people buying it at that price. In the example you will see the contribution margin go up, peak, and begin to decline. Thus, from the data you gathered, it appears that $185 is the optimal price.

Now, back to the survey questions and that control price. This is basically our “good value” price. Most of the time it is hard to get data sets for the Reservation Price study. By asking the control question we’re essentially asking our target if our product or service is a “good value” at a particular price. We can map out the most common answers and check our demand curve price against it. This process is also useful to help you know at what price to set your product/service and what discount levels you can offer.

Bottom Line: If your pricing strategy is akin to throwing a dart against a wall or going with what the competition is charging you are creating a lose situation for your organization. You may be leaving critical monies on the table by not charging enough, or you may be diminishing your market impact by overcharging. Using a method like Reservation Pricing and Percentage Good Value allows your organization to understand not only what your customers value, but also what prices contribute and take away from your top line revenue.

For more on pricing strategies, listen to my radio show with Reed Holden, author of Pricing with Confidence: 10 Ways to Stop Leaving Money on the Table.

-- David Kinard, PCM

Metric Monday – How Much is that Marketing Effort Worth?

The scenario is common – you’re in a meeting with the communications committee and someone suggests that your organization needs a brochure. Lots of ideas are shared about the size, how big, how many, and where it could be distributed. But very little of the conversation surrounds what you want to receive back from that brochure. In other words, what is that piece supposed to do for you in terms of contributing to your organization’s top or bottom line revenues? In today’s edition of Metric Monday I am going to suggest how you can determine if your marketing activities are negatively or positively contributing to your finances. Break-Even Analysis, and Contribution Analysis are two metrics you can use for this purpose.

(Important Reminder: variable costs could be the cost of goods sold, shipping/delivery charges, costs of direct materials or supplies, and/or wages of part-time or temporary employees. Fixed costs remain the same regardless of your level of sales such as rent, equipment expenses, and salary of permanent full-time workers.)

The break-even level is basically the dollar amount – in either donations generated, registrations sold, memberships acquired, etc – that is required to cover the total costs (both fixed and variable) of the marketing effort. Your profit at the break-even level is zero. The equation looks like this: Total Costs = Total Revenue.

Now, if your prices are higher than your variable costs, then revenue generated contributes to covering some portion of the fixed costs. This is a contribution level. So, your contribution can be calculated as the difference between unit revenue and unit variable costs. When you’ve generated enough contribution to cover all your fixed costs, then you have a true break-even scenario. Of course, any revenues generated that go beyond the break-even scenario is profit.

Okay, now that we have these basic financial concepts in mind, let’s go back to the idea behind the brochure. Again, the first question you have to ask yourself is what do you want to receive back from that brochure? What is it supposed to do for you? More often than not, committee members will say it will help to generate awareness. So then you have the difficult task of assigning a dollar amount to what awareness means to your bottom line. For this basic reason, I typically suggest organizations do NOT make a brochure just to have one. Assign a specific, quantifiable purpose to it – a goal that can be measured against. That’s the only way to know if you’re efforts are contributing to your organization’s value.

Practical Scenario: Let’s figure that you want to do a brochure to generate registrations for your conference. To identify the benefit of that brochure you first need to know how much each registration sells for (e.g. $300). Next you need to know the fixed costs to your organization to put on the conference – basically your own organization’s staff, equipment, etc. Let’s say that is $12,500. You also need to know the variable costs to your organization for things like confernece room rentals, meals, badges, speaker fees, etc. Let’s say they are $210). That means you have a contribution per registraiton of $90 ($300-$210=$90).

To figure out your break-even volume you divide the contribution per registration into the fixed costs ($12,500/$90). In this scenario you need to generate 139 registrations. As your variable costs change you recalculate the formula to identify how many registrations you need to cover your fixed costs and achieve a break-even point. If your brochure is more expensive and adds an extra $5 per registration to your variable costs making them now $215, you’ll see you now have to generate 147 registrations to break even. If you need to make a profit on your conference of $5,000, you can calcuate that you now need to generate 205 registrations (I figure this by simply adding the profit requirement into the fixed costs forcing it to be a positive return to the organization).

Bottom Line: Marketers spend way too much of their time just making brochures and doing marketing without fully understanding the goals and impact of their activities upon the finances of the organization. By approaching your marketing activities with a financial perspective you force clarity around what marketing is supposed to be achieving, identify measurable goals, and ensure you’re getting the most value from your efforts.

If your organization is using break-even or contribution analysis I’d love to hear how its working for you. What challenges have you faced in going through this process? What has happened as a result of adding a financial perspective to your marketing?

Metric Monday: Measuring Awareness, Attitudes, and Usage

In a recent survey of non profit leaders and marketers by the American Marketing Association and Lipman Hearne, respondents of small, medium, and large organizations said that building awareness was their top priority. In today’s edition of Metric Monday I am going to suggest a few ways of measuring your organization’s activities toward achieving this goal.

Typically referred to as AAU (Awareness, Attitudes, and Usage), this metric is most useful when results are set against some form of comparator – that is data from a prior term (e.g. year-over-year), different markets (e.g. geographic or demographic), or with the competition. An AAU metric by itself is meaningless until you have a pivot point from which to demonstrate movement. In that light, several data sets are essential to identify valid trends and movement in AAU.

In a nutshell, AAU looks at:

Awareness: the percentage of your target audience (customers or potential customers) who recognize your organization or its brand, either aided or unaided. It also measures what knowledge the target audience has about your organization’s products and services. So, not only do you look to see if they know about you, you measure what about you they know.

Attitudes: this is a combination of what your target audience believes and how strongly they believe it. Measurements cover the target audiences’ perceptions of quality, effectiveness, and value as they relate to your organization, and also cover intention to purchase or become involved with your cause.

Usage: this is simply the target audiences’ self-reported behavior as it relates to your organization.

So, how do you get this type of information? Here are two ideas.
Caveat: make sure you specifically identify the target audience you’re wanting to measure. I can’t emphasize the need for specificity in this step. Saying you want to measure awareness amongst the general population will not give you actionable data as your organization likely doesn’t have the marketing budget of General Electric or Coke. Think specifically about the finite group you want to study.

1. Use surveys conducted by research organizations who know how to reach your target audience. These might be online, intercept, mail, or telephone surveys that ask a series of questions. USE THE SAME SET OF QUESTIONS over time so you have data points to measure against. Yes, you can administer a survey yourself if you’re measuring your internal constituents, but I’d still suggest you employ a true researcher to help with the set up, collection, and analysis. They’re the experts at this type of work – you’re likely not.


2. Scan discussion boards and social sites for first-hand comments and reviews. You can gather a wealth of knowledge by being a quiet participant in user forums and sites that are talking about you. Resist the urge to defend and comment. Just listen and regularly monitor the tone and information shared.

Here are a few scenarios of data streams you might get and what to do:

• High awareness, high attitude, low usage – I know about you but I do not think highly of you and will not engage with you. Things to do: these people may not know of ways to engage with your organization. Maybe you’re communications are unclear as to volunteer opportunities. Maybe your opportunities for engagement are not what this audience wants. Go to them and find out how they want to engage you and create those opportunities.


• High awareness, low attitude, low usage – I know about you but don’t think highly of you and will not engage with you. Things to do: these people should be left alone and you should focus your energies on higher yield opportunities.


• Low awareness, low attitude, low usage – basically I don’t know you exist and do not engage with you. Things to do: an awareness campaign might migrate members of this group into another category. You’ll need to evaluate the cost of what it takes to break through the noise in the market space as you compete for attention. Make sure you have a plan in place to engage or disengage these people once you do.

Bottom Line: For many non profits or cause-related organization marketers, the idea is that if more people are aware of our organization then there will be more supporters to our cause and more users of our services. They equate awareness with moving the organization forward and increased success. My friend Katya Andresen, author of Robin Hood Marketing, recently quoted her mentor Bill Novelli as saying, “If your goal in life is to raise awareness, you might as well be shoveling pamphlets out of airplanes. Be in the business of creating action, not awareness.” Ultimately, while AAU may be a sexy metric to follow, it is a poor substitute for measuring your ability to do good.

If your organization is measuring AAU, please share how and what you're learning. If you have other ways you've gathered data for this metric, what are they?

-- David Kinard, PCM