What's the ROI of social media? | FreshGigs.ca

What’s the ROI of social media?

A different business owner asks me this question almost every day. The answer depends on how you’re using social media. You might think your $6 sandwich and soup daily special is a big deal. But if you’re tweeting about this special expecting it to create a lineup out your door within a few hours, then you’ve probably missed the boat on social media. Nobody cares.

Getting Involved

Let me paint you a picture. It’s a random Monday night and you’re browsing Twitter and you see that your friend Joe is eating out at @XYZRestaurant. You’ve never been there, but you’re always on the hunt for great places to eat. Half an hour later, you see another tweet from Joe, and it’s a picture of his delicious pulled pork poutine. You love poutine and pulled pork, but you’ve never had them together. Meanwhile, your now cold microwaveable dinner doesn’t look so good anymore. That night, you decide to check out @XYZRestaurant’s Twitter feed. You see they thanked Joe for stopping by, and also retweeted Joe’s picture. You also see that they have Caesars on special on Sundays. You love Caesars, and now you can’t wait for the weekend. They seem to also be involved in numerous conversations with other people now, also commenting on Joe’s poutine. You think to yourself, this place is on the ball. They’re providing great service online, and you’re hoping it translates offline as well. Although it might not happen today or this week, you’ve already made a mental note to check them out the next time you’re in their neighbourhood. Wait a second, did you just get marketed to? No.

Four out of five people search for and read customer reviews about restaurants before making their decision on where to eat

Thinking About ROI

If you’re @XYZRestaurant thinking about ROI, you’re probably asking yourself, how many people did my tweet reach? How many people did Joe’s tweet reach? And how many people will act upon Joe’s tweet? How do I know that you came in to eat as a result of Joe’s tweet? How much did Joe’s friend spend eating there? If you go down that path trying to quantify ROI, you’re going to lose your mind. Just take it for what it is. You just got great publicity, and it cost you nothing.

The Research and Numbers

As an avid “foodie”, I love going out to try new restaurants, especially those recommended to me by my friends. Gone are the days of “Honey? Where’s the Yellow Pages? Do you feel like Chinese food today?” According to a Nielsen global survey, only 14% of consumers trust advertising, whereas 87% of consumers trust recommendations made by others. This should come as no surprise. These days, more than four out of five people search for and read customer reviews about restaurants before making their decision on where to eat. Much of this chatter takes place on review sites like Yelp and Urbanspoon, but also on social media networks like Twitter. Before I go any further, yes, I’m like Joe, I tweet pictures of my food. If that annoys you, do yourself a favour and just unfollow me. Have I ever been influenced to try a restaurant based on someone else’s tweet of their delicious meal? Absolutely. For me, this happens all the time. And I personally know of many other people that are the same way. Like it or not, this is how decisions are made nowadays. If you’re a restaurant, it’s boils down to the quality of your food and service that determines how successful you are. Social media is simply the megaphone that allows people to tell the world just how good or bad you are.

According to a Nielsen global survey, only 14% of consumers trust advertising, whereas 87% of consumers trust recommendations made by others.

Generate Real Results

We recently put on a media event for one of our clients. We invited about a hundred people, all active Twitter members. The crowd was a combination of lifestyles and food bloggers, journalists, and local power Twitter users. Many people in attendance had never even heard of the restaurant despite it being open for well over a year. Most people were just happy to have been invited for a night of good food and company. Not only did the event hashtag trend nationally on Twitter that evening, they also received so many blog reviews and posts from the event that the restaurant soon ended up on the front page of Urbanspoon as one of the most blogged and talked about restaurants in Vancouver. We also ran a Facebook campaign, giving away over 500 gift cards to all those who ‘liked’ their page. Over a quarter of these gift cards were redeemed within one month. As a result of these two campaigns, the restaurant’s profits have increased by over 30% from where they were last year. And it all happened in less than two months.

Just Stop It Already

My point is, stop trying to quantify ROI of social media. Entrepreneur and author Gary Vaynerchuk said it best, “Asking about the ROI of social media is like asking about the ROI of your email.” You can tie in ROI to specific social media campaigns that you’re running, but when it comes to the daily community management, it’s difficult to attach a dollar amount to it because building relationships and trust doesn’t happen overnight.

Instead of using the term “social media marketing”, we should really just call it “social media communications”. Although you can use social media for marketing, you should really be using it as a communications tool. It is a tool that allows you to connect and interact with your existing customers and reach potential new customers. You can use it to listen to your customers, to find out what they like and don’t like. As a result, you can improve your products and get more people raving about it. This will allow you to stay competitive for much longer. But beyond that, you’re using social media to create conscious and subconscious brand awareness. If you can understand that, then you’re already more than halfway there.

Dennis Pang is the CEO of Popcorn and Motive8 Media. Popcorn is a boutique social media and PR firm that works specifically with restaurants. Motive8 Media is a web development and Internet Marketing agency that services SMB’s across all industries. Dennis has an diploma in Web development and a business degree, and brings with him over a decade of experience in Internet Marketing.

  • I was having a conversation with my dad about whether or not television advertising is a waste of money. I told him it’s basically the same large corporations who produce them, one – because they can afford it, and two – because it tends to keep them relevant.

    For example, if you see a commercial for The Keg and have had good experiences dining there, you’re more likely to go back, rather than go to a gem of a small restaurant hidden somewhere in the city that relies more on word of mouth than on advertising. Social media is a great way for those little places to get their name out there. Having a place on the web for your customers to express their satisfaction, and for you to express your appreciation, is a no brainer.

    • Smruti

      Television advertising does work. But as per the recent survey, the level of connectivity and the growth rate for the print and television ads had gone down drastically and we have 800 million people using the Social Media. So word of mouth and social media go hand in hand and companies are hiring Social Media strategists to market themselves rather than concentrating more on the print and television.Social Media is a two way process where the buyer and the seller can interact on daily basis and is more flexible compared to the traditional television ads where you reach the mass but you don’t know their reaction as it is a one way process.

  • Sinharp_mm

    it is good

  • Bobby Mongoose

    If one of my friends on twitter or facebook posts a positive review about a restaurant or says “hey i am at XYZ and it’s great!” I can get behind that. However what I find is the majority of the time once a restaurant engages them back it seems to turn into a mutual admiration society. I then end up thinking to myself shouldn’t the Chef be concentrating on his meal preparation rather than sending my friend Cindy a “Thanks for the tweet” message?

    Also I find that Cindy will then return several times to the same restaurant only to tweet again and again essential turning her messages into spam and having me press ignore on her feed.

    Does social media play an important role in the marketing of ones business? Absolutely! But is it the end all and be all especially for someone running a restaurant? Definitely not.

    • I think Bobby is missing the point that the chef’s job is to cook, not to tweet behind the pass. That is why you expand the duties of your hostess. Maybe pay her to take a social media course at the local college. This is the front of house that should be concentrating on the customer and raving about your food.

      If you are trying to do it all by yourself, good luck ever having a life or a vacation.

      • I have lots of clients who have various members of their staff tweeting. The chef will generally only post pictures of what they’re cooking up in the kitchen. Usually it is the manager and/or frontline staff who are doing the customer service tweets.

    • I definitely agree that social media is not the be all and end all for restaurant marketing. It’s definitely important for restaurants to monitor what’s being said about their business and for them to respond back in a timely manner.

      Whether you choose to ignore Cindy’s tweets is a matter of personal preference. That’s the beauty of social media.

  • Jason Repovs

    Ah, an article by someone who gets it. Well written my friend, very well-written.

  • Jnails1

    Loved the article because you can insert any business into this situation, not just the restaurant business. For instance in my world, nail companies or educational directors may be on the fence about participating in a nail tech networking event. They have to wonder what is the ROI and is it worth their effort?

    You simply cannot quantify the ROI for these networking events and I’ll give you an example: company “A” might send an educator to demo while company “B” might not, but company “B” instead donates their nail products for the goodie bags. While company “A gets direct sales at the networking event, it may not at that point in time amount to more than the company spent by being a vendor…….BUT…..the relationship & customer satisfaction of those techs who made purchases will generate future sales, & for how many months or years?

    Company “B” who donated products will see future sales, but not necessarily from all the techs who received their products. Possibly a tech will have no interest in their product, but pass it on to another tech who would. This tech had never attended the networking event, but loves the product enough to make future purchases. Company “B” has no idea that had they NOT participated in the networking event, they would not have gained this customer.

    Some companies get that it’s about building a relationship one nail tech at a time and since social media is HUGE with nail techs, we share our feedback (good or bad) on every networking event, nails show, nail product, nail company, customer service of the nail company, etc. And it definitely counts more than any advertisement any nail company could ever create!

    • I devote so much time to networking and events. There is no direct ROI to increased brand awareness. It takes time, and you have to plant the seeds in order for you to reap the benefits of it. It’s a marathon, not a sprint, and those looking for immediate returns are going to miss the big picture. I have been able to grow both my companies steadily, and all of my business has come from word of mouth since day 1. I have done nothing in terms of outbound sales. That’s word of mouth marketing that speaks for itself. 🙂

  • Talia

    Great article, Dennis, succinct and realistic. Social media presents lots of exciting opportunities for businesses, but what people sometimes miss is that it do very well standing alone. Social media, paid advertising, traditional medial coverage, posters, door-to-door, events, and absolutely anything else that a business owner can think of to generate notice, interest, and ultimately sales, all play a role in establishing a brand and name that people will return to frequent, and talk about with their friends. I really like the comparison between social media and a megaphone, where people have a wider audience to share their feelings. It’s still up to the business to create the experience.

    • I agree with you 100%. Social media is hardly the be all end all marketing solution. It’s just one piece of the puzzle. Other forms of marketing should not and cannot be ignored. 🙂

  • Talia

    * missed a word… and completely lost the point… sigh
    It DOESN’T do well standing alone.

  • ROI is something every CEO/CMO expects, therefore it is something that has to be delivered. However, you make some great points regarding the fact that it’s not the ONLY thing to look at. And, Social ROI is unique. It takes a different way of looking at it.

    • Dennis

      Definitely. Businesses need to recognize that it’s not a sprint, it’s a marathon. They need to recognize the intangible value of brand awareness and building relationships.

    • Rebecca Heins

      I agree with you, though there is a huge intangible benefit you do get from social media, but however possible, we should try and measure it; data does help while working with the senior executives

  • Christian Hery

    Enjoyed the article but would like to point out, it all depends which audience you’re targeting. If your target is let’s say the 60+ women for example you’re out of luck. Chances are these folks are seldom on Facebook, certainly not on Twitter, and would probably never go on YouTube. Up to you to find the right channel and that well might be print or even TV. My 2 cents.

    • Dennis

      No matter what your product or service is, you definitely have to go to where your customers are gathering. In the context of restaurants in Vancouver, I don’t think there are very many of them targeting 60+ year old women. That being said though, 55+ is currently also the fastest growing age segment for social media adoption. Times are changing!

  • Cammie

    Depth in tweets and posts – yes! It is a great communications tool that must be a priority and managed.

  • Anonymous

    Great article, it makes perfect sense. What I’m wondering is how the ‘social media effect’ works from a b2b perspective. At my company we work with large $$ sales (from 50k – 1mm+ ), and the industry is already an old boys club that is generally not very tech savvy, but that is with the decision makers not the newbie hire doing the research for a product.

    From a b2b perspective, what would be a great way to interact with the “influencers” and potentially the DMs using social media?

    • I think social media has a ways to go with more traditional b2b companies. That being said, 55+ also happens to be the fastest growing demographic in social media. Also, businesses need to stop looking at it as a sales/lead generation tool. The idea of social media shouldn’t differ that much from traditional offline networking. You wouldn”t ask for business at a networking event. You simply make the connection there, and you hope that later on if/when the time comes to make a purchasing decision, that your business is top of mind with that person. Social media is a great way to ensure your company is even in that discussion if/when the time comes. Remember that social media is not a sprint, it’s a marathon.

      • Anonymous

        I certainly understand Dennis, but we are looking to interact with them – the sales can happen later. Using social media have you experienced a unique way to encourage the old-school mentality to touch base and try out social media?

        We certainly want to be in the discussion but in order to get the most out of social media we need to also have our prospective clients and current clients engaged in it.

        For us, the reality is this is a double edged tactic since there are only a few a handful of companies that have the capital to become part of our industry. Since that is the case we need those already there to engage with us.

        We are currently considering a non-permission based one time email (well one for our blog, a month or two later one for our twitter, and later on still one for our linkedIn profile) that will invite our database to connect – thoughts?

  • Kathleen

    Very well said. I am going to refer so many people to this blog post. I particularly like your notion that we should stop using the term, “social media marketing” and instead start using “social media communications.”

    PS: It may interest you that I came to read this post because of a recommendation and link on Twitter from someone I know and respect.

    • Dennis Pang

      Thank you!

  • Great post, Dennis! I love the GaryVee quote too.

  • Great article – and not a boring read, either! Thanks for sharing, Dennis!

  • Amen! Great post Dennis! A-Greed….enough already! 🙂