ForeSee Results has introduced a "Social Media Value Calculation" tool aimed at helping its clients understand the impact of their social media marketing campaigns on revenue.
"Most businesses have accepted the marketing value of social media without any real proof points," said Larry Freed, president and CEO of ForeSee Results.
"We can count how many Facebook fans, how many Tweets, how many complaints, and how many people click through ads on social sites, but we haven't had a way to calculate a tangible return on investment for social media efforts, not to mention other marketing initiatives. Now we can."
ForeSee Results uses a scientific methodology created at the University of Michigan to measure customer satisfaction and examine its impact on future behaviors. Using its proprietary methodology, ForeSee has created a way to tie influences on customer visits to a website, store or call center with what they actually spend. ForeSee says its Social Media Value Calculation tool helps businesses understand how much revenue is being influenced by social media compared with traditional advertising, marketing emails and brand awareness.
Research conducted using the Social Media Value Calculation tool indicates investments in social media vary from company to company. Some companies are spending millions in advertising their social media presence, only to find out that social media is influencing just 1 percent of all purchases.
Marketing emails have been neglected in favor of social media, and emails are influencing 32 percent of purchases. Other companies are seeing social media as a main influencer of 5-6 percent of all revenue.
"The Social Media Value Calculator tells our clients what is influencing their customers' visits, how much those customers spend, and which marketing efforts are having the greatest return on investment," added Freed.
"Every business is going to have a different model for success, which is why it's so critical that companies understand their customers and not allocate marketing spending based only on hunches, industry standards, or expert guidance."