Calculating ROI for Social Media in Life Science

We often get asked by our life science and biotech clients how to calculate return on investment (ROI) for social media activities. Sometimes we are surprised, because the equation is the same as for any marketing activity, and the metrics are often easier to measure than with traditional tactics. We’ve realized, however, that the question is broader than this, and that life science companies want to see the connection between social media activities and their bottom line. We’ll address both concepts in this blog post, and would like to know your thoughts as well.

Like many other ideas that are perceived as being new, social media can indeed be viewed as a new marketing tool, but we arrived at it as a natural progression, and life science companies are a great example. Thus, some of the guidelines we’ve outlined below will be familiar to you, some will be new, and we hope it helps you understand the process of determining ROI for social media in the life sciences.

Establish a baseline. As with traditional marketing, you need to know where you’re starting in order to make sure your marketing is helping you to reach your goals. Several of the metrics are things you’re already tracking, such as sales, growth, web traffic, and conversion. However, you’ll also need to consider more ‘external’ metrics such as mentions on public forums and the ‘buzz’ you create leading up to a product launch. At this stage, do your best to find the information that exists about your company, products, and brand, and realize that it will be an iterative process as you’ll learn more as you go. Thankfully, the cycle times will be much shorter than with traditional metrics, as both the feedback and the tools to measure them are more facile with social media.

Have clear goals. We think this gets at the true ‘heart’ of the ‘ROI for Social Media’ question. Like traditional marketing, you must define your objectives and develop a plan to meet them, with strategies and tactics. What’s new is that you’ll move away from ‘broadcast’ type marketing and into engagement or relationship marketing. Strategies and tactics will differ, because you’ll need to consider things like customer psychographics more carefully and differently, and some of your goals may appear less tangible. For example, one of your goals may be ‘to engage customers more.’ How do you sell this to the management? It will likely correlate with increased revenue, and is no more less tangible than traditional goals such as increasing the number of leads. Some have the perception that social media is random (e.g., people talking about celebrities on Twitter), and can’t possibly lead to a good ROI. If done properly, it definitely can, and having a good plan will lead the way. We’ve provided an outline of our Social Media Charter™ which will help you get started.

Implement and measure. Like traditional marketing, your plan will be a living document which will guide your activities, so follow it and track your results. Besides the traditional, mostly internal ways to measure, there are many ways to measure external metrics, and you’ll soon discover that you’ll be getting more timely, relevant information than ever before. As with traditional marketing, use the equation: ROI = [(Payback-Investment)/Investment] *100. See the table below for some examples. With social media, you’ll find that engaging your customers more may mean that part of the payback comes back differently, such as efficiencies in customer service. For example, if you implement an online forum to answer customer questions, instead of relying solely on phone and email, less time may be needed as the information will be more readily available (think of it as FAQs on steroids). This information accessibility is especially important for life science companies, with highly technical products and customers with questions who often can’t wait. We’re not suggesting you get rid of customer service, rather get them involved–social media will help you to serve customers better and learn more about their needs at the same time.

Examples of Expense and Payback for Calculating Social Media ROI

Rinse and repeat. The beauty of this process is that you will receive information quickly that can be fed back into not only your marketing campaigns, but into improving your products and serving your customers better. You’ll see that your reach is greatly increased and that you’ll receive more qualified leads, which is especially important for smaller companies. These benefits are all part of integrating social media into your overall plan, and we think that once you start seeing the benefits, the ‘ROI for social media’ calculation will be a no-brainer.

However, if you are still questioning ROI for social media in life sciences and biotech, you may want to see more examples and learn more about how it can be relevant to your particular business. We offer free consultations to help get you started. Also, feel free to leave a comment below so we can discuss and answer our ‘FAQs’ (we practice what we preach ;).

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