Tracking and modeling the performance of social media marketing is a rapidly growing industry. Valued at $620.3 million in 2014, this industry is expected to be worth $2.73 billion by 2019¹ as corporations and advertisers put more resources behind social media marketing strategies. For financial professionals, the key variables that determine the return – and therefore success – of any social media campaign can be boiled down to four components:
- audience size
- engagement rate
- close rate on social engagement
- value of a sale
Engagement rate is defined as the percentage of social connections who view, like, comment, or share each social media post on average. Close rate on social engagement is the percentage of these engagements that are then nurtured to the point of sale.
The model below provides a range of returns that a financial professional could expect from a year’s worth of social media marketing based on these four variables. For this model we assume that a financial professional has 500 connections on each of their social networks (LinkedIn, Facebook, and Twitter – resulting in 1,500 total connections) and they are posting to each social network once per week. The results of this activity is 78,000 total potential post impressions during the course of the year (1,500 connections x 1 post per week x 52 weeks per year). The financial professional’s average sale size is $70,000 and the commission from each sale is 4%.
Assuming that 1% of followers engage with each post and 1% of these engagements lead to a sale, a financial professional would expect a return of $21,840 for a year’s worth of social posting. As audience size, engagement rates and close rates increase, the value to the financial professional can increase dramatically.
This model fails to account for one critical factor – the value of getting your photo, title, and contact information in front of your market. Large corporations invest heavily in advertising, even when they know consumers aren’t ready to buy. They want consumers to remember them when they are ready. Financial professionals should view their social media marketing strategy in the same way. Your connections on LinkedIn, Facebook, or Twitter may not have a need for insurance, financial products, or services today, but if you stay top-of-mind with these prospects, they may be more receptive to your communications when they are.
1. Social Media Analytics Market Report – MarketsandMarkets