February 12, 2013 by gsetiawan
1. Getting a baseline average daily new “likes” for your page.
For this first step, you simply need to track how many new users your page generates organically. You can either do your own primary research or use .05-.11% daily increase as a proxy. The purpose of this step is to not overestimate the additional fans that your promotion will have attracted.
For more information on this, refer to part I.
2. Survey you fans on how much of your product they purchase.
Before conducting this survey, you will first need to define the product you want to test, the time period, and a standardized quantity.
Product: Your choice of product will depend on the promotion that you will be running . If your promotion will mainly revolve around your beer line for instance, then it would be wise to choose beer as the product
Time: The time aspect of this should be decided based on how durable your product is. If it is something that is not very durable, like food, you might want to go for a shorter time period. If it is more durable, like kitchen appliances, the you want to extend this time period.
Quantity: In order to choose quantity, you will need to find out one in which would be easy for your fans to gauge and for you to turn into a standardized quantity. For example, for beer, i can ask them how many bottles of beer they drink per week as 1) bottles of beer is a widely used measure than people can estimate and 2) it has a standardized amount of 12 oz per bottle.
With these three already decided, you can frame your question as such:
“How many bottles of beer do you drink in a week?”
For more information on this section, refer to part II.
3. Find a $ value for the standardized amount we chose.
To find this number, you will have to refer to your company’s revenues and production volume for the particular product you chose. Simply follow this formula to find out the $ value per amount:
$ value / amount = Revenues from the product / Sales Volume from product
I understand that your company will have multiple products sold. The beauty about this equation is that it already takes into account the relative weights of the sales from your various products.
For more information on this secion, refer to part II.
4. Determine the $ value of each of the customers you surveyed. (Express it in annual terms)
With the 1) amount of your product your fan consumes and 2) the $ value of the standardized unit of consumption, your can find out that particular fan’s contribution to your revenues. It is ideal to express it in annual terms as it is familiar to most.
Refer to Part III for details on finding this value.
4. Creating a probability distribution of ROI.
All that is left to do now is to create a probability distribution of annualized ROI for your promotion. With this information, you can present to your clients / boss various scenarios, the ROI that it will yield, and the likelihood of it happening.
For more information on this, refer to part IV.