Interview with Jamie Turner, Author of How To Make Money with Social Media

02/24/2011

Business has always been organized around people. However, in the last several decades, with the onset of mass marketing and global commerce, somehow too many marketers lost sight of that truism.  It was too easy and at the same time too difficult to remember that business begins with the personal. 

In the past decade, along came the internet and with that new ways to connect with customers in a digital environment. And it was a very good thing.

However, the cries from the C-Suite often were not where's the beef, but where's the $$? My friend Jamie Turner wrote a bout that addresses that issue. In our interview I challenged him to answer his own question .. "How do you make money with social media?" 

How to make money with social media Jamie Turner is the Chief Content Officer for the 60 Second Marketer, the online magazine of BKV Digital and Direct Response. He is also the co-author of How to Make Money with Social Media, which is available at fine bookstores (and a few not-so-fine bookstores) everywhere. @60secondtweets

Diva Marketing/Toby: Before we dive into this interview, let’s set the stage with a question I often ask, “What does social media mean to you?”

Jamie Turner: Several years ago, someone I respect a great deal named Toby Bloomberg introduced me to social media. One of the first things she said to me was that social media was about having a conversation. I’ve always been grateful for the insight you provided me from the very start.

That said, if you’re a business, social media isn’t just about a conversation – it’s also about turning that conversation into revenue. After all, businesses don’t do social media to be social – they do social media to make money. That’s something that’s overlooked way too frequently.

Diva Marketing/Toby: Oh, blush .. and look where you are now .. a famous author! But Jamie, there are zillions of books about social media with more published every second, or so it seems. Why this book? What was special about your vision that the reader would take away from the read? 

Jamie Turner: This is one of the few books out there that provides a step-by-step roadmap on how to set up a social media campaign so that it generates a return on investment. Most of the other books on social media are just about the conversation. This one is about turning the conversation into revenue.

Diva Marketing/Toby: The title of your book is captivating. It s indeed the $10 million dollar question! So, Jamie let’s cut to the chase .. what is the insider’s secret on using social media to make money?

Jamie Turner: Okay, first the bad news. If you’re going to make money with social media, you’re going to have to know math. That was a surprise to me when I first started writing the book, but the math is relatively simple once you get the hang of it.

The math starts with a direct response formula called Customer Lifetime Value (CLV). In its simplest form, CLV is the amount of revenue a typical customer generates for your business over the course of their engagement with your brand.

So, if you’re a lawn care company and the typical customer is generating $80/month and stays with you an average of 3 years, then your CLV is $2,880. Once you know your Customer Lifetime Value, you can then calculate how much you’d be willing to spend to acquire a customer, which is called your Cost Per Sale (CPS).

In most cases, Cost Per Sale is 10% of your Customer Lifetime Value. In the case of the lawncare company, the Cost Per Sale would be $280. In other words, you’d be willing to invest $280 to acquire a customer that will generate $2,880 for your company during their engagement with your brand.

Once you’ve established your Customer Lifetime Value and once you know your Cost Per Sale, then you can use those figures to help calculate the ROI of your social media campaign.

For example, going back to the lawn care company, you might spend $280,000 on an extensive social media campaign that includes YouTube videos, Facebook promotions, Twitter updates, LinkedIn updates, e-newsletters and other social media tools. But, if that $280,000 generates 1,000 new customers, then you know your Cost Per Sale was $280, which works out perfectly.

It sounds complex the first time you come across the formulas. But if you understand Customer Lifetime Value and Cost Per Sale, you’re well on your way to making money with social media.

Diva Marketing/Toby: In your book you compare a successful social media to that of a successful marriage built on great mutual communication. I get the communication part, but how does that really play out in the social web?

Jamie Turner: When I first started in social media many years ago, I thought you could just do it in 15 minutes a day, so I’d crank up my computer in the morning, spend 15 minutes on Twitter, YouTube, Facebook, etc. and then sit back and wait. And wait. And wait.

Unfortunately, nothing happened. Which is when I shifted over to an ongoing conversation during the entire course of the day.

Like any good relationship, a social media relationship has to be ongoing. You can’t have a successful marriage in 15 minutes a day. Nor can you have a successful social media campaign.

Diva Marketing/Toby: One of the most allusive aspects of a social media strategy has always been aligning it with Return On Investment. For some people ROI translates only to sales dollars. For other people ROI can mean a set of metrics that support a strategy’s goals. Which camp are you in and why?

Jamie Turner: That’s a good question. I’m definitely in the ROI camp. After all, in this day and age, the Chief Financial Officer wants to see specific results for their investment. When you use the formulas outlined above and covered in detail in the book, you can track your ROI and show the CFO that for every $1 invested in social media, it generated $10 or more in revenue.

Diva Marketing/Toby: Let’s wrap this by playing “what if.” What if a client came to you to create the ultimate social media initiative that would lead to making the cash register sing. How would go about creating that program?

Jamie Turner: I would do what Dell does and what we do here at BKV. That is, I’d make sure that every social media channel has a link that drives through to a landing page on our website. In Dell’s case, that landing page sells their products directly via e-commerce. In BKV’s case (we’re an ad agency), we have to track downloads of our white papers, then re-market to those prospects to see if we can turn them into customers.

The bottom line is that it’s all track-able. As such, we’re able to show a return-on-investment. So, in a nutshell, the ultimate social media initiative is one that can be tracked and measured on an ROI basis.

Blogger Disclaimer: Jamie kindly comped me a copy of his book.

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Comments

Excellent post that finally shows marketers and businesses how to generate revenue with social media.

Posted by: Elaine Fogel on Feb 25, 2011 5:03:35 PM

But just as popular are guests who can share some professional knowledge of social media marketing. It’s the hot topic of the now, something everybody needs and wants to know about but that changes daily, sometimes hourly.
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