The ROI of Influencer Marketing
Demand and Lead Generation
What does it mean to be an influencer marketing company? And, furthermore, can the value and impact of influencers be measured?
It’s a topic many businesses grapple with as they work to keep up with – and strategically harness – the power and possibility of digital technology. Figuring out how to create and sustain win-win relationships with potential influencers is increasingly critical to keeping the lights on and the revenue streams flowing.
And yes, its value and impact can be measured. This post will talk about how.
But first, let’s establish some fundamentals.
What is Influencer Marketing?
Influencer marketing is the strategy of establishing relationships with influential people who can amplify and expand visibility for your brand’s products and services.
David Amerland, social media marketing specialist and author, defines an influencer as:
“The person who has their own social network and is actively influencing the direction of thought of that social network through the content they share, the comments they make, and the things they draw attention to.”
Influencer marketing is as old as the hills, but technology and the Internet have blown the doors off its potential; not only can influencers reach more (and different) people than you can, they can sway opinions and impact purchasing decisions at unprecedented scale.
What Do Influencers Do for a Brand?
Influencers act as a gateway and a shortcut to valuable information. They filter and synthesize what’s going on in the world – business, fashion, trends, news, etc. – and share with their social networks the content they think is relevant.
Influencers have considerable impact because they’re viewed by consumers as being more trustworthy than traditional advertisers and messages. Ample data underscore this, including:
- A Nielsen report that shows 84% of worldwide consumers will take action based on the reviews and recommendations of trusted sources above all other forms of advertising.
- A DemandGen study that shows 72% of B2B buyers use social media to research a purchase and 53% rely on trusted recommendations to make a purchase.
- A Sprout Social survey that says that 74% of consumers rely on their social networks to guide purchase decisions.
- A Forrester Research report that 85% of B2B decision-makers rely on trusted online communities when researching business technologies.
- A McKinsey & Company study that cites word-of-mouth as the primary factor behind 20% – 50% of all purchasing decisions.
SEO consultant and digital marketing influencer Eric Enge calls it the Influencer Trust Factor. He’s written a great post in which he offers an example of how the Influencer Trust Factor works. Here’s a short synopsis to illustrate how advantageous an influencer can be:
Let’s say your brand has 1,000 Twitter followers and your marketing department sends out a piece of content (e.g., a video) to the network. Here’s what might happen:
- 100 followers share your video with their networks, which average 200 people each.
- Their sharing results in 20,000 other people seeing your video.
- Of those 20,000 additional people, you get 20 additional shares and 10 links.
Now let’s consider the same audience being reached by one influencer. Assuming all things are the same – i.e., the video content that’s sent out, the 100 shares by your network, and the 20,000 additional people who see your video – here’s the difference:
- The 20,000 additional people who see the video will be much more likely to respond to/re-share it because they trust the original source – the influencer – and want that affiliation with someone who is a well-known brand.
- As a result, rather than 20 additional shares and 10 links, your video content gets 100 additional shares and 50 links.
From a marketing perspective, influencers are pure gold because they can radically magnify and amplify a brand’s message by virtue of sharing it, and they can accomplish it in far less time and effort than it would take you. In a sense, they can be your brand’s proxy.
How to Reach Influencers
According to Jeremiah Owyang, an expert in influencer marketing, the best way to uncover an influencer is to shift your thinking from “what can you do for me?” to “what can I do for you?” This can get your brand noticed, respected, and ultimately supported by potential influencers.
So how do you do this? “Think laser, not buckshot,” says digital strategist, Leslie Bradshaw. “The influencers community is, by definition, finite. Don’t try to build relationships with all of them at once. You are better off identifying one or two people likely to be receptive to your company’s story.”
To jump start the identification process, ask people – members of your company’s board, investors, executives, friends, colleagues – to introduce you to select people who are likely to be friendly toward your brand. Once you do, proceed with relationship-building.
- Do your research to ensure you’re familiar with the person’s achievements, writings, motivations, aspirations, goals, and needs.
- Invite them to lunch or coffee or cocktails.
- Recommend them for speaking engagements or other opportunities that will help them meet a particular goal of their own.
- Take it slow and steady, and be genuine and sincere.
- If you don’t like or trust someone, don’t pursue them, no matter how much influence they have. This can’t be faked.
Gaining the trust of an influencer will not happen overnight. If you push it or come off as insincere, your efforts will backfire; no one likes to feel they’re being “played” for someone else’s benefit.
Measuring Influencer Impact
Successful influencer marketing is a fine balancing act based on trust and understanding between your brand and the influencer, and the influencer and their audience.
The good news is that trust is quantifiable – it can be measured through metrics.
This means that influencer marketing can be tracked, measured, and concretely tied to revenue across the sales funnel using the same data-driven methodologies that other relationship-based marketing programs use.
When it comes to gauging the impact of an influencer, start simple by focusing on the three core elements you already track and optimize for other nurture-type campaigns:
- Attraction: How many visitors is an influencer driving to your website?
- Lead Conversion: How many influencer-sourced prospects convert to leads?
- Sales Conversion: How many convert to customers?
By connecting the dots of those three elements, you can quantify an influencer’s impact to actual sales figures.
Methods for Tracking and Measuring
Keeping the focus on effectiveness and simplicity, the primary place to start is your website because it’s the hub of activity: the place where content is hosted, visitors land, and conversions occur.
Because every online connection and touch point can be tracked and measured, your website is a great starting place for understanding how an influencer is impacting the numbers. Linda West, Manager of Demand Generation for Act-On, recommends the following:
- Use unique trackable URLs on all of your content and campaigns. Unique trackable URLs are URLs that are appended with special code. Here’s an example:
Unique Trackable URL (code is in bold):
Unique trackable URLs allow you to track the activity of a person within a single channel as well as across multiple channels. By adding them to your influencer marketing campaigns, you can directly tie engagement, activity, and conversion to a specific influencer.
- Use a mix of gated and ungated content. Ungated content is openly accessible to anyone, while gated content requires a person to exchange a small bit of information (e.g., their first name and email address) to access it. Ungated content offers greater opportunity to “be seen” by a large pool of prospects who may or may not be familiar with your brand. Gated content helps self-select and pre-qualify prospects, ultimately helping convert them to leads; its use is most effective for your highest quality content, such as videos, webinars, and eBooks.
- Tap into the power of Website Visitor Tracking. This is different from standard web analytics. Website visitor tracking lets you connect online behavior to a prospect’s profile in your CRM tool (e.g., Salesforce). For example, when a social follower lands on your website, you’re able to understand:
- Who the follower is – by name if they’re already in your CRM system, or often by company if they’re not.
- Which referral sources (including influencers) are having the most impact.
- What content is driving the most engagement.
- Which audience segments are most engaged with your brand.
Connecting the Dots to Revenue
The following Revenue Impact Analysis slide is a theoretical example of how you can quantify the impact your influencers have on your sales funnel. In this example:
- Your website was visited by 1,000 people, all of whom came from a particular influencer. (And you would know this because of the unique tracking URLs on the content that the influencer shared.)
- Of those, half converted to a lead. This could be via filling out a lead form on your gated content.
- Of those 500 leads, 20% convert. (Note that 20% is the general conversion rate cited by several well-respected studies as coming from social referral marketing.) That’s 100 new customers.
Here’s another example demonstrating how two separate influencers (A and B) impact ROI. Notice how Influencer A and B both drive the same traffic to your website, but the majority of the actual sales come from Influencer A. In this example, the ROI from Influencer A is much higher than from Influencer B.
These two examples illustrate how your data can be used to empirically demonstrate the impact of your influencer marketing program, by influencer, content, channel, and more. It’s a powerful story.
Who Are Your Influencers?
Influencers can significantly and measurably expand your brand’s visibility and simultaneously increase your credibility with new audiences. In terms of time, effort, and the ability to direct consumer attention to the points you want to make, influencer marketing can (should) be a critical part of your marketing mix.
Interested in getting started with Influencer Marketing? Download our free whitepaper, Best Practices in Social Influencer Marketing and learn the four key components of influencer marketing, how to attract influencers and incorporate them into your greater social strategy.