Digital Marketing and in particular Social Media marketing, often has a question mark over its relevance to brick and mortar businesses. However, with Instagram’s visual nature and foodie culture, there’s an undeniable link between the way a Hospitality venue presents itself on Instagram, and the impact it has on driving new business. Here are the facts and figures.
ABOUT THE AUTHOR
Andrew Bilak is the Director of RoyalWood Media, a social media agency specializing in Instagram marketing for hospitality, health and food based businesses.
I get asked these two questions all the time by business owners.
1. How is Instagram valuable to my business? 2. What can I expect as a ROI?
As a business owner myself, I welcome these questions as they are the exact same questions I have when looking at starting a new marketing activity.
The purpose of this study is to answer both these questions, and while I focus on the hospitality industry here, the formulas are transferable to almost every industry.
Before you continue reading, keep in mind that your success on Instagram is determined by how you present yourself, and not by simply having followers. For a hospitality venue, the number of followers you have is irrelevant and simply a vanity metric. If they're not local, and people from your target market, then it's highly unlikely that they have any value to your business.
WHAT IS YOUR MAJOR MOTIVATION FOR FOLLOWING A LOCAL FOOD VENUE ON INSTAGRAM?
[A] For now, I just want to learn more about the venue. [B] I've already decided I want to visit, now what to order. [C] I'm just here to look at the food, I'll probably never go [D] I’ve already visited and I plan on going again.
[A] 32, [B] 46, [C] 8, [D] 31
7% of followers have no intention to visit your venue [C] 27% of followers are interested in your venue [A]
27% of followers are existing customers [D]
39% of followers intend on visiting your venue [B]66% OF YOUR FOLLOWERS INTEND ON VISITING (OR HAVE ALREADY) AND SPENDING MONEY AT YOUR VENUE.
We then looked at the average dollar spend per head across 4 of our client’s venues.
**The purpose of this data is to provide an example, and cannot be applied to every business however the following formula can be replaced with the data from your own hospitality venue.AVERAGE DOLLAR SPEND PER HEAD ACROSS VENUES (from Figure 2) = $26
When we apply the data from our study to the average dollar per head, we identify the value of each Instagram follower to be worth = $17.16
Calculation 1: Average dollar ($) per head x Existing/Probable customers $26 x 66% = $17.16
Lets say your venue has 1000 relevant followers, with 66% of these people converted to diners, you have 660 people spending $26 at your venue on their first visit.
Instagram = $17,160 income stream for your business.
Now let's consider the potential dollar value when you grow your Instagram account by 100 new followers.
66% of these customers visit and spend money at your venue. Each customer spends $26 (average dollar) and your business adds $1,716 revenue.
This doesn't even include your followers dining partners.
If the last equation hasn’t already got you excited, take note that we are yet to consider the other 27% of your Instagram followers that have said that they're interested in learning more about your venue.
With the right content strategy, you will be able to build a relationship with these followers and help inspire them to also become customers.
That’s potentially another 27% of your audience becoming customers, increasing your average dollar value per follower from $20.14 to $24.18.
Calculation 2: Ave. $ per head x Potential customer’s $26 x 93% = $24.18RETURN ON INVESTMENT?
Return on investment is an important metric to value the efficiency and effectiveness of an investment.
To calculate ROI from Instagram, the estimated revenue generated from Instagram is divided by the cost of your investment.
With RoyalWood Media, we focus on finding your existing customers, then targeting similar people who are most likely to visit your venue (Maximizing your ROI and revenues from Instagram). With our follower targeting strategies, our goal is to grow our clients followers by 125 to 300 relevant people per month.
For the purpose of this example we'll work off a $1000 investment per month, growing the account by 250 followers per month.
66% of 250 new followers = 165 new followers intending to visit Average spend = $26
165 x $26 = $4,290 (estimated revenue)
ROI Calculation: ($4,290 estimated revenue / $1000 investment) x 100 = 429% ROI
Instagram has suddenly become a significantly profitable marketing channel for your business.
To conclude this report, you must acknowledge that these results wont just happen. Using the right hashtags, engaging with your audience and posting consistently go a long way to running a successful Instagram account, however the best thing you can do is use Instagram for the sole purpose it was created. To share high quality photos.
Photos tell a story, use visual content to educate your audience about your business and to build a relationship with each follower. Remember, not everyone will see every post that you publish, nor will each follower be inspired by the same theme of content. It's important to share a variety of content that meets a range of peoples interests. Some people may be inspired by delicious looking food, others by your drinks menu and some may want to learn about the atmosphere at your venue.
At it's core, Instagram is a platform for entertainment, don't be afraid to have fun and show your venue's personality. People love that.
If you have any questions about this study, or want to discuss Instagram marketing for your business, feel free to email me email@example.com