Think back to the last meeting you had where you were reporting campaign results. You were able to confidentially report return on investment for PPC and geofencing, but when it came to reporting on social media you hesitated. Maybe you said something to the likes of “well this post got 27 likes” or “55 people retweeted this Tweet”.
Let’s face it, reporting on the ROI of social media can be difficult. Measuring the return of metrics such as engagement rate or customer satisfaction can feel like a shot in the dark. Did the social posts really make an impact or was there another contributing factor?
Here’s how to measure the ROI of social media so you have an answer the next time you step in to a client meeting.
Why You Need to Measure ROI
Knowing the ROI of your social media efforts provides more information than just how well a campaign performed. Measuring social media ROI is important for the following reasons:
- It can change the way current and potential clients perceive social media
- It can show the potential impact social can have across the business
- The ROI shows where your efforts and resources are being used most effectively
- The ROI will also show where your efforts are being wasted, allowing you to make informed decisions on where to shift your focus
- It helps you better understand your audience (What they care about, what they respond to, what products they’re the most interested in, etc.)
Now that you know why you need to measure ROI, here’s how to actually do so.
Define the Purpose of Your Social Media Presence
Take 30 minutes to put pen to paper and think about why your business (or client) is on social media. Is it to build brand awareness, a community, serve as a customer service platform, or something else? Maybe (and probably) it’s a mix of a few reasons. There is more to a brand than just constantly pushing product. For example, Targets Instagram feed features a mix of products, memes, and lifestyle images to inspire their audience.
There is no one right way to be using social media, only what works for you and the client. Once you know why you’re on social media, you’ll be able to develop a content plan and determine how much time and money you should be investing from the start.
Set S.M.A.R.T Goals
S.M.A.R.T. stands for the following:
S.M.A.R.T goals will hold you and your team accountable and are more likely to be achieved than a more generic goal. Instead of setting a goal of gaining more Instagram followers, set a number and a deadline. For example: “We will gain 50 Instagram followers in one month for client X”.
To set an achievable goal, measure past performance to establish benchmarks. If a client of yours has historically gained an average of 35 Instagram followers per month, 50 in a month is doable with the right strategies and effort. 100 followers in a month, though? This is less likely to happen.
Track the Right Performance Metrics
You need to know what metrics to track to know if you are successfully reaching your S.M.A.R.T. goals. When deciding what metrics to use, consider these things:
- Do they align with your objectives?
- Do they help you make decisions? (what to do more of, where to focus your attention)
- Are you able to measure them effectively?
Some metrics you can choose to measure ROI include:
- Audience engagement
- Site traffic
- Leads generated
- Sign-ups and conversions
- Revenue generated
Assign Value to KPIs
Once you have identified your goals, it’s time to determine a monetary value for each of them. As we’ve mentioned earlier, determining the value of engagement, or more “arbitrary” metrics can be difficult, but there are several different ways to approach the task.
Continuing with our example of gaining Instagram followers:
- Lifetime value: How much do you earn from each follower on average?
- Lifetime value multiplied by conversion rate: How much is each potential follower worth to you based on the percentage that converts?
- Average sale: How much is the average purchase through your site from an Instagram follower?
- PPC valuation: How much would you end up paying if you were to use ads to achieve the same social media results?
Track Conversions in Google Analytics
Knowledge is power! Knowing how each of your audiences behaves on your website will allow you to retain and convert them. Set up conversions in Google analytics to track and measure your new goals. With goal tracking in place you’ll be able to see which social platform performed the best and which ones were less in line with your goals.
Track Social Media Expenses
While the act of posting to Facebook, Instagram or Twitter is free, there are still expenses tied to social media marketing. In order to figure out whether you’re getting a positive or negative ROI for social media campaigns, you need to measure how much you’re spending, both monetarily and time wise.
Time: From conception to posting, creating a social media campaign takes time. Add up the hours that go into the campaign from beginning to end.
Content: Did you outsource any part of the campaign? Was a video made or a specific landing page built? These are all contributing costs to the social campaign.
Ad Costs: If you promoted a Tweet, Pin, or boosted a Facebook post, this counts toward the total expense as well.
A simple formula to measure ROI is:
Revenue/expenses x 100 = social media ROI (as a percentage)
Social media is here to stay, and it’s times you knew how much of an impact it’s truly making. Measuring ROI will ensure that your campaigns are focused and that you’re investing in the right platforms and strategies. Knowing what you’re getting out of your social media efforts is possible, it just takes a little work.