As a business owner, you already know that your social media efforts contribute to your organization’s broader business goals. However, to allocate larger budgets for social marketing strategies with a bigger reach, you need to have a clear indication of exactly what returns you can expect from your efforts.
Long gone are the days where social media marketing campaigns were mere experiments. These days, social is at the core of most business strategies, but it also requires a lot of resources. Measuring and tracking your return on investment (ROI) not only proves the impact social media has on your company, it also allows your marketing team to fine comb tactics that deliver the most value.
Why Your Business Need Social Media Marketing
When you take a look at the stats, you can see that many businesses struggle to understand the financial impact social media marketing has on their companies. In a survey on The State of Social Marketing, 60 percent of companies said that showing social ROI was their greatest challenge. However, social media marketing has a 100 percent higher lead-to-close rate than outbound marketing. Plus, 31 percent of the 3.419 billion Internet users across the globe use social media. This means that there is great potential for using social media marketing campaigns — if you can figure out how to optimize your returns.
Your social media campaigns also help to:
Build Your Audience’s Trust
Facebook, Twitter, Instagram, and the likes are social tools. They allow your audience to finally put a face to your brand and start opening up to you. When you provide consistent high-quality content, such as videos, articles, and blogs, your audience begins to trust your brand. You can also build trust by being transparent. For instance, if a user complains about an experience with your brand, take the time to respond, offering reasons or an apology. Another valuable technique is to avoid overtly advertising. Instead, provide followers with useful, original information.
All this will cause users to see you as an authority in your industry, making them more likely to come to you when they want a product or service you offer.
Social media platforms have a wide reach, enabling you to make an impact on an audience you wouldn’t otherwise have access to. Through an active social media presence on various platforms, you can drive this traffic to your website, blog, landing page, or other desired destinations.
However, just creating accounts and posting will have little impact on traffic. You need a strategy. This involves finding out when is the best time to post and what type of content your audience prefers. Although you can use the same content on various platforms, you will need to optimize it differently. To stay ahead of the game, you also need to monitor your competitors’ activity.
Social media pages are crawled by Google. A social media presence tells Google that you are a credible source of information and that you are offering your audience more value than just a website. This can potentially boost your rankings in search engine results.
To further boost your SEO, work on growing your number of followers. Never buy followers (Google also judges quality of followers to determine rankings,), but create content that is more likely to be shared. Next, optimize posts for SERPs, not just search for social. This involves using a descriptive title and including your keywords in the description of the post.
Reduce Advertising Costs
Traditional media, like TV ads and radio advertisements, cost a lot for a mere minute of exposure. On the other hand, social media platforms have attractively-priced marketing deals to offer. It makes much more sense to get exposure through these channels. Paid ads on social media are a great way to expand your reach and grow your followers.
Why You Should Measure Your Social Media ROI
As social media leads to highly-measurable outcomes, there’s no reason to keep pouring money into social and hoping that it works.
Here are a few reasons why measuring your social media ROI is important:
- It helps to prove the value of social media to your company’s goals and objectives.
- You’ll see where you are efficiently allocating efforts and resources.
- It enables you to evaluate where resources are being wasted or inefficiently used.
- You’ll find out where your social media budget is being used optimally and where it could be reduced.
Measuring Your Social Media ROI
There’s a simple formula for calculating the ROI of social media efforts. It looks like this:
ROI = (return – investment) / investment
With that formula in mind, here are the basic steps for measuring your social media ROI.
1. Set a goal
Do you know what metrics you should be measuring? Your social media goals need to complement existing business and departmental goals. Use these to decide on aspects like how many leads you want to acquire or how many landing page conversions you want to gain. You need to establish baseline targets and then set appropriate goals for improvement. Only then can you determine what metrics to use.
2. Study your performance
Google Analytics is a great tool for measuring social media ROI, as it provides you with a variety of useful metrics. You can effectively start tracking the number of conversions that are due to your latest campaign. This will allow you to closely monitor the effectiveness of your approach.
3. Evaluate the goal’s real value
This is where you’ll starting connecting dollars to customer actions. Calculate the lifetime customer value (LCV) by multiplying your average order value by your average number of repeat sales. Then, multiply that by the average length of time you retain a customer.
For instance, let’s say that your average sale is $10 and that a typical customer comes by once a month and keeps buying from you for four years. In this case, your lifetime customer value would be $480.
Next, it’s time to calculate the value of each lead. Say you have a 5 percent conversion rate from a specific social media campaign. In other words, if you receive 100 new leads, five will convert. Those five conversions will generate $2,400 LCV, which means that each lead is worth roughly $24.
Carrying this calculation with your own numbers will allow you to determine an average customer’s worth. It shows you how much your social media marketing campaigns are generating, regardless of where a customer might be in the buyer’s journey.
4. Evaluate the initial investment cost
Traditional media in expensive. Whereas social media marketing isn’t as heavy on the pockets, campaigns do require ample time and energy, along with some financial resources, before they can take flight. To prove profitability and ROI, you need to calculate and analyze the costs you incurred on your campaigns. The cost of your investment includes factors like hours spent working on campaigns, costs incurred to receive top-notch content, paid social media tools, and advertisement costs.
Here’s an easy way to calculate expenses: Let’s say that you gained 100 leads from the campaign that brought in $2,400 LCV for your organization. Say it took about 10 hours of networking, content creation, and editing at a rate of $20 per hour — $200. Add your social media tool subscription costs of roughly $250 a month and use the handy-dandy equation above:
Your social media ROI would be 4.3%. You always want to keep ROI above 1%. If it’s anything less, you need to rethink your strategy.
Tracking Social Media ROI with Analytic Tools
If you’re feeling a little overwhelmed, you can rely on a bunch of great analytical tools to better track and measure your social media ROI. These tools include:
Google Analytics – Most of you are already acquainted with this tool. It’s an all-star for tracking your campaign’s progress and conversion rates.
Hootsuite Insights – This analytic tool can help you track industry conversations. There’s also Hootsuite Analytics, which you can use to see how many URL clickthroughs your campaign has secured and to determine your growth of social media followers.
Salesforce – You can add Salesforce tracking codes to the links you share on social media networks using marketing software like Marketo. This enables you to track sales leads back to individual social messages or specific campaigns.
Buffer – Buffer works a lot like Hootsuite, including by helping you to schedule social media posts. It also has a powerful built-in analytics tool that shows social media post performance.
Facebook Insights & Twitter Analytics – Facebook and Twitter both have their own analytics tools to help you track social media marketing efforts. Beyond basic stats, like impressions and clicks, you’ll see information about different demographics. This is essential for providing your audience with a personalized message.
Increasing Social Media ROI with Relevant Adjustments
Adjusting your strategy is simple once you’ve started defining what works and what doesn’t. This step in social media ROI tracking goes beyond proving the value of your efforts; it helps increase value over time.
The important thing to remember is that making adjustments isn’t a one-off event but rather an evolving, consistent process that will help you plan for the future more effectively. As you gain more insights from the data, you can continue to fine tune your efforts for optimal results.
Tracking and Measuring ROI Is NOT an Impossible Task!
Hopefully, this post has shown you that tracking and measuring your social media ROI isn’t an impossible task. Rather, you just need to gather and track the right data for your goals. As a result, you will be able to take full advantage of the amazing opportunities that social media provides businesses.
This post was originally published in March 2017. It was last updated in January 2018.