What’s the one thing about your social marketing campaigns that frustrates you? If it’s the ROI from your social media efforts, then you are not alone.
In fact, the 2017 State of Social Marketing Survey revealed that measuring ROI was the biggest challenge for 58.7% of social media marketers.
It isn’t hard to see why.
Although social media is a great platform for brand promotion, it’s difficult to gauge how effective your marketing efforts are. For instance, you can’t tell for sure if the Facebook video you’ve spent time and money on production has generated any revenue.
Since you’re devoting valuable resources for your social campaigns, you deserve to know if they’re actually paying off. Fortunately, measuring social media ROI is easier than it looks.
What is Social Media ROI and Why Measure It?
Social media ROI is when your business gets back the resources you invested in your campaigns.
You need to measure your ROI to know which of your social media strategies work and which ones don’t. In doing so, you’ll get these advantages:
- Find out which strategies you need to improve on.
- Check the impact of any changes on your social media goals.
- Avoid wasting resources on things that don’t produce results.
However, social media ROI isn’t just about revenue. Other metrics like brand awareness and engagement also matter, even if they don’t directly result in sales. If you look at ROI based on revenue alone, measuring it becomes difficult and unrealistic.
5 Steps to Measure Social Media ROI
Here are five actionable steps you can take to measure social media ROI.
Set SMART Social Media Goals
What do SMART goals mean? Ask yourself these questions:
- Specific: Are your goals clear and precise? If you want to increase your reach, which social channels and how many followers per channel are you targeting?
- Measurable: What are your metrics for tracking progress? Want to increase retweets? Do you want to improve your customer service metrics on social media?
- Attainable: Can you achieve your goals with your available resources? Look at the goals you’ve achieved in the past and set your new goals based on them.
- Relevant: Are your goals relevant to your business? Make sure to align all social media goals with your business goals.
- Timely: What’s your time frame? Set a deadline per goal to keep yourself and your team accountable.
Consider these examples of SMART goal examples:
- X new followers on Twitter/Facebook/Instagram every week/month/quarter
- X% increase in newsletter signups by [deadline]
- X% increase in contact form completion by [deadline]
- X% increase in online sales in the next X weeks/months/quarters
Define Your KPIs for Each Goal
A key performance indicator (KPI) measures how well your campaigns are performing based on your goals.
While you can use various KPIs or metrics, it isn’t practical to waste your time measuring everything. Instead, choose only the KPIs that align with your SMART goals.
Focus on these key social media metrics:
- Reach: How far does your brand message reach your audience? This factors in your fan count, traffic from social media, and impressions (number of times your ad or post appears on social media feeds).
- Engagement: How do people interact with your brand on social media? This metric includes likes, shares, comments, brand mentions, clicks, profile visits, and active followers.
- Leads: How many of your engaged followers show interest in buying from you? The number of inquiries on your product or service is a good measure of your lead generation efforts.
- Conversions: How many of your leads actually purchased from your company? How many first-time buyers became repeat customers? Your conversion rates are the ultimate indicator of your social marketing success.
Track Your Progress Using Analytics Tools
Failing to use analytics is one of the social media mistakes that can set you up to fail.
A critical step in measuring your ROI, tracking your campaign’s progress involves using the right analytics tools for your different social channels.
Here’s a quick look at some free useful tools for social media analytics:
- Google Analytics
The easiest way to set up and track your social media goals, Google Analytics lets you monitor the number of visitors on your social media landing pages through tracking codes. You can also set up an event-based goal to check the number of times a user clicked on a social sharing button on your website.
- Twitter Analytics
Twitter’s built-in analytics platform provides valuable insights on your audience growth and engagement in terms of clicks, retweets, favourites, and mentions over a 28-day period.
- Facebook Insights
A powerful social media analytics tool, Facebook Insights measures reach, engagement, and other key metrics of your fan page. Its various graphs help you understand what people did on your Facebook page, as well as how well your videos and events are performing.
- Instagram Insights
This Instagram analytics tool helps you measure your Instagram marketing success through metrics such as likes, comments, mentions, profile visits, and conversions. To access Instagram Insights, you need to upgrade to a Business account.
Assign Monetary Values to KPIs
How much are you willing to spend on getting a lead, a follower, or a click to your website?
Whatever your social media goals are, be honest about your budget. You’re in for a huge disappointment if your ROI doesn’t meet your expectations.
Here are the different ways to assign values to your social metrics:
- Customer lifetime value: How much value will your customers bring to your business over time? This entails computing the average profit you earn from a customer.
- Conversion of each customer’s lifetime value: To know how much each potential visit is worth to your business, multiply a customer’s lifetime value by your conversion rate.
- Average sale: If you want to increase sales, compute the average purchase through your website and use that as the monetary value
Now, you should be ready to compute your ROI for each social media campaign.
Here’s a simple formula to measure social media ROI:
(Total Revenue – Total Investment) x 100 / Total Investment
The total revenue includes metrics such as conversion rate and customer lifetime value.
The total investment refers to the amount spent on your social media campaign, including ad spend and labour costs.
To compute your ROI quickly, you can use this social ROI calculator.
Once you’ve measured your social media ROI, compare the results with your business goals to see if you’re actually meeting them. Benchmark them also against your competitors, so you know where you stand in the competition, whether you’re ahead of or lagging behind other companies.
If your ROI is negative or far from your competitors’, take it as an opportunity to improve. Revisit your strategies and re-allocate your budget to other channels or tactics.
Sometimes, a change of perspective is all you need. While social media marketing doesn’t bring immediate profits, it adds value to your business through brand building. You can then use this as the foundation for other strategies that would then directly affect your bottom-line.
Are you happy with your social media ROI? How do you measure it? Let’s learn from each other and share your thoughts below!