Do you spend hours on your social media marketing outreach and have no idea if it’s successful?
Are your clients constantly clamoring for social proof?
Clients and supervisors need to know if you’re successful… and you do too! And what other way can you measure this success if not by rating through your return on investment which is proof that your marketing efforts are working.
This is important for social media companies, consultants and in-house staff. Gone are the days where social media marketing was merely an experimental marketing tactic.
It has become a core part of any business’s marketing strategy, and it needs to support your business goals, and prove its value in comparison to other channels for resources, budget, and executive buy-in.
If you haven’t already done so, you need to find a strategy to measure your social media return on investment (ROI). Over 60 percent of marketers identify measuring ROI as one of their top social media marketing challenges.
The main challenge in measuring ROI is keeping up with changes in algorithms, implementing the new tools that hit the marketplace and proving to your clients that they’re getting the most out of their investment in you.
There’s a tremendous amount of work that must go into social media marketing for it to be effective—and it’s often underestimated by business leaders.
Financial investments are precious to startups and small businesses, so it’s extremely critical that social media marketing efforts can be validated as to how they’re contributing to the business’s goals.
Sure, a financial return is a priority, but never forget that you first need a solid foundation to build your marketing efforts on.
You must invest in the resources, tools, and technologies to measure and track your social media ROI. This will allow for you to allocate more resources toward what is working, and improve upon what is not.
The ability to take such a proactive approach to ensure that paid efforts are as effective as possible is an enormous value-add to modern day businesses.
In this article I’ll share tools and tips to measure the ROI of your social media efforts.
Define your social media metrics
Using your business goals as a guideline, define the metrics you’ll be measuring and reporting. There are several different metrics you can use to track your progress against, such as:
• Reach: the number of people who have seen your social media posts
• Site traffic: the number of people who’ve visited your website
• Leads: the number of people who have filled out a form on your website
• Sign-ups and conversions: the number of people who’ve joined your email list, or downloaded premium content
• Revenue generation: the amount of sales generated from social media marketing
No campaign can work based on the overall strategy alone. For the campaign to be meaningful and measurable, you need to break down your big picture into smaller bite-sized goals.
Based on the strategy your brand chooses to pursue, your social media goals may vary from increasing traffic to your site, to getting signups for your email newsletter, to generating more product trials, to growing sales figures—or simply increasing brand recall and product awareness.
Each of these goals can be measured using specific social media metrics like reach, engagement, traffic, engagement, and traffic.Let’s go through each metric and define when it’s a good idea to measure them.
If one of your goals is to increase social media engagement, definitely keep track of the number of likes, shares, comments, and retweets.
The most repeated objective for social media marketing is engagement. Likes, shares, comments, retweets, and favorites are all indicators of how engaged your users are.
Once you are done aggregating the engagement metrics for each social media platform you are active on, you can then get down to measuring real engagement. It is not a straightforward sum total of all your likes, shares, retweets, etc.
To know whether your engagement rate is constant, rising or dipping; you need to measure it as a percentage, and not as an absolute number.
For example, if your engagement metrics showed two million interactions in a month with four million fans, this means you have an engagement rate of 50%.
However, if three months later you see four million interactions, it does not mean you now have 100% engagement.
Your fan base would likely have increased in those three months, and so your new engagement rate must be measured against your new fan base to get an accurate picture.
Engagement = Sum of interactions across all social media platforms / Total no. of fans across all platforms
This can also be measured as a ratio of the number of interactions vs. number of posts created or even as a ratio of number of interactions vs. reach based on the specific requirements of your brand.
Studies show users who engage most often with a brand on social media tend to view the brand in a more positive light than others.
They are also more likely to purchase products from the brand and recommend it to others. However, this utopian goal of increasing engagement is probably one of the toughest to achieve.
Is one of your core business goals to increase visibility and brand awareness?
This refers to the total number of fans and followers that have a chance to see your posts at any given point in time. It is one of the biggest benefits of Facebook.
With the high number of posts from different brands and individuals cluttering people’s timelines, it is impossible that every fan gets to see every post you put up.
It goes without saying that the higher your reach, the higher your chance to influence your fans to take specific actions. You can check your Facebook reach against thousands of other brand pages using the Facebook page barometer.
Reach = No. of fans who saw a particular post / No. of fans online at the time
If you’re looking to increase the number of visitors to your website or re-market to visitors, measure the number of URL clicks and traffic from social media.
One of the prime reasons brands get on to social media is to drive traffic to their physical stores or websites. The idea is that the greater the awareness a brand generates the more users like the brand and engage with it on social media.
Also, the brand stands a greater chance of getting traffic from social media to your site. Use the social media option on Google Analytics or other analytics tools on the referrals your site receives from social media.
Factors that affect traffic on social media include the total size of your fan base on social media, how interesting your posts are (CTRs on organic posts), how well you build campaigns to target your specific audience via paid ads and so on.
These dashboards not only show you the contribution of social media overall to your site traffic, they also offer you a breakdown of how each social media platform performs in terms of visits, page views and more.
Generally speaking, you’re going to want to track the number of organic and paid leads that come in through your website and be able to attribute their source.
Sign-ups and conversions
If building your list of qualified leads or emails is a part of your goals, you’re going to need to track the number of sign-ups or conversions.
Conversions are not a one-size-fits-all goal. Business goals, including email signups, subscriptions, lead generation, sales and revenue per customer are a few examples of conversion metrics that work for different brands.
Facebook has made tracking conversions a tad simpler by incorporating their conversion pixels into the measurement process.
It can automatically show you the conversion rates for any page. This can be an order confirmation page, an email subscription page or a whitepaper download page, depending on your specific conversion metric.
Calculating conversion rate
Conversion rate = No. of conversions or traffic
This is an easy metric to figure out once you have the data for traffic and conversions separately.
A measure of traffic to conversions shows how well your website is geared towards completing a conversion from traffic that landed on your site from social media.
The traffic-to-conversion ratio can be negatively impacted by a high bounce rate or an un-optimized website. It can also be impacted by conflicting messaging in your posts or ads on social media and the contents of your website or landing page.
You’ll need to see how many nairas were generated from your social marketing efforts. It’s important to compare the spend versus sales to identify the cost-per-acquisition.
This is the final step, where we get the proof of the pudding. Compare the results achieved against the goals laid out, and measure the surplus or shortfall in numbers.
ROI is a function of your marketing costs vs. the net profits you generate from social media.
Calculating social media ROI
Social Media ROI = Revenue from social media – cost of social media marketing or cost of social media marketing.
You have your social media budget laid out at the beginning of the year (or quarter, as the case may be) as a watermark to arrive at the total social media expenses for the period.
Include all variable costs and apportion fixed costs proportionately to the period being considered. Compare this amount with the actual revenues generated out of your social media efforts, both through paid and organic means, to arrive at your final ROI number.
What results should you expect from social media?
The specifics of what each company will gain from social media will vary widely based on your target audience, competitive landscape, industry sector and, most important, your efforts on social media.
However there are some universal gains that all brands hope to achieve from marketing themselves on social media, including the following:
• Brand awareness and top-of-mind recall
• Website traffic
• Customer acquisition
• Customer retention
• Brand advocacy
Don’t fret if your brands’ results vary significantly from those of the competition. The important thing is to steadily work to improve your social media ROI.
Social media marketing takes a lot of time, and a bulk of it is spent analyzing and reporting data. The ideal solution that saves time on manual reporting is a marketing automation platform.
However, these are not always the most affordable solution for small businesses—especially startups. If you can’t afford a marketing automation platform yet, Google Analytics allows you to create custom reports that display only the data that matters most to you.
Although it’s not a complete social media marketing platform, it will allow for you to keep an eye on key metrics such as which channels are contributing to your website traffic, which pages are most visited, how long users are staying on your website, and much more.
With the right goals, metrics, and systems in place to support your social efforts, you’ll be able to quickly identify its value, pinpoint what’s working and what’s not, and ultimately maximize returns.
You’ve set your goals and selected which social media tools you’re going to use. Now you need to calculate your ROI. All your social media efforts should be trackable so you’re never scrambling to prove the value of a campaign.
Here are some tips:
Build out reporting templates to track the metrics that matter most to you. There are two different ways to monitor and analyze data: manual or automated.
If you’ve opted to use a marketing automation platform like Hubspot, there are visual dashboards that allow you to quickly view and analyze the impact of your social media marketing efforts and how they tie into your sales.
If you’re not using a marketing automation platform yet, you’re most likely going to need to use a spreadsheet to track the progress and impact of your social media marketing efforts.
You can use the built-in reporting tools from Google Analytics, Facebook Business Manager, LinkedIn, Twitter, and any other social media channels you use to pull the data you’re looking for.
Then, you’ll consolidate and organize the data into your shiny, new marketing spreadsheet to determine the effectiveness of your social media efforts.
Benchmark against your competitors
Compare your social media efforts to your competitors and you can uncover areas of opportunity for your organization to stand out and be heard through the noise. Learn what platforms are most successful in reaching your targeted audience.
Learn how many posts competitors are publishing per day so you can see what works. Don’t stress if your brand’s results are significantly different from your competition.
The important thing is to consistently work to improve your social media ROI. The first step to improving your performance is to understand the results of your actions.
With social media spending accounting for 13.2 percent of marketing budgets in 2014, how many of us really, truly know what we’re getting out of it?
Some quantify social media success in terms of fans, followers, likes, shares, retweets or repins. Others look at referral traffic from social media platforms. Yet others consider purchases made from social media referrals.
The fundamental problem with social media marketing is there is no common yardstick by which one can measure brand outcomes across all social platforms simultaneously.
Because of this, the effectiveness of social media has been measured in a very sketchy manner, at best, and not at all in some cases.
According to The CMO Survey 2014, just 15 percent of marketers are able to prove their social media marketing activities has a clear, quantitative impact on helping them fulfill their overall marketing objectives.
So how do you align your social media efforts with your business goals?
Here are some tools you should consider implementing
• Google Analytics – Track website traffic, sign-ups, and conversions stemming from social media campaigns.
• A good CRM – Most CRMs allow you to see the URLs for incoming leads so you can determine the source of traffic and accurately attribute them.
Furthermore, you’re able to determine which campaigns and messaging are working, and what’s not. The leads in your CRM are also a good way to verify the information displayed in Google Analytics.
If you’re looking for something basic, Hubspot has a great CRM that is both functional and intuitive. The best part is, it’s free!
• Third-party social media platforms – Platforms such as Hootsuite or Hubspot have great built-in analytics. You should be able to effectively reach, track conversion, and gain more insights about your social media activities.
Over 50 percent of marketers struggle with tying social media activities to business outcomes. Additionally, a study conducted by Altimeter outlined the reasons why several organizations avoid focusing on social media ROI because of:
• An inability to tie social media to business outcomes
• A lack of analytics, expertise or resources
• Poor tools
• Inconsistent analytical approaches
• Unreliable data
It’s critical to identify and implement the tools and processes required to measure your social media ROI once you’ve established your social media goals. This will more than likely involve UTM tracking codes to monitor where traffic is coming from, building custom landing pages, and more.
The fundamental problem with social media marketing is that there is no common denominator to measure its ROI. Because of this, the effectiveness of social media has been measured haphazardly at best, and not at all in some cases.
Measuring and consistently evaluating ROI would be a massive headache if it weren’t for the five tools listed above and others like them. When calculating your most accurate ROI, however, you still want to add in all the necessary factors and costs.
These can include the amount you’re paying for the campaigns, on social media tools (including contest, analytics, and scheduling software), and the social media specialists you’re paying to create content.
Make sure to consider these costs and factor them in where necessary. The software and tools listed above can help you do the rest, and give you an accurate assessment of your true ROI.
If you’re measuring your social media ROI for the first time, take it slow and keep your goals to a limited number to avoid confusion. Understand that it could takes many years of iterations, adjustments and tweaks to arrive at a process that is universally acceptable in your organization.
You can share with me some of the strategies you have used to measure your return on investment (ROI).