Social media ROI is often seen as the elephant in the marketing room and a topic quite difficult to grasp. In truth, it’s not easy to see what you’ll tangibly get back from the time, effort, and money poured into your social presence. But… calculating your social media ROI is totally doable, so keep reading to find out exactly how to do this.
But What Is Social Media ROI?
More often than not, ROI is translated into dollars, but when it comes to social media, can we quantify every like, share-for-share or retweet? All the biggest social channels are free to join and require virtually zero-dollars investment, but can you really expect to get something without putting in something, first?
Whenever you want to measure ROI, it comes down to a few simple questions:
- What is it you’re trying to achieve with social media?
- And what are the specific actions that help you teach this goal?
- Lastly, how much does it cost you to implement these actions?
ROI very much depends based on what your overarching goal is: brand awareness, revenue, fresh leads etc. So simply put, social media ROI is the sum total of the actions that create value for both your business and your audience.
The broad ROI formula is: Profit / Investment x 100 = % ROI.
So, if you sold $1,000 worth of products via social media on a $500 ad campaign, your profit is $500 and your ROI is 100%.
But not every business can tie their direct revenue to social efforts. Value can also be measured in increased brand awareness, excellent customer service, email signups, timely crisis management and so on. Not to mention social media’s ability to nurture leads and push warmer prospects closer to the point of sale.
Tracking Social Media ROI
So, you have your core business goals dialed in, you’ve developed a strategy to reach them, outlined the main tactics to implement your strategy and now you’ve come to the point where you must track and actually prove the actual ROI of your social efforts.
Brand awareness created by social can be easily monitored through the increase in Likes, shares, comments / retweets, but there’s more to social ROI than brand awareness. You have customer acquisition, lead generation, customer service, etc.
By keeping your social media goals aligned with your business goals, you’ll have an easier job at tracking those specific activities that help you the most in reaching those business goals. If, for instance, your business goal is to increase the conversion rate on your landing page by 10%, then you can measure social ROI by tracking the conversion rate of visitors who get to your lander via social.
Before choosing the social ROI metrics, make sure it’s something that’s aligned to your business goals and you can track it effectively. Also, use Pareto’s 80/20 Rule to analyze data at a more granular level. When measuring traffic from social, for example, don’t just look at volume, but also at conversions. You could get 20% of traffic from Instagram, but that could account for the most sales and email signups.
Social media is, without a doubt, a key component of any robust marketing plan. Tangible ROI includes more traffic to your website, a stronger brand image and an improved audience engagement. Tracking ROI in social requires clarity in setting the over-arching business goals and then coupling them with some very specific social media goals. All of this is doable as long as you’re fully committed to growing your business and getting a deeper understanding of our audience.
How are you currently tracking ROI in social media? We’d love to know what’s working for you and what results have you reaped so far. Please share your thoughts in the comments below!