How do you measure the success of your social media efforts? It turns out that many CMOs and marketing agencies struggle with that. According to fresh data from MDG Advertising, 28% of marketing agencies say that they are struggling with quantifying social media marketing impact of their campaigns; 55% claim they can measure it somewhat, and only 17% say that they can provide accurate data on this point.
It’s not surprising. How do you know when a share or a comment leads to a conversion? The path isn’t always clear-cut. How to calculate the value of a customer who never engages, but buys your product because they saw a social media post? Even determining which factors to measure can be confusing.
So let’s establish some clarity here. This post will detail the most important metrics you should be concerned with when it comes to social media marketing. Not every metric can be pinpointed exactly, but you can certainly come much closer than intuition or an educated guess.
What is social media ROI?
“ROI is return on investment, and technically that’s just what it is,” said Jesse Brodsky, Head of Membership, CEO of Lawyers of Distinction. “Think of the amount of time, human resources, and money you invest in a social media marketing campaign. What you get back in returns from that investment - sales, email subscribers, traffic, downloads, brand visibility or customer trust - is your ROI number.”
Sometimes, ROI can be measured in terms of money. For example, a social media ad that leads directly to an un-indexed landing page with an order form is pretty easy to track. You can use a few different estimation methods:
- Customer lifetime value (CLV) - the average profit you net from one customer over a span of X years.
- CLV x conversion rate - how much every hit is potentially worth to you.
- Average sale - the average purchase made thanks to the ad.
The bottom line is that for social media marketing campaigns that can be measured in terms of dollars, you have to know the cost of your investment and the value of your profit.
Why social media ROI matters
“A lot of businesses approach marketing the wrong way,” said Alexandre Garese, a businessman and investor. “For instance, here’s how they do social media marketing: create social media accounts; post things; expect to make some profit. Unfortunately, effective social media marketing isn’t that plain simple. It takes a lot of effort to create a social media presence that actually benefits your business. To make things even more confusing, popularity on some platform does not necessarily translate into profit. That’s why tracking ROI is so important in business. It indicates whether or not you are getting the results you want from your efforts.”
By tracking ROI, you learn which campaigns are working best, the social media channels that are most beneficial to you, where you need to boost investment, places where improvement is needed, even efforts you should probably abandon. Remember, even though many social media efforts are low or no cost, they aren’t truly free. You are investing at least some time and resources.
How to set ROI goals and measurements
Every social media effort should be associated with one or more goals. Data from St. Bonaventure University Online suggests that without goals, you can’t connect your business efforts with any sort of positive results such as profit or engagement. Your goals are basically tightly defined objectives. They might be:
- Increasing purchases
- Getting people to download a free trial
- Increasing followers on a particular social media channel
- Generating leads
- Boosting sales of a particular product
Defining your goals is nearly identical to creating your call to action. They are also quantifiable.
“Once you know your goals, you have to make them as measurable as possible,” said Alexey Anshakov, CEO of WRIO Internet OS. How you do that depends. You have to start by assigning a value to your goal. Anshakov says you may be able to do this by looking back at past campaigns. “For example, if you know that 25% of customers who take you up on a free trial offer go on to make a purchase, you might be able to predict that one download is worth one-quarter of a sale,” he explained.
You can best quantify sales and other dollar metrics if all business areas can report back accurately. For example, new-gen online payment processing solutions tend to capture enough details that could help you properly attribute a purchase to a particular marketing activity.
You can also remove profit from the equation and replace it with something else. For example, the percentage of increased traffic to a landing page is a good metric. To track the ROI on that, you would have to define the percentages at which you would consider your campaign a success.
The tools and methods for tracking ROI
Once you have established your goals and the value of those results it’s time to track those metrics. The good news is that there are tools for nearly every platform. You can start with Google Analytics. This free tool will help you track traffic to landing pages, bounces, click through rates, conversions, video views and more. It even has a social conversions module that allows you to create goals related to tracking social media efforts. Then, it reports on the results.
You might also check out tools like SimplyMeasured.com and SproutSocial.com, both offering advanced analytics dashboards and reporting features for tracking all sorts of campaigns, along with advanced add-ons such as sentiment analysis, hashtag tracking, conversions, etc.
Ultimately, tracking social media ROI boils down to choosing the right metrics and KPIs to monitor, aligning those with your goals and leveraging the rights tools for attributing certain fans’ actions to direct profits.
