Social media has induced a revolution. It has transformed how we communicate with one another, and it has opened up a whole new way of doing business, helping set the stage for what could be an unprecedented era of growth and prosperity.
Of course, that social media is doing this is also a product of the times. We are becoming more and more connected every day, and this is opening us up to a whole world of new possibilities.
Perhaps unlike any other industry, though, social media has completely transformed marketing. It has given brands a whole new way of interacting with current and potential customers, and the research suggests that positive experiences lead to recommendations and a positive reputation.
For further proof, we only need to consider that Facebook alone influences over half of the consumer decisions we make, suggesting that it must be included in any strategy to influence consumer behavior. However, constantly changing trends make this difficult to do, which is just one of the many reasons why you should be focused on measuring social media ROI.
The Importance of ROI
Another reason is that social media also exposes brands more than ever before, meaning there are risks involved with opening and maintaining a social media account. Anyone can say anything they want about you, and you never know how much this is going to affect your image.
As a result, you need to be sure that each and every one of your social media activities is worth it. In other words, you need to make sure it’s getting you what you want. Determining this requires determining the return on investment, or ROI, of your marketing strategy.
But marketing ROI is notoriously difficult to measure, since marketing requires layers of different communication tactics that don’t always produce results that can be easily seen, something executives are never keen to hear.
This should not discourage you, though, for the right approach can help you get a much clearer idea of how well your marketing efforts are paying off for the company.
Here is everything you need to know about measuring your social media marketing strategy:
1. Determine Your Objectives
The first thing you must do is be crystal clear about what you hope each aspect of your marketing strategy to accomplish, which starts with identifying where your audience is in their Customer Journey when they come into contact with some of your marketing.
This is important because it will help tell you what your Key Performance Indicators (KPIs) are.
For example, the first part of a customer’s journey is information gathering. Sometimes they are in this stage and they don’t even realize it. They are essentially waiting for a brand that piques their interest to appear in front of their eyes.
You may be running a Facebook advertisement designed for these people, and in this case, your objective is merely to get eyeballs in front of your content. However, be weary of setting too many of your goals centered around simply expanding reach. Quality is always better than quantity, and you want to make sure that each one of your efforts stands a chance at drawing someone into your sales funnel.
2. Going Further
As a result, you will likely need to have something working in support of these types of ads. Perhaps it’s another ad that’s more specific, or a piece of content that you think people who have been introduced to your brand are likely to respond to.
But no matter what it is, you need to set another, more specific objective for this tactic, such as a set number of clicks, shares, sign ups, sales, etc.
Every component of your marketing strategy must serve a purpose, and once you figure out what that purpose is, make sure you identify the right KPIs, as these will be essential for evaluating ROI. Here are some of the more common KPIs in marketing:
- Shares, likes, comments, retweets, etc. are all good ways to measure engagement.
- Sales, sign-ups, downloads, clicks, quotes, referrals, etc. are all useful metrics for conversions
- Followers, subscribers, impressions, etc. are effective for analyzing reach
3. Quantify Costs
Once you’ve figured out what it is you’re measuring, you need to determine how much money you are spending to drive a given action. However, for this to be accurate, you need to make sure you’re including all of the costs that led up to that action.
For example, if you’re measuring sales, you need to include the costs of any and all marketing activities that helped you generate the lead that eventually led to the sale, which means accounting for all of the leads that didn’t wind up in a sale.
So, as in the example mentioned above, if you’re spending a bunch of money on informative ads meant to expand your reach, you need to include this in the cost per conversion. If you don’t think this part of the strategy was impactful, then you should be rethinking its place in your campaign.
In addition to this, you’ll need to spend some time counting up all the costs that went into making and distributing whatever content you post to social media. If you make your own, great, but you need to account for the hours spent creating whatever you post. This should then be added to any money you spend on paid advertisements, social media management, automated platforms, etc.
4. Compare With Results
Once you get to this point, calculating ROI is a matter of simple division. Take the amount you spend for each activity and then divide it by the amount of revenue generated from your investment. Any number less than one means you’re earning more than what you’re spending, which is good news.
Unfortunately, when your objectives are not directly related to sales, things get a bit more difficult. For example, if the goal of your campaign is to boost engagement, it can be quite a challenge to equate an increase in engagement with an increase in sales, but it’s your job to find a way.
The best thing you can do is try to find evidence that a more engaged audience helps you generate more sales. This might involve surveying your customers both before and after your campaign to try and measure their connection to your brand, although it can be quite costly to do this in a meaningful way
This is why getting involved in these types of campaigns is risky, as engagement and reach are only good insofar as they generate revenue. Make sure you’re acting on sound research before pursuing these objectives, otherwise you could find yourself in too far over your head.
5. Evaluate and Optimize
One of the reasons you’re evaluating ROI is to make sure your money is being well-spent. Social media poses a risk, and this makes it important to get the most out of your social media efforts. But this type of analysis is important because it also gives you the chance to identify where you could be doing better, an approach that will eventually improve the overall health of your business.