Measuring Social Media ROI (Return On Investment), is another important metric you should measure to ensure your social media marketing efforts are paying off. Knowing what works and what doesn’t, ensures your audience are exposed to the right programs and product offerings.
Obviously, if you begin without a plan, then it’s going to be next to impossible to know if what you’re doing is working. Each effort you put into social media marketing, should have a corresponding monetary or numerical goal associated with it. Doing so allows you to measure your results.
6 Tips for Measuring Social Media ROI
Following, are six steps you can take to begin measuring your return on investment on social media.
1. Set Your Conversion Goals
It’s impossible to measure something for which you have no goal. Thus, the first step to measuring your ROI is to attach your actions to a goal.
The most common goals include:
- Make a purchase
- Complete a form
- Click-through to website or sales page
- Download a report
- Engage with your post
- Backend Sale
Whatever the case may be, ensure that you know what the goal is and that it’s something which is measureable that you can track.
2. Track Conversions
Once your conversion goals have been established you can begin tracking the results.
They’ll be noted in terms of reach, website traffic, leads, customers, and ultimately conversion rate.
“Conversion” in this case only means that they did what you wanted them to do.
It doesn’t necessarily mean that they made a purchase; maybe they completed a form and sent it back, or they did some other action that you wanted them to do.
3. Determine the Value of Each Conversion
Even if each conversion isn’t a “buy”, it still represents a value of those who didn’t as opposed to those who did.
If you have historical data to review, each of the people you get into your list and each of your actual customers have a lifetime value.
If you do not yet have historical data, then their potential customer lifetime value is based on the products and services you have in your product funnel and the industry average in terms of sales.
Once you know the value of each conversion – even if it’s an average or a potential value – it will help you to know whether or not the investment is worth it moving forward.
More on social media ROI…
4. Define Value by Channel
Obviously, you don’t want to determine the value for your social media overall but by channel.
For instance, if you’re doing great on Facebook but lousy and even losing money on Instagram, then you know where to shift your focus.
You can’t continue throwing good money after bad on one channel, or you risk losing revenues on the other social media channel.
Using a spreadsheet application like MS Excel, for instance, can help you keep track of your social media ROI.
Note: “value” doesn’t have to mean that you made money directly; figure instead the value of having that new person on your list.
5. Calculate Total Cost
When you determine your overall costs of doing business on social media, don’t forget to include your labor costs – your personal labor.
Your consulting fees, labor hours, graphics, copywriting, etc. all are costs associated with marketing via social media.
Most people realize that they should consider outside labor, but they often forget to attach an amount to their own labor as they work with social media.
If you forget to do this, then your numbers will not “jive” with the real costs involved in the work you do.
6. Finalize Results Calculations
Create a chart that helps you determine the percentage return on investment for every channel and overall for your social media marketing efforts.
It’s rather a simple formula that you can plug into your spreadsheet.
The percentage return on investment is easy to figure out.
To calculate ROI: Subtract (-) all your costs of investment (expenses) from your total revenues (+), then divide (/) by 100 to get the percentage return on investment.
With this information you can compute the value, costs and return on investment in total and per channel.
If one channel is not getting good results, you can change things up on that channel completely or you can just put your resources into what’s working.
The importance of measuring your social media ROI cannot be overstated.
In order for you to measure an outcome, you must first determine what you want desired outcome to be.
I realize that for most of “goal setting” sucks. It can be tedious and, well, boring as opposed to other enjoyable tasks.
However, in order to do more of what you enjoy doing, you must ensure that what you’re doing is producing the desired result.
If you enjoy writing blog posts and posting them on social media, for instance, wouldn’t be that much more enjoyable if you knew which posts brought the most engagement?
Of course you would! This is what setting goals and tracking your analytics can do for you.
Put these these tips for measuring your social media ROI to good use and watch your social media marketing efforts skyrocket.
How about you?
How do you measure your social media ROI? I’d love to hear your input in the comments!
If you’ve struggled in this area or haven’t started, I’d like to hear your story as well.
Until next time,