“But what’s the return on investment?” If you’re involved in social media marketing, trying to answer this question could potentially ruin your day. In fact, many businesspeople now question whether social ROI is truly measurable or whether we need to employ metrics other than financial returns.
The fact is, in order to measure social ROI, you need to first figure out how your social media marketing fits into your overall marketing/communications/PR strategy and tie relevant goals, like the ones below, to your efforts:
- Produce sales
- Generate leads
- Direct traffic to your website
- Build visibility/brand awareness
- Engage customers and prospects
- Enhance customer relations/loyalty
- Create goodwill among various types of stakeholders
When you know what your goals are, you’ll know which metrics you should be measuring and so you can better determine whether or not you’re succeeding. Below are some suggestions for tactics and metrics that align with each particular goal.
The first goal listed (generating sales) allows you to use the traditional ROI formula:
(Sales – Expenses)/Expenses = ROI (expressed as a percentage)
A direct response social campaign would be best suited for this type of calculation. But as many businesses have realized, the ways in which social media marketing can directly impact sales is limited.
With the second goal (generating leads), things get trickier. You could simply measure the volume of leads produced using a pre-established metric (subscribing to a newsletter, completing a contact form, viewing a video, downloading an ebook, report, or coupon etc.), but you ideally should track the sales conversion rate.
The feasibility of determining how many leads turn into actual customers/clients depends on how you’ve designed your social media marketing initiative. Google Analytics, a free and very popular website metrics tool, or other tracking software will help you track the number of conversions or even the desired actions that lead to designation as a lead. You can also go old school and place a“how did you hear about us?” question at the point of purchase.
Measuring the volume of traffic that your social media directs to your website is relatively easy. Again, you can use Google Analytics, or another measurement tool of your choice, to track how many people clicked on a posted link designed to drive people to your business’ website or online store.
In Social Media Examiner’s 2013 Social Media Marketing Industry Report, 89 percent of the marketers surveyed said that social media had generated more visibility for their businesses. In this case, the number of people who follow and talk about you on a particular social channel and the rate at which that number changes over time can give you an idea of how visible your organization is.
Engagement and Loyalty
Social media metrics such as Facebook likes, Twitter favorites as well as a particular social media platform’s version of shares and mentions are all metrics that can be used to evaluate engagement with a company or brand. Additional metrics could include participation in social contests, attendance at Google+ Hangouts, tweetchats, etc. (but if you’ve experience bad publicity, you may want to heed the disastrous Q&A fails such as those by JP Morgan and Robin Thicke.
Customer Loyalty and Stakeholder Goodwill
When you engage directly with customers in a positive manner, it tends to reinforce their loyalty, but as with the other goals, you should perform some form of evaluation to see how you’re actually doing in this department. One of the best ways to evaluate sentiment is by monitoring conversations about your brand or offerings, which also allows you to respond to complaints and other comments, enhancing goodwill. This Inc. article shares information and tools for sentiment analysis (note: it includes Twendz, which is defunct).
ROI vs. Correlation
As I mentioned, apart from sales and (at least in some instances) lead generation, the goals listed above aren’t really a good fit for the traditional ROI. But you might be able to see where an uptick in improved sales or customer retention, etc., matched or followed success in a particular goal. Admittedly, it’s not a precise way of determining efficacy but remember that social media marketing is not alone in being hard to measure. Most of us know the old saying from John Wanamaker:“Half the money I spend on advertising is wasted; the trouble is I don’t know which half.”
It’s advisable to pick your goals and metrics before you dive in too deep into social media. Also, remember that your organization type and the goals you’ve assigned to social media efforts will influence which social metrics will be relevant.
In addition to the metrics mentioned above, you need to track the time spent and other expenses with your social media marketing in order to get a better idea of whether the results you’re obtaining are worth it. When you have those figures in front of you, you can decide whether to tweak or drop a particular social campaign or whether you should continue/repeat it.
If you’re interested in more measurement tactics, check out my content marketing checkup post.