In this day and age, social media is no longer about posting images or links for the sake of building an online presence. Today, it is about how businesses can leverage it to add value to their target audience and generate leads.
That is obvious since 63% of the global population uses Facebook, Twitter, LinkedIn, and other social media channels in the mix. Despite social media effectiveness being everything, marketers still drive this marketing tactic on faith rather than evidence.
No wonder 80% of businesses are under the impression that they deliver great assistance through social media. However, 92% of their customers beg to differ. That is why it is vital to measure the impact of social media efforts.
What is social media ROI?
It is a metric that shows how much value a business generates with their social media investments. While some companies track the monetary return, others may also view ROI as a non-monetary ROI such as newsletter signups, website traffic, follower count, Likes/Retweets, impressions, and more.
What social media ROI means for your business depends on the goals you want to achieve. What is interesting is that companies invest 12% of their marketing spend on measuring these metrics. Measuring social media ROI requires dedicated staff, advanced tools, customer databases, etc. Most companies view it as expensive.
Why should your business measure social media ROI?
The reasons are simple. Analyzing your social media effectiveness can help you to:
- Identify areas in your strategy that need more improvement
- Pin-point aspects that have proved to be successful and can perform even better with a broader budget
- To evaluate platforms where the resources are just being wasted
- To analyze gaps in messaging and audience engagement
How do you calculate social media ROI?
There is a simple formula for calculating the metric.
Profit / Expenditure x 100 = social media ROI %
Profit is the amount you have earned from your social media efforts.
Investment is what you spent on those efforts.
For instance, if your total Facebook paid ads cost $350 and you got 1200 new email signups (valued at $0.5) due to the ads, then your profit would be $600 – $350 = $250
Your social media ROI% = $250 / $350 X 100 = 71.43%
How to measure social media ROI
If you are new to measuring social media ROI or want to polish your process, here are four steps you can follow to get started:
1. Define your business goal
A Sprout Social study reports that nearly half of marketers struggle to align their social media efforts and business goals. Therefore, begin with a broad objective.
Ask yourself: “Why should my business have a social media presence in the first place? What is it that I am trying to achieve?” Define your “big-picture objective” to make this process less overwhelming. It could be, for instance, engaging local followers and growing your community.
ii. Set SMART goals
Once you have decided your primary goal, get down to the nitty-gritty with the SMART framework:
Narrow down your goal. If you want to engage 100 local followers in a month, select the platform where you want to do so.
How would you determine you are successfully connecting with the local audience on, say, Twitter? Choose metrics, which could be follower count, page or post impressions, page reach, or something similar.
Do you have the resources to have 100 local profiles follow you on Twitter in 30 days? Discuss with your team. Be practical.
You may need an extra pair of hands to man your business Twitter profile, create a buzz, and subsequently build a community on the social media platform. Or if you feel you have to spend $15 per post to target a local audience, be sure about that.
Every goal needs a time frame. If yours is 30 days, you must ensure it is practical and doable.
2. Execute your goals like a campaign
Once you have decided on the business objective, sorted out your metrics and timelines, it is vital to run your goal like a campaign. Doing so will allow you to track individual links you share on Twitter (or any social media platform of your choice) and help you attribute visits from these specific links in motion.
For instance, companies on Instagram often update their bio link to align it with whatever campaign they are running. Curalate Like2Buy, Tailwind, and Bit.ly are a few tools in the market that can help you tie clicks to specific social media campaigns and CTAs.
Tracking links and URLs of your social media efforts can help you quickly analyze how your posts are performing. Besides that, you can even set up campaign-specific links and integrate them with your CRM, such as SuperOffice, to see who has clicked on what and track all clicks by source.
3. Track and report your social media metrics
After the campaign has been launched and some time has passed, monitor the performance, and gather essential intelligence to improve accordingly. For that, deploy any social media analytics tool of your choice and capture data from the platform to put it into relevant context for greater understanding.
For instance, if you want to track your company’s awareness on Twitter, look at data on your profile views, impressions, and post reach. Check your metrics regularly. Depending on which tool you use, have reports sent to your inbox on specific days of the week.
A LinkedIn research found 77% of digital marketers measure the results within the first month of the social media campaign. An Oracle report states only 47% of a campaign’s value is realized in 30 days. If you want to calculate your social media ROI, start doing that as soon as you enter the campaign’s fourth week.
4. Report your findings and make amends
Once you have tracked your social media efforts and retrieved information, the next step is to collate all the data in an organized manner. Most social media analytics tools prepare reports in a specific format. If that works for you, that will save you plenty of time.
A perfect report would be the one that includes both qualitative and quantitative metrics and results for the social media networks in question.
After the social media campaign has run for four weeks, you also need to develop a timeframe to report and analyze your social media performance. It could be every two weeks, month, or quarter – depending on how long you would like to run the campaign.
Once you have the data in front of you, calculate your social media ROI, and critically identify what worked and did not work. If there are too many mistakes, do not get disheartened. Instead, conduct more such campaigns on different social media platforms to pin-point what your target audience likes.
Soon you will notice your social media efforts are being seen more than ever, and there is a gradual increase in your shared content and number of followers through your social media platforms and your website.
Use cases with a successful social media ROI
If you feel you lack inspiration, here are three companies that leveraged the power of social media and fetched brilliant results:
1. Clean & Clear
Using Snapchat, the skincare company raised awareness about its Morning Burst facial cleanser among their female customer base, aged 13 to 24. Given 48% of Snapchat’s US users are 15 to 25 year-olds, the platform was the obvious choice for Clean & Clear.
The company optimized its Snap Ads and used Stories and Filters to reach the audience most likely to be interested in skincare. Their campaign boosted awareness by 11.2% and a 7% increase in favorability.
After noticing a considerable buzz around social payments, the dutch aviation company integrated the system with the help of their IT and finance teams to analyze its viability. After launching their social payments tool, which took €3,500 to set up, they now make €80,000 every week in sales.
3. British Telecom
The British company saves £2 million annually after redirecting 600,000 contacts through social media instead of its call centers. The change came after they found out their customers preferred dealing with them via social media instead of email or phone.
Next steps: tips to improve your social media ROI
Please bear in mind there is always room for improvement in your social media ROI. The most important thing is understanding the type of return your social media can have on your business. For that, you must do the following:
- Mine as much data as possible so that you can get a clear picture of where you stand.
- When starting, run test campaigns (both paid and otherwise) to get in the groove.
- Leverage tools of the trade for tracking goals, building custom links, scheduling social media posts, and so on.
A lot of time and energy is invested in creating a social media strategy, designing and launching it. Make it worthwhile. Research states 73% of new-age marketers agree social media has given their business a competitive edge. Grab that opportunity with both hands!