Does social media have an ROI?
Does social media have an ROI? A question many businesses want answered, because why would you waste time and money on something that isn’t going to give you a return? A return in this case, is anything you get back from utilizing social media marketing. The great thing about online marketing is that you can measure just about anything from your company’s click-through rate, sentiment analysis, influence, traffic, followers, engagement and so on. But most the time, businesses want to see a return in terms of a dollar amount and we don’t blame you! However, measuring your social media return on investment isn’t as easy as other measurements because there is no set formula for social media ROI.
The biggest misconception companies have is that leveraging social media will not make them more money. The great news is that social media marketing (if done properly) does see returns all the time! In fact, there are companies out there today dominating their industry by using social media as a marketing tool. Some big brand companies doing so are GoPro, Dove, Pampers, and Oreo just to name a few. With strategy and rich content, these brands have enhanced their recognition, number of marketing channels, and communication with customers which in return has given them more of a return than their cost of using social media.
You’re probably wondering if your efforts have been worth it. “Did that tweet capture a new customer”? “Did that post lead anyone into buying one of our products“? These questions may be frustrating if you don’t know how to answer them. In order you see your ROI in terms of a dollar amount, you’ll need to follow a few steps:
- Set your Conversion Goals
Determine what actions you want your customers to take.
Examples: Make online purchase, sign up for a newsletter, and fill out a contact form, engage on social media interaction (share, like, or follow), view video, etc.
- Track Conversions
You’ll need to track IT systems, conversions goals, budget, and each social media platform conversion separately. There are many different generators, apps, and tools you can use in order to gather this information. We recommended you use Google Analytics. You’ll be able to track your reach, traffic, leads, customers and conversion rate which are the top 5 metrics for social media ROI.
- Assign Monetary Value to Each Conversion
You’ll need to set a monetary value to each of your efforts to convert a viewer into a customer. There are 2 methods to do so. In method 1, you’ll need to determine the life time value of each of your customers through historical data. In method 2, instead of using historical data you’ll use your current common sense and experiences with your customers.
- Measure Total Benefits by Channel
Use an analytic tool (Google Analytics) to collect information about conversion numbers and incoming traffic. Take your information and create a spreadsheet that correlates with the data.
- Determine Total Costs
For each channel you’re utilizing, add up labor costs, sundry costs and promotional account fees.
- Analyze Results and Improve
You can use this formula to determine your percentage return your investment costs:
After calculating each platform your chart should look similar to this:
Tracking your social media marketing ROI is not an easy task but it is not impossible! Just remember your goal isn’t just sales. Social media allows you to build a community, build customer relations, loyalty, events, and buzz, all of which can be measured financially. Your business’ financial and non-financial goals can be developed, achieved and then turned into profit for your business! If you haven’t already, start tracking your ROI today, figure out what’s working on your platforms, what platforms show the best results and capitalize on your findings!