How to Measure the ROI of Social Media Marketing

You know how many hours you’ve invested into your social media marketing strategies but have no clue on whether they are successful?

Are your clients expecting to see some sort of social proof but you’re not sure what they mean by that?

You need to find a strategy to measure the return on investment (ROI) of your social media marketing efforts.

In this article I’ll help you achieve just that. All you need to do is bare with me until the end :)

Know where you want to go. Set social media goals

“If you don’t know where you’re going, any road will take you there.”

So, where do you want to go? What are your goals and business objectives? Ask yourself these questions so that you know what you want to ultimately achieve through your social media marketing campaign. Take for example the following goals:

• Increase blog and website traffic

• Increase the number of leads
• Increase reach and online visibility
• Become a thought-leader
• Boost sales and conversions

Be careful here. My advice is that you don’t set more than 2 goals per campaign. One is the ideal number in this case. However, there are times when goals are closely intertwined and it’s possible to go for 2 options.

Select the right platforms & plan your campaign

The platforms that you choose must be in line with your social media goals. Some audiences spend more time on Twitter, others on Facebook, Pinterest or Instagram. Find where your audience is so that you can position your strategy to be successful.

Given that your social media campaign will highly depend on the goals you have set, you need to customize it in accordance with those goals.

For example, if you want to get more leads, you will have to provide an incentive (eBook, Whitepaper, Report, etc) for which your prospects will share their personal information with you. In this case, you could choose to go for Facebook and Twitter ads coupled with a dedicated landing page. Still, if your audience is primarily B2B, LinkedIn and Slideshare might be a better choice. Mind your audience’s demographics!

Use metrics

Use social media metrics like reach, engagement and traffic to see if you’re heading in the right direction.

Reach

Otherwise put, the total number of fans and followers who have a chance to see your posts at any given point in time.

The higher the reach, the better. Still, it doesn’t mean that each and every fan will see your posts. Given the incredibly large number of social media posts, that would just be impossible.

How to calculate Facebook reach:

Reach = No. of fans who saw a particular post

Engagement

Everyone is striving to boost social media engagement levels nowadays. It’s what you always hear. Likes, shares, comments, retweets, repins and favorites are all indicators of how engaged your users are.

However, very few people actually know that real engagement is not measured as a direct sum total of all your likes, shares, retweets, etc. The best way to measure engagement is as a percentage. This way you will know whether things are constant, rising, or dipping. Your engagement rate must alway be measured against your fan base.

How to calculate engagement:

Engagement = Sum of interactions across social media platforms / Total number of fans across all platforms

Or

Engagement = The number of interactions/ the number of posts created

It’s important to know which users engage most often and in a positive way with your brand on social media because those are your brand evangelists and are very likely to recommend you to others. Cherish those relationships!

Traffic

One of the reasons why you’re probably using social media is to drive traffic to your website, right? You’re leveraging social media to generate that awareness users need to go and check you out.

How to see traffic coming from social media

Use Google Analytics to zoom in on the referrals your site receives from social media platforms. You will find out not only the contribution of social media overall to your website traffic, but also how each social media platform performs in terms of visits, pageviews and other parameters.

Conversions

There isn’t a single type of conversion that applies to all businesses. Conversion metrics like email signups, subscriptions, lead generation, sales apply differently depending on the type of business and its goals.

With Facebook, you can track conversions easily because it automatically shows you the conversion rates for any page, regardless of whether it is a confirmation page, an email subscription page or a whitepaper download page.

How to calculate the conversion rate

Conversion rate = Number of conversions / Traffic

The traffic-to-conversion ratio can be negatively impacted by a high bounce rate or an unoptimized website. It can also be impacted by conflicting messaging in your posts or ads on social media and the contents of your website or landing page.

Track your metrics

Luckily, most social media platforms provide some form of analytics (take for example Facebook Insights and Twitter Analytics).

Also, valuable insights can be accessed via social media management tools which provide enhanced analytics in terms of audience engagement.

And if these are not enough, there is always good old Google Analytics!

In order for you to know

• Which social media platforms referrals come from
• What type social media content attracts the most user activity

you need to create separate (custom) tracking URLs for each article/ landing page.

Once you create a custom URL, identify where this URL will be posted by creating tracking tags and including them at the end of each landing page URL. A very basic "source only" tracking tag looks something like this:

/?utm_medium=social&utm_source=facebook

The source definition at the end of the tag will vary depending on which platform you post your URL on. Defining the source of your URL helps your analytics tool attribute referrals to the correct social platforms.

Tracking these URLs against the goals you've laid out for your brand in the beginning will help you measure success on a detailed level.

Check results against initial goals

Now that you’ve got the statistics part sorted out, it’s time to calculate the social media marketing ROI and review the entire process so as to see what worked and what didn’t work. If you did paid advertising, that’s important to measure as well, because it relates to a specific cost.

Social Media ROI = (Return from social media – cost of social media marketing) / cost of social media marketing

Still, even if everything seems to be easily measurable, there are some things that are a bit difficult to measure in terms of ROI. And those things are brand loyalty and the quality of social customer care. What we do know is that exceptional social customer care has the power to trigger brand loyalty by making customers happy. We also know that bad customer service is bad for business. Therefore, while you pay attention to generating social media marketing ROI, make sure you’re not leaving social customer care behind. The two need to go hand in hand if you want to achieve your business goals.

About the Author

Michael Kamleitner is CEO & Product Manager at Swat.io, a Social Media Management solution that’s helping companies to improve their customer support & content management on Facebook, Twitter, YouTube, Instagram and others. Swat.io is currently used by companies such as 3?sterreich, Hitradio ?3, ?BB, Focus Online and Burda Intermedia.