Smart Tips for businesses to measure ROI from Social Media

Social media is a force to reckon with and holds a prominent place as an essential marketing channel for businesses. With over 1.7 billion users worldwide, the rise of social media has provided businesses with opportunity to engage with existing and new customers to grow their business. According to a recent survey or CMOs, almost half (49%) said they aren’t able to quantify whether social media has made a difference for their companies, while 36% said they had a good sense of qualitative – though not quantitative – results. Only a meager 15% said they’ve seen a proven quantitative impact.

Having said that, it is important to know how social media investments help your business. Many digital marketers today, find it really difficult to measure ROI from social media. This article provides some insights on how to do this based on my personal experience managing several social media channels for various B2C and B2B brands.

1) Link your ROI with business goals: Unless you know what your business goal is, it is really futile to jump on the social media band wagon. Sadly, according to Altimeter, only 34% businesses feel their social strategy is linked to their business goals. Few common business goals could be – create brand awareness, generate leads, improve landing page conversions, communicate with existing customers. Once you have the goals in place, list down the matrix that could help you track these goals. Measuring “likes”, “+1”s, “followers”and “retweets” is important but not enough.

In my opinion, matrix like

• reach,
• traffic,
• leads,
• conversions,
• signups,
• revenue generated are more relevant and can be tied back to your business goals.

2) Use social media tools to track performance: Once you have the matrix setup and tied back to your business goals, you need to track these matrix on daily, weekly, monthly and yearly basis to actually know your social media ROI. Track Each Step of Your Lead Generation Efforts. This involves building custom landing pages, adding tracking pixel to urls, A/B testing for Ad copies, and much more. There are several free as well as paid tools which can help you do this. Google Analytics, Hoot Suite, Salesforce are a few tools which you can use. Here are several social media marketing tools used by pros, you can explore these and use the one that best suits your requirement.

3) Calculate ROI from social media: Now, its time to calculate your social media ROI. Since you have made sure that tracking is built into everything that you are doing on social media, it should be easy to now put these numbers into custom templates to gauge the performance and start measuring ROI from social media. This is not as difficult as it seems.

The underlying basic principle is –

“To calculate the ROI from your social media, calculate the equivalent $ Ad Value that you would need to spend on display advertising to get the same performance matrix.”

Let me explain this better with an example. Lets say, you got 10,000 new clicks to your website from social media posts. You spend 1 hours daily for 1 month i.e 30 hours @ $5 an hour, which is approx  $150/month for resource cost. To get 10,000 clicks form display advertisement @ $0.05 CPC, you would have spent $500. So your ROI from this activity is ($500 -$150)/$150 which is 2.3. Not bad

You will need to create several such templates for every social media activity and channel to accurately measure ROI from social media marketing. An excellent article by Angie Schottmuller can help you get started on this. I would however suggest to have your custom templates made and no go by generic templates taken from internet as they may not be relevant for your social media strategy.

4) Track, Measure and Optimize: Once you have the social media measurement templates in place and have started measuring the ROI, start reporting it to your management, talk to your peers, relook at those templates everyday and ask yourself, are they closely representing what I am trying to do. If the answer is no, refine the templates. In all likelihood, it may take a few months of iterations  before you have a perfect template and complete control over your social media.

To summarize, it is important attribute Social Activities to Business Goals and Customer Lifetime Value.How you measure and track these would be based on your business goals and your overall social media strategy should tie into this. Measuring social media ROI is a journey and not a destination, so keep working towards it everyday.

This article was originally published on my blog