Last week we introduced you to the complex world of social media ROI. In part 1, we gave you tips on what to measure and why, and we reviewed setting social media goals and objectives. Today we’re going to give you our best tips and tools for calculating ROI.
As mentioned in part 1, you should concentrate on the platforms your audience frequents. Trying to be involved on every social media platform can be overwhelming—and tracking your goals and measuring ROI on all of them is too. “But,” you protest. “How do I know where my audience hangs out if I’m not measuring my success on each platform?”
Answer: Start with the “Big Three”—Facebook, Twitter, and LinkedIn—and once you’ve got a handle on those, seek out the niche platforms you’re on. Run a photography store? Try Instagram. Run a craft business? Try Pinterest. (Or, as recommended in part 1, use this infographic to see what type of audiences hang out on which platforms.)
Once you’ve determined which platforms to concentrate on, it’s time to start tracking and measuring. First, let’s figure out what social media ROI really is.
Calculating Social Media ROI
The social media experts over at Buffer give this formula: ROI= (return – investment) / investment. Here’s how to calculate this:
- Set your goals for your social media campaigns, as we described in our previous article: x number of new followers, downloads of your free resource, sign-ups to your newsletter, purchases of a certain product. Your goals should be focused on an action potential customers will take, like clicking on a certain link, downloading a free resource, sharing a specific post, or following your channel. That way it’s easier to measure the outcome.
- Track your goals using in-platform analytic tools (Facebook Insights, Twitter Analytics, and LinkedIn Analytics) to review how your posts and updates are doing in each individual platform. Additional tools, like Google Analytics, Buffer, and Hootsuite offer additional valuable insights (we’ll discuss these below).
- Track your expenses. While using most social media platforms is free, the actions associated with running a social media campaign are not. You’ll need to figure out the cost for the hours it takes you or your social media manager to run the campaign. You’ll also need to factor in the costs of creating content if you hire a copywriter or editor. Additionally, if you use any social media tools that charge a fee, you’ll need to account for those costs; you’ll also want to be sure to account for any ads you pay for on social media sites. You can figure out these costs on a per-campaign, monthly, or yearly basis. It all comes down to what you’ve invested in your social media efforts.
- Determine your return. Here’s the tricky part. Your return is what you get back on any investments you’ve made. First, take a look at your goals. Were you successful at achieving a certain number of followers, downloads, or product purchases? That’s your return. But you can’t just plug in “Yes, we achieved our goal” into the above formula; you need a way to calculate a number to determine your return. How? We’ve scoured the internet for the best options to determine monetary value. Here are a few from Buffer and Sprout Social:
- Lifetime value of a customer : This is an estimated dollar amount or value your business will earn from the entire relationship with the customer. The experts over at Kissmetrics have devised a helpful infographic to help you figure this out.
- Lifetime value multiplied by conversion rate : A conversion rate is based on your goal—how many email subscribers did you gain? How many downloads? How many clicks did your link get?
- Average sale : How much does a customer usually spend on a purchase on your site?
- Keep in mind the indirect benefits of social media. One of the most important things to remember is that not all ROI is going to be financial. Social media creates a relationship with potential customers, which then grows with engagement, which hopefully leads to paying customers. Additionally, the social interaction social media provides can also capture the attention of new followers. This is why you want to carefully track metrics—you get valuable insights on any engagement with your posts—shares, comments, likes—and also clicks to your website, which is where you want your posts to entice your followers to go so they become customers.
If you’re interested in an example of an ROI calculation, check out this infographic from Quicksprout’s Neil Patel, who was named by Forbes as a top-ten online marketer.
Let’s Talk Tools
In-platform tracking tools are an invaluable part of tracking and measuring ROI. The Big-Three platforms have the following analytics tools:
- Facebook Insights gives you an overview of how your page is doing, how many likes you have and where they’re coming from, what your reach is, and how your posts are performing.
- Twitter Analytics shows you how every one of your tweets has performed—how many times it’s been seen, retweeted, liked, and how many replies you got. You can also view audience information, such as who’s following you, what their interests are, and basic demographics.
- LinkedIn Analytics shows your company-page updates, supplies helpful information about your followers, and tracks the visitors to your page.
Outside-the-platform tools help you get an overall picture of your social media efforts. You want your posts to lead to a website visit, and, across the board, the most recommended tool by social media experts is Google Analytics, because it allows you to track your different social campaigns through the Social Analytics section. You can even set goals here as well as track and measure the referrals coming from social sites. You’ll also get insights as to which social media platforms (and any ad campaigns you run) are most successful at triggering clicks on your website link.
Similar to Google Analytics is Kissmetrics, an analytical platform you can use to track each visitor individually and anonymously all the way to conversion. And social media management tools like Hootsuite and Buffer not only help you manage the scheduling of your content but offer reports that help you track the performance of each of your posts.
We hope the tips and tools listed above will help you feel more comfortable and confident as you navigate the often-complex world of social media ROI to determine whether your efforts are paying off. Have any tips or ideas on how to calculate the ROI of a social media campaign? Please share them with our readers in the comments below.
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