Optimizing your social media profiles, using the right tools, and incorporating your brand voice in the messages you share with your audience is essential for creating an effective social media strategy. Considering social media is a powerful way to connect with your audience, you cannot afford to ignore it.
If you want to be truly successful in your social media efforts though, you need to know how it contributes to your business as a whole. Have your social promotions contributed to the awareness of your brand? Do you notice an increase in sales? Does your target audience spend more time on your website?
All of these can be described as broad business goals and they ultimately translate into more revenue. In fact, these goals should be supported by your overall marketing strategy. Social media marketing is just one part of that strategy.
However, many small and large businesses find it hard to understand if their social media efforts are paying off. Some of them don’t know how to set proper goals. Nor are they sure which metrics to track or the tools to use to analyze the data. They're missing crucial information that would prove their social media strategy is working to support their goals.
As a result, many businesses do not track the efforts of their social media campaigns properly and have no clue whether they are getting their deserved return on investment.
As a savvy business owner, it’s only natural that you want to know you’re getting your money’s worth from all your marketing efforts. Tracking and measuring the results of your social media marketing is essential if you want to understand what’s working and what needs to improve in order to reach your goals.
In this part of the Kickstart Social Media Guide for Small Business, we’ll discuss what social media ROI is and why should you measure your return on investment in the first place. Then we'll dig into how to set strategic goals so you can calculate it. We'll also touch up on tools that will help you measure and analyze the results. This guide will help you improve your social media strategy and start measuring your results better.
What is Social Media ROI?
Contrary to popular belief, social media ROI (return on investment) is not tracking the number of followers you gained last week on Twitter or how many likes a post received on your Facebook page. Sure, those numbers need to be taken into consideration, but overall, they don’t paint the entire picture.
Just because you have 500+ followers on Twitter, that doesn’t mean that all of them will suddenly show up in your store and buy your product or that they will hire you for a specific purpose. Those numbers are also known as vanity metrics that don’t hold any information on a specific business goal.
In layman’s terms, social media ROI is what your business is getting back from the time and money, as well as resources spent on social media marketing.
The general formula for calculating your social media ROI is as follows:
Social Media ROI = (earnings - costs) / cost percent
From that simple formula, you can conclude that you should be aware of how much money you’re putting into your social media marketing as well as how much money your social media goals are worth.
The total cost of your social media marketing combines:
- Labor: Whether you have an employee in charge of social media or if you’re doing it yourself, there’s no denying it that social media takes time. Taking into account how much time you spent on social media campaigns is a part of the cost that should be measured on an individual basis, rather than taking the entire paycheck into calculation.
Content: If you outsourced writing the copy for your campaigns, the cost of that should be included.
Tools: If you used a social media management tool, consider the monthly cost of the tool.
- Ads: Any additional method of boosting your campaigns such as Promoted Tweets, Promoted Pins, or Sponsored Facebook posts.
The rest of the equation will largely depend on the goals you have set for a particular campaign.
Why Measure Social Media ROI?
Whether you sell products or services, I’m fairly certain you don’t simply put up a new product on your shelf and then ignore it, without ever checking how many customers have bought it? Or, how many customers bought it and returned it to your store the same day, right?
Launching a new service works in a similar fashion. And when it comes to marketing, measuring the success of your social media campaigns equates to launching a new service or introducing a new product to your lineup.
Measuring your social media ROI is important for a number of reasons, some of which are:
- You’ll know which social media platforms bring in the best results in terms of revenue and engagement.
- You’ll understand what types of campaigns perform better and have a bigger impact on your business goals.
- You’ll see where you can improve.
Once you have a deeper understanding of that, you'll be able to launch your next campaign with better results. Also, if you apply these same principles diligently, you’ll continually improve and refine your strategy, which will yield a consistent positive return on investment.
How to Set Your Social Promotion Goals
I’ve mentioned before that the other part of the equation depends largely on the goals you set. Those goals will determine which metrics you need to measure. It’s also worth mentioning that those goals should support your existing business goals as well.
Instead of focusing on vanity metrics, consider setting goals that are quantifiable and linked to the specific campaign. A good place to start it to set S.M.A.R.T goals which are Specific, Measurable, Attainable, Relevant, and Timely. You should always be able to attach a numeric value to your goal.
A few examples of goals you can track include email signups, contact form inquiries, online purchases, site traffic, and so on.
When you convert them to S.M.A.R.T. goals, they should always focus on measuring actions that convert a casual website visitor to a lead to a paying customer.
A few examples of that would be:
- 150 new email subscribers by the end of the second quarter.
- 20 contact form inquiries by the end of the month.
- Acquire 10 more customers from a specific region.
- 15 new clients during the third quarter.
- Increase site traffic by 35% by the end of the year.
Learn more about how to set S.M.A.R.T. goals for your business:
Once you’re clear on your goals, it will be easier to track specific metrics. Depending on the goal, you can track URL clicks, traffic from social media, subscriber growth, follower growth, time spent on site, follower growth rate, clicks by region, and more.
Keeping track of your growth rate is important, but shouldn’t be the primary focus of the metrics you track. Rather, use those numbers as supporting values to your bigger and more important goals.
The second part that’s important is linking your goals to a specific campaign. A campaign may sound intimidating but in reality, it’s nothing more than a planned effort to achieve a certain goal with a measurable outcome.
This will allow you to track individual links you share on social media, whether you focus on Facebook, Twitter, any other social media network, or a combination of them. You can then easily attribute visits from the shared links. This helps you determine which channels are working and those that aren’t.
Tools to Help Measure Your Goals
While it might seem difficult to keep track of your goals and their outcome, there are numerous tools that can help you.
Some social media management tools include analytics which can help you track the metrics you need to monitor. However, before covering those, let’s briefly mention Google Analytics.
1. Google Analytics
Google Analytics is one of the easiest methods to track your social media goals. In fact, you’re probably using it already for your website, but you can extend the reports to include various social media channels.
Doing so will require you to go to Acquisition > Social > Conversions. It will prompt you to set up a new goal so click on Set Up Goals. This is where you want to enter the goal you defined earlier.
As a simple example, let’s say you want to track the number of new visitors from Instagram. This will require you to create a custom landing page on your website where you will direct Instagram users. Adding the URL of that page to your Google Analytics will allow you track your results.
As mentioned in our previous social media tools article, Buffer has a very basic set of analytics which allows you to track the number of clicks generated, and the number of likes, retweets, and replies. It’s not as powerful as some other tools, but for a basic campaign, it’s a good way to get an instant overview.
3. HootSuite Analytics
Hootsuite Analytics includes a powerful set of reporting tools which can help you track your reach, conversions, and more. You can use Insights to identify conversations happening within your industry, your reach, brand sentiment, and more.
Its custom URL parameters will allow you to track which social networks and social messages drove traffic to your website or a landing page, while Reports will allow you to get a quick overview of your follower growth, click-through rate, and per-post stats for individual social media networks.
If you use Salesforce as your CRM, you can attach their tracking codes to the links shared on social networks. When you combine it with a tool like Marketo, you can track sales leads back to specific campaigns or social messages.
5. Simply Measured
Simply Measured provides a very comprehensive social media reporting platform that supports a broad range of social networks. They support Facebook, Google+, Twitter, YouTube, Vine, Pinterest, Instagram, and LinkedIn. It’s one of the pricier solutions but it allows you to track and monitor the following:
- Web traffic and conversion analysis in conjunction with Google Analytics.
- Competitive analysis and benchmarking to help compare your business against your competitors.
- Influencer and trend analysis to discover key influencers in your industry.
- Brand, keywords, and hashtag monitoring.
- Multi-channel analysis so you can compare many accounts at the same time.
However, they also have a set of free tools that you can take advantage of to analyze your brand across Twitter, Facebook, Instagram, and more.
Once you have a way of tracking data, you can attach a value to each conversion. You can use the lifetime value of your customer and multiply it by your conversion rate to get the potential value of each conversion. You can also use the average sale amount and set that as the value of your conversion.
How to Adjust and Improve Your Social Media Campaigns
After looking at the numbers you will be able to see which channels are performing best and concentrate your efforts on those. For social media channels that have a negative ROI, you can try to adjust your efforts in a few different ways:
- Adjust your campaigns to use a different type of copy or imagery.
- Spend less time.
- Spend less money (for example, spend less on Promoted Tweets and increase the budget for your Facebook Ads instead).
- Target a different segment of your audience.
Be sure to examine your goals and evaluate how they tie in with your overall business goals. The adjustments should be made as soon as possible because social media is always (and forever) changing.
The first round of goals and your first calculated ROI is not a number that will stay the same so it’s important to continue setting goals and calculating the ROI to correctly measure the success of past campaigns and plan for the future.
It's also important to calculate your ROI for your content marketing as well, learn how:
Start Tracking Your Social Media ROI Now
Tracking your social media ROI is not an impossible task but it does require some strategy and planning. Once you’ve defined your goals, understand which metrics are related to those goals, and know the costs associated with your campaigns, you'll get a clear picture on what is bringing you the biggest return on your investment. The tools and tips outlined here, should help you get started the right way.
Learn more about social media marketing with our beginner guide.