To measure social media Return on Investment (ROI), most businesses use the following formula:
Profit/ Investment x 100 = Social Media ROI
But this can be more complicated that it seems. For starters, how do you calculate profits? How do you work out which social media goals to set in the first place? And how do you prove which specific marketing campaigns were the ones to spark interest and drive sales?
If the concept of social media ROI feels a little daunting, you’re not alone. But calculating ROI doesn’t have to be complicated and time-consuming. We’ve composed a simple step-by-step guide that will help you measure your social media profits, and save a whole lot of time and money in the long run.
By seeing which of your marketing efforts deliver great results, and which ones don’t do so well, you can focus on the campaigns that really matter to maximize your ROI.
#1 Define your goals
Before anything, you will need to carefully identify your key performance indicators. KPIs will show you the progress of your business goals, and make sure you stay on track.
The more specific your goals, the better. Brand awareness means something different to everyone, so make sure you agree on a single, quantifiable awareness goal that you will be able to measure afterwards. For example, you could track new followers, clicks on links, or online purchases made.
#2 Track your goals
With your goals clearly defined, it’s time to start tracking. An easy – and free! – way to track website actions like sales and downloads is with Google Analytics. For tracking social media interactions such as shares and likes, Buffer is also a great tool to use.
#3 Attach a dollar amount
Once you’ve tracked your actions, you’ll need to assign them a monetary value. This is where it gets interesting, as there are many ways to do this. You could…
- Work out how much you earn on average from each customer
- Calculate how much each online visit is worth to your business
- Work out how much the average purchase is through your site
- And finally, work out your PPC costs e.g. how much you would end up paying to achieve the same actions through ads.
#4 Track your social media expenses
For the final step, you’ll need to deduct your investments from your overall ROI. These often include:
- Man-hours- Deduct the amount of time you or your employees spend on each specific social media campaign.
- Content- If you paid for content, such as a freelance blogger, you will need to factor this in.
- Social media tools- While Twitter and Facebook are free, often social media tools and services are not.
- Ad costs- Remember to deduct the amount you spend on social media advertising, such as boosting Facebook posts and promoting tweets.
With your stats in front of you, you can calculate your ROI using the formula at the top of the page and see which of your social media marketing campaigns come out on top. Just remember your social media investments might be paying off whether or not you see a direct, immediate increase in revenue- so stick with it!
We understand that social media takes practice and may not be at the top of your to-do list if you’re running a small business. Our team at Cloud9 Marketing are social media whizzes, and would love to give a helping hand to boost brand awareness, improve online credibility, and increase sales. To put our social media management to the test, please get in contact!