Social media can be a time-consuming, daunting task. But it doesn’t have to be.
Invest your time upfront to research your audience, build your social media strategy and plan, and batch content.
(Did you miss our first posts in this three-part series? Read Part 1: Which Social Media Platforms to Use and Ideal Social Media Posting and Part 2: How Long Are Social Media Posts Relevant?)
One common question marketers have is this:
How do I know if I’m getting a return on your investment on social, and how can I even measure that?
Calculating social media ROI can be challenging because your objectives and targets may be measured in something other than dollars (such as followers, website visits or engagement). Plus, many marketers forget to include all of the expenses associated with social media management.
To begin analyzing ROI and your effectiveness in general, you need a social media plan. Build yours now in these five steps:
- Identify How Social Media Helps You Achieve a Business Goal
- Set Social Media Objectives
- Decide on Your Post Topics and Schedule per Platform
- Create Targets for Your Social Media Metrics
- Calculate ROI
1. Identify How Social Media Helps You Achieve a Business Goal
If you have a business plan, you should have your business goals written down somewhere. Get them in front of you and answer this question: how does social media help you reach one or more of those goals?
If you don’t know the answer to this question, you need to map out your buyer’s journey and sales cycle. That will tell you how social media fits into each one of those “funnels.”
In many cases, social media is part of the “awareness” and “interest” phases of your marketing funnel, as well as the “advocacy” phase of your sales funnel. Many business owners expect social media to lead directly to sales, and sometimes that happens. More often, though, social media is where prospects learn about you and further consider a relationship with your business.
By building a buyer’s journey map (and using the homework from our first article), you’ll know which platforms your target audience uses most. So, next comes setting social media objectives.
2. Set Social Media Objectives
Write out specific goals for your social media platform(s). Just saying “Build brand awareness” is not enough. Instead, try:
- Build brand awareness by reaching 4k accounts per post monthly.
- Drive traffic to the website by getting 100 website taps a month.
- Create a brand community by gaining 1k followers by Quarter 3.
Not all of these work in an ROI equation, which is what frustrates many marketers (but more on that later).
3. Decide on Your Post Topics and Schedule per Platform
Your content topics, tone and look will depend on your preferences and those of your target audience. However, it’s best that you do more than sell on social media. Build a relationship with your followers by adding value.
We talk extensively about best content and platform practices in our last two articles. One additional suggestion we will make here is to create content categories based on audience wants and needs. For example, a skincare company’s four content categories could be inspirational quotes, product shots, testimonials and resources for solving common skin issues. For artists, maybe the content categories are artworks, behind-the-scenes and art shows.
4. Create Targets for Your Social Media Metrics
Look at your objectives and identify which platform targets can measure results (e.g., followers, website taps, shares, saves, retweets).
If you are completely new to a platform, your first month or two will be spent creating a baseline for targets. If you have established profiles, compare your current results to industry averages using a source like Rival IQ as a benchmark.
For more specific or detailed analytics, you may need to use another tool like Google Analytics on your website. For instance, your Analytics dashboard can tell you which platform referred the user to the site. However, even that has its limits and may not tell you which specific post led to a web visit. When that’s a case, use the platform’s analytics to identify trends or correlations between results and high-performing posts. We recommend using a tool to capture your targets, results and trends – even a simple Google Doc would work.
If you are unsure of which social media or even marketing metrics you should be tracking, check out this article by Klipfolio.
5. Calculate Social Media ROI
Return on Investment (ROI) is calculated with this equation:
(Revenue – Spend) / Spend = % ROI
This equation sounds simple, and can be for tasks that are simple to measure.
For example, if you spend $10/month on a subscription management service that saves you $20/month, then your ROI is ($20 – $10) / $10 = 100%. You return an amount equal to 100% of what you spent. As Social Media Examiner puts it, 100% ROI means that for every $1 you put in, you make $2. If you had made zero dollars, then your ROI would have been 0%. Breaking even (making your investment back) would be 50%.
Calculating your social media expenses includes billable time you spend doing the work or paying someone else to do it, plus overhead expenses related to software for design, scheduling, internet, etc.
Calculate your return by assigning monetary values to the metrics you chose to track in Step 2. Since you cannot monetize follows or likes, but you may be able to estimate revenue from website clicks and DMs that lead to the subsequent sales. Buffer has a nice concise article that includes an example to show you how this works.
Here are a couple of ways to track “revenue” to activity on social media:
- Use UTM tags on the links you share on SM to track website activity and sales
- Ask where customers were referred at check-out or in a follow-up customer survey
- Estimate using conversion rates (X viewers download a freebie and Y of those subscribers make a sale times the average transaction amount OR the lifetime value of a new customer)
Do you actually need to calculate social media ROI?
The ROI equation is a tool for comparing the effectiveness of advertising, promotional and marketing channels.
If you do choose to use ROI, measure it based on the length of your sales cycle. If it takes you six months to go from awareness to sale, then calculate the ROI six months after your campaign begins.
There are incalculable benefits to having a strong social presence, such as building know/like/trust with prospects, strengthening your brand credibility and creating relationships with strategic partners.
Let’s say your social media goal is to raise awareness about your brand. Then, six months after launching a consistent social media strategy, you find that website traffic increased 25% and brand mentions rose 100%. This tells you that you’re getting some ROI without actually using the equation. It may be correlation and not causation, but that data still tell a story about your efforts.
Many of you want to pin down your social media ROI, but perhaps there’s a better vision of success as your company grows. Instead of spinning your wheels to figure out the ROI, think about what the “cost” would be if you didn’t have a social media presence.
By prioritizing the social media platforms you use, creating content your audience loves and using a plan to set and reach targets, you will find that your return on social media investment grows as your company does – even if the equation doesn’t work for you yet.
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(Related: Part 1: Which Social Media Platforms to Use and Ideal Social Media Posting and Part 2: How Long Are Social Media Posts Relevant?)