Social media usage is more prevalent than ever. As of 2015, approximately 2/3 of the population in Hong Kong are active on social media. As the use of social media grows, brands have been trying to master the art of measuring their return on investment from it. While it’s not always as cut and dried as, say, measuring sales resulting from pay-per-click ads, it is possible to measure, if you know what to look for.
What Are Your Social Media Goals?
Start by establishing what you hope to achieve through social media marketing, and, if possible, assign a dollar value to each goal. For example, if your goal is to sell an additional 10,000 bottles of your new nail polish through a social media campaign, and the revenue of that many sales would be $50,000, you can more easily measure results now that you have established monetary goals.
Avoid less specific measurable goals like “brand awareness” or “positive brand sentiments”. For the purpose of measuring results, you want goals that are easy to measure and benchmark. Consider setting different goals for each of your social media accounts. It may take some time to accurately gauge how your followers behave on each site but is well worth the effort.
Where Do You Get the Biggest Impact for Your Efforts?
This, too, will take time to discover. You can’t base the success of your social media efforts solely on the number of followers you have, because, while you might have thousands of followers on social media, only some of them will be quality fans, meaning that they actually are interested in your brand and what you sell.
Run some tests by creating the same offer (say, 20 percent off a certain product) on all social platforms, and then measure which converts to the largest number of sales. Take notes and tweak future efforts based on what you see.
Assign Monetary Value to Social Media Data
Now that you’ve set financial goals for your social media efforts, assign monetary value to metrics that help you achieve those goals, such as sales, number of followers, engagement, and shares. You can find general data online, such as the statistic that a Twitter follower is worth about $2 and a Facebook fan $8. But the actual value of your followers will depend on several things, including:
- Average purchase amount
- How frequently the average customer buys from you
- What percent of your social media followers become buyers
- Your profit per purchase
For example, let’s say you have 5,000 Twitter followers, and about 3 percent of them have purchased from you in the last year (150). On average, each Twitter customer spends $50 on your site, and the average customer buys once per year. Your profit per $50 sale is $30, so your total profit on 150 sales a year from Twitter is $4,500. Let’s say you spend $1,000 a year in advertising or hiring a social media manager. That means your ROI is $3,500 ($4,500 minus $1,000). As you ramp up your efforts, you keep converting 3 percent of your followers, and sales grow, while your advertising and marketing costs remain the same.
The same can be applied to other metrics, like social shares, clicks, and reach. You can configure and see through your Google Analytics how many of those people actually clicked to your site, and how many did more than just stay on a single page, or even perform an actual purchase.
Once you figure out your overall social media ROI, use it to get smarter about how you spend your marketing budget. If you’re not seeing the return you’d like for a particular platform, consider pulling back your efforts there in favor of another site that helps you convert more buyers. Remember: You’re looking for the best return you can get, which requires making changes to your marketing strategy for better results.