Ever since social media became popular as a way to connect with new customers, 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.
You may have some less clearly defined social media goals, such as expanding brand recognition or creating brand loyalty, but these are too nebulous to measure, at least as they relate to ROI. For the purpose of measuring results, stick to goals you can easily benchmark, such as boosting your online conversion rate by 5 percent.
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. For example, you may find that your Twitter followers jump on any coupon code or discount you offer, while Facebook users respond better to contests and freebies.
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.
You can assign value to other metrics, like social shares, clicks, and reach. If you know the latest blog post that you shared on Google+ was shared by 200 people, who, on average, have 500 people each in their networks, you can see through your Google Analytics how many of those people actually clicked to your site, and which did more than just stay on a single page. If you have Goals set up in your Google Analytics settings, you can see how many people from a given social site made a purchase, and what those purchases were valued at.
Once you figure out your overall social media ROI, use it to get smarter about how you spend your social media 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.