If you’re struggling with figuring out the ROI on your social media spend, you’re certainly not alone. One recent study found that 61 percent of social marketers in North America say that evaluating their return on investment is a challenge, and another study determined that 41 percent of companies said they actually had no idea whether or not their social media efforts were actually paying off.
The good news is, there’s certainly no shortage of social media metrics you can use to gauge performance. If you want to track fans, followers, retweets and shares, you can easily do that. Others count on social media to drive referral traffic, and focus on measuring that. Still others are even more granular, and quantify success from purchases made from social media referrals.
Choosing what to focus on is one of the most important starting points. Here are some tips from anthonyBarnum on how to measure the effectiveness of your social media efforts:
- Identify your key performance indicators (KPIs). Are you looking to drive revenue or build awareness of your brand? It makes a huge difference. One of the most confusing things about social media marketing is that there is no common denominator to measure ROI because social media can be used for so many different things. A brand visibility campaign, for instance, is rightly measured entirely different than an initiative to attract new business – which is structured differently from a customer retention campaign.
If your goal is sales, you should measure ROI as a dollar value. By assigning a dollar amount to your conversion goals, it’s easy to understand the impact of your social media marketing to your bottom line.
- Align social media efforts with business objectives. The goals you set for social media will vary considerably depending on what you’re hoping to achieve. Some businesses focus directly on revenue. The goals they set will likely have to do with product purchases, number of viewed product demos, or free trials. If brand awareness is what a business is focused on instead, then its social media goals might be brand mentions, followers or impressions.
Note well: Brand awareness can mean something different to everyone. Your boss might define awareness as getting your brand in front of as many people as possible, while your PR team might want journalists to remember your brand name. Be sure to agree on one specific brand awareness goal with the help of your stakeholders.
- Take advantage of Google Analytics. It’s a free tool that you can use to set up trackable goals and monitor how often visitors visit your website and complete the actions you define. Work with a partner such as anthonyBarnum that can help you configure and monitor the program, or ensure that internal resources have the time and training to focus on this. Businesses that want to retain and convert prospects care a lot about how those prospects behave when they visit a website. Almost any goal you want to set for a campaign is measurable if you adopt the right approach and structure a system to monitor it.
- Assign a monetary value to your KPIs. Besides choosing specific goals and setting up a system to track and monitor them, you should consider assigning a monetary value to those goals. There are various ways of doing this. The PPC valuation approach asks: How much would you end up paying if you were to use ads to achieve the same social media results? You also might choose to focus on average sale, which is the size of the average purchase made at your site. Many companies like to track lifetime value, which assesses how much you earn from each customer on average. And if you track conversion rate, you can figure out precisely how much each potential visit to your site is worth to you by multiplying lifetime value by conversion rate.
Zoomcar, the largest car rental company in India, has a methodology that assigns dollar values to KPIs, and it seems to work quite well for them. The company relies on social media campaigns to drive mobile app installs, and knows that 40 percent of its mobile app users make a purchase (Zoomcar’s key conversion metric). Zoomcar knows that its lifetime value of a customer is $70, so, since 40 percent of app users make a purchase, it knows that a mobile app download is worth $28. That helps a lot in planning future campaigns and budgets.
- Benchmark competitors. Compare your social media efforts to your competitors. See what platforms they use to post on. Track how many times they post per day. Look at their messaging, tone and link strategy. See if they’ve written about what they’ve found works. If they’re doing something well, that can inspire you and provide a helpful model. You’ll also be able to discover areas of opportunity for your own company by figuring out what market areas and social media metrics your competitors are neglecting.
Don’t worry if your measurement doesn’t provide you all the answers you’re hoping for immediately—as noted earlier, most companies out there have difficulty evaluating social media. Most companies find that they want to retune and tweak the specific metrics they track over time, and it’s not uncommon to rethink and redefine primary KPIs when a business decides it needs new focus. The important thing is that you put a strategy behind what you do on social media, document it, and begin monitoring it. If you’re not doing that now, taking those initial steps will offer you tremendous insight into social media ROI.