These days, everyone has heard of Facebook and Twitter. But start talking about social media ROI—that is, how to use social media to move the needle for your business—and you may as well be speaking Frisian: You almost get the meaning of some of the words, but not quite.
After you send an eblast with MailChimp or ConvertKit, you can easily track open, click-through, and contact form completion rates. You can look at what you spent, look at specific measurable outcomes, and use those numbers to determine the campaign’s return on investment.
But what about a tweet?
You publish a study, white paper, or blog post, which becomes a link, which becomes a tweet, which becomes a conversation, which becomes a lead, which eventually becomes a sale. How much did the tweet contribute to your bottom line?
Measuring ROI for content and social media marketing isn’t as clear cut as measuring ROI for an email promotion. In their ” 2016 Social Media Marketing Industry Report ,” the eighth of its kind, the Social Media Examiner found that only 41% of marketers were able to measure their social activities.
That means approximately 3,000 out of the 5,000 marketers surveyed, or 59%, have trouble measuring ROI for their social media efforts.
So what are the savvy 41% doing differently than their peers?
They define desired behaviors for specific campaigns, track those behaviors, and measure the results.
You can only measure what you track, and you can only track clearly defined actions—for example, contact form completions.
Thankfully, we have plenty of tracking and lead generation options at our disposal:
- Custom URLS
- Landing pages and Thank You pages
- Contact Forms
- Content Downloads
- Email Subscriptions
- Webinar Registrations
- Facebook Pixels
The key is to avoid “vanity metrics” like new Facebook fans or Twitter followers and instead measure actions that really matter—for example, promo code redemptions.
Take, for example, the fast casual chain, California Tortilla. In the past they have run exclusive promotions for people who like their Facebook fan page. The catch? At the register fans must use the secret password posted only on Facebook to request free chips and queso. California Tortilla’s point-of-sale system can then use the password/coupon code to close the loop, track the sale, and enable store owners to later compare average order values with those from non-promotion days.
Why Measuring Social Media ROI Is Important
Think about the deeper meaning of “social media.” We’re talking about social interactions, about relationships.
How do you quantify a relationship with your next door neighbor or the barista at your favorite coffeeshop? How do you put a price tag on someone who forms a positive opinion of your company? How much is a good reputation worth?
Many companies dip their toes in media marketing because a thought leader in the marketing space tells them that it is important. Or they hear a Cinderella story about how a brand is winning with Snapchat and decide to get in on the action without first defining desired actions for specific campaigns, tracking those actions, and measuring the results.
Consistent measurement delivers the right insights at the right time:
- What is working?
- What isn’t working?
- Which social media channels are most effective?
- Which results are inconclusive?
- How can the next round of experiments produce better insights?
- How do you need to your adjust goals?
- What are specific, measurable, actionable, relevant, and timely (SMART) goals?
You should set goals you can measure, ones to which you can assign a number: X number of email opt-ins, contact form completions, or downloads of the new report.
1) Set your goals based on actions that convert a digital passer-by into a bonafide lead: real people taking specific, measurable actions online that you can tie to your activities. Variety metrics, such as post shares, clicks, or new followers, bring a nice confidence boost, but don’t let them distract you.
2) Link your goals to specific campaigns.
Many marketers drop the ball on this. They can tell you what a marketing campaign is, and if you were to ask about Google AdWords, they would recommend that you monitor your click-through rates, opt-in rates, and conversion rates. They might even ask about the lifetime value of a new customer and how much can you can afford to spend to acquire a new customer.
What can you do about social media ROI moving forward?
Let’s say your goal is to use Twitter to generate contact form completions for an upcoming tradeshow. You can can set up a unique form and unique Thank You page.
By asking Google to not index these pages, you can ensure that they only way people find them is through the process that you designate and keep your data and metrics clean.
Log in to your Google Analytics dashboard, and go to Acquisition > Social > Conversions > Set Up Goals. Plug in your unique links to non-indexed pages, and you can later assign a value to each conversion.
Once you start running a campaign, numbers will trickle in. How many total visitors completed the form? How many people who completed the form become customers? What was the average sale amount? What is the average lifetime value of a customer?
Once you calculate the lifetime value of a customer, and multiply that number by your campaign’s conversion rate, you can determine the value of the campaign as a whole, as well as a single form completion.
Once you know the campaign’s value, you can factor in your costs, in terms of time, content production, tools, and paid ads, and zero in on definitive numbers: positive or negative return.
Once you know your expenses, you can use this formula to calculate ROI for each campaign
(Earnings – Costs) x 100 / Costs.
($12,000 – $9300) x 100 / $9300 = 29. That campaign generated a 29% ROI.
Use this same formula for each social channel to segment your earnings and costs, compare different ones, and identify the best campaigns and channels.
When campaigns have negative ROI, you can respond by spending less, rethinking strategy, or stopping altogether.
In order to effectively track your social media ROI, you must choose specific measurable actions that you want people to take. You must set up tracking to monitor people as they make their way through your funnel. And you must have analytics in place so that you can quickly and easily measure the results and tweak your strategy as needed.
The more organized you are, the more accurate your numbers will be.
As you and your team grow more accustomed to this cadence, you’ll be able to streamline your workflow and zero in on both reasonable budgets and realistic expectations for ROI and lifetime customer value.
A strong social media presence is like a spare tire: You may not think about it that often, and thus, it may not seem that important—that is, until it is really, really important.
At the very least, you will see secondary benefits:
- Brand awareness
- Perception of relevance and vitality
- Better customer care (a la Facebook and Twitter conversations)
- Brand equity in the form of online following(s)
- Viral potential for marketing campaigns and promotions
Sometimes the simplest perspective on social media ROI is the best: It is better to have up-to-date accounts than to not. You miss 100% of the shots you don’t take, so it is better to the minimum than to do nothing.
Haven’t had your fill of punishment?
Here are some other resources from big names in the biz like Convince & Convert and Sprout Social:
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No-nonsense business advice for content writers and freelancers. Served warm with a side of dad jokes.
Also published on Medium.