Unless you have been living in a very deep cave for the last five years, you will be familiar with the term Social Media. It’s also likely that you will be very familiar with the concept of ROI (return on investment), as well as have a pretty good handle on how to measure it within your business on the more traditional types of investment you make. However, do you know how to measure your Social Media ROI?
In many instances Social Media and marketing strategists constantly struggle to deliver what the ROI is of a particular Social Media campaign or worse, their Social Media efforts as a whole. The problem with this is that it’s an impossible question to answer if you don’t first set measurable and timed goals upfront. That’s right, before you even decide to dabble in Social Media, you should be asking your boss or client what s/he is expecting out of your Social Media efforts. Is it more customers? More web hits? More video views? An increase in customer satisfaction? When you know what the goals are, you can easily the success of each campaign you run.
For example, if your goal is to use campaign budget X to get Y more sales via Facebook, then your Social Media objectives are likely to be two-fold. The first – increasing the number of Facebook fans you have by X% within X time period. The second – convert new and existing customers in to new sales by X%, during the same time period.
- First take the # of Facebook fans you currently have (let’s say 1,000) and let’s say you’ve worked out that to meet your objectives you need to increase this number by 10%. That means you need to increase fans to 1,100. And let’s assume you want to do all of this within 2 weeks.
- You create a promotion and/or some other strategy to increase fans that costs you X from your budget of Y. You get 80 more fans and your total fans now stand at 1,080. You’ve increased your fans by 8%.
- Now let’s say the rest of budget Y you decide to use to drive sales by offsetting the cost of using a general 20% online promotion your company is running when customers spend $200 or more. You decide you are going to track this promotion with two separate bit.ly URLs for Facebook (one link for new and one for existing fans) so that you can tell which sales specifically came through promoting it via you Facebook fan page.
- Let’s say 80 sales in total are generated via your website and through Google Analytics you see that 16 people came from your bit.ly Facebook URLs (12 new Facebook fans and 4 existing), increasing overall sales by 20%. Now armed with the results of your campaign you can review its success and ROI against the goals you initially set. In addition to this you can compare your Social Media ROI against more traditional marketing methods that you client / company use to establish which channels may be more effective and warrant more investment in the future, to give better returns.
This is how you can simply calculate Social Media ROI for every campaign you run. The key is to set measurable goals from the outset.
In addition to the tangible ROI you can get from your Social Media campaigns, its important to realise that there is longer-term, less tangible benefits that your brand can benefit from, such as more people spreading positive messages about a brand online within both personal and professional networks.
Remember – once you set the measurable and timed goals for each of your Social Media campaigns you will be able to effectively develop simple strategies to measure success and develop clear ROI.
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