Social media marketing strategies need a significant investment of time and money. Unless you’re able to quantifiably demonstrate the return on investment (ROI) of these social strategies, it can be hard to show their value to key decision makers—which is essential to ensuring you have the resources you need to do your job effectively.
Social media efforts are also more valuable when they are measureable. When you’re able to differentiate between tactics that are working and those that aren’t, you can take action accordingly to constantly hone and improve the strategy as a whole.
In this blog post, we’ll show you how best to approach social media ROI, how to calculate it, as well as how to communicate its importance to the C-suite.
First of all, let’s go back to basics and see how ROI can be applied to social media. As you likely know, the basic formula to calculate ROI is Net Profit / Total Investment * 100. So to calculate the ROI of your social media investment, all you need are the amount of return attributed to social media, and the investment itself.
The problem that many marketers face is that it can be hard to pinpoint exactly what social media return is, let alone assign a dollar value to it. That’s why it’s so important to define your goals beforehand. If your campaign is meant to increase sales, then measure its return in terms of new sales. This will additionally give you a solid reference point to better understand and optimize your social media usage.
Now that we have a working understanding of what social media ROI is, here are some tips to ensure it stays in the black.
We kind of mentioned this earlier, but it’s worth reiterating: always set clearly defined goals before starting any social media campaign. These goals should be SMART Specific, Measurable, Attainable, Relevant, and Time-bound. For example, increase traffic to your site from social platforms by 20%, through increased blogging and social sharing, by the end of next quarter.
Being able to identify which customers found you as a result of a certain social media campaign will make it considerably easier to determine its ROI. Consider surveying existing customers to narrow it down to a particular platform. It can also be valuable to include the survey as an optional part of the purchasing process so that you can constantly tweak your strategy according to what’s working best.
It’s absolutely vital that any marketer looking for social media marketing results constantly track, measure, and optimize their strategy. Is a certain post not performing as well as expected? Maybe it needs to be shared at a different time of day or the messaging needs tweaking. The beauty of digital marketing is that you have a deluge of data at your fingertips, and can use this to improve your execution in real time.
It can also be valuable to divide all metrics into “hard” and “soft” numbers. While hard numbers are those that closely relate to your company’s bottom line, like conversions, leads generated, and sales made, soft numbers have more to do with social engagement, such as likes and shares. Just make sure you use the right tools to measure all relevant analytics and that you have the knowledge and skill set needed to interpret them accurately. For many companies, it’s a good idea to employ the help of a skilled marketing consultant who can provide the guidance and expertise needed to maximize the return on any social media investment.
Are you interested in seeing what happens when the marketing campaigns of big brands go awry? If so, check out our infographic on Marketing Horror Stories that you wouldn’t wish on your toughest competitor.