How to Determine the ROI of Your Social Media Marketing Strategy
With more than 50 million businesses owning a Facebook Business Page and 94 percent of B2B organizations relying on LinkedIn for content marketing and distribution, it is clear that social media is continuing to grow.
With so many new businesses breaking into Social Media, it is no wonder they can often times feel overwhelmed and find it hard to determine the impact it is having for their business.
Social media ROI comes down to having a strong understanding of what your goals are, what you plan to do, and what you’re looking to get out of it.
Let’s review some key steps to building a social media strategy that results in definite ROI.
Social Media ROI Definition
ROI is getting a return. Obvious, right?
But when it comes down to how to calculate social media ROI, it isn’t just the result of revenue minus expenses.
ROI is value received in return of an investment.
The value you receive as a return on your social media marketing investment might include increased:
- Customer lifetime value: Transactions — sales
- Customer referral value: Referrals — leads, traffic
- Customer influence value: Word of mouth — branding, reach
- Customer knowledge value: Information — market research
Recent research in the Journal of the Academy of Marketing Science connects customer engagement strategy to marketing goals, like customer acquisition, growth including cross-selling and upselling, and retention.
If the value you’re looking for isn’t something that social can provide, then what’s the point of investing in social?
If it is, then it’s time to set your Social Media goals.
How to Determine Social Media ROI
ROI is getting a return. ROI isn’t just a number.
You need to know where your audience is most active and the platform they are using. You need to evaluate your internal resources and Then understand the investment of time and energy for quality updates.
Once you have your setup, then you determine what is the ROI — understanding your goal and what you’re getting out of it. Then you can understand the return. Here are a few tips to help you figure it out:
1. Know your social media goal.
First determine what social media means to your company.
What’s your reason for jumping on social media. Is it realistic?
From driving leads, sales, and traffic to automating or scaling customer service to information gathering, a social media campaign may make a lot of sense.
There are many different goals that will influence how you utilize social media as a whole, such as:
Increased website traffic
Increased customer engagement
Reduced cost of customer service
Exposure to a new audience
By the way, obtaining information from your current or potential customers is a commonly overlooked goal. And I urge you not to forget the value of data.
2. Align your social media activity to your resources.
For this step, you should absolutely look inward.
If your whole company is on Facebook regularly, knows its features and community expectations and participates on Facebook naturally, well, you see where I’m going with this.
Better ROI might come from not having to hire a new person for Facebook.
Developing your social media strategy is more than throwing a body on an initiative and hoping it comes out well.
3. Reality check the social channel.
Before you jump on social, consider the longevity of the channel.
Snapchat’s growth has become stagnant, down to around 2 percent quarter to quarter, as of Q1 2018. With Instagram growing to become one of the most popular social networks worldwide, it seems only a matter of time before they replace Snapchat all together.
Facebook Pages are becoming less visible. A recent Facebook News Feed algorithm update reduces the chances for Facebook Page content to be seen as much in the organic News Feed. Depending on how things progress, traffic from Facebook could continue to dwindle.
Obviously, developing a strategy for a platform in its sunset days doesn’t make sense for ROI.
4. Analyze your data to determine ROI.
At the end of the day, you’ve started with a clear goal in sight and designed a campaign that matched your goal to your audience to a channel and your resources.
You put tracking in place and assigned a value to your metric. With the performance data rolling in and everything in front of you, you can ask the question: Did this campaign show ROI?
Say, for example, your goal was traffic and your campaign ran on Facebook. You posted content combining statistics and great images. As a result you got a 2-3 times increase in website page views over the lifetime of the campaign. That’s a campaign that demonstrated ROI.
What do you want social to give you to make you feel good at the end of a campaign?