How To Measure ROI of Social Media
FREE DOWNLOAD: Social Media ROI Calculator Spreadsheet
FREE DOWNLOAD: Social Media Metrics Made Easy
Social Media ROI is arguably one of the hardest to measure in digital marketing. It’s hard to tell how much you can earn from a single Instagram post, or if a Snapchat can boost your sales numbers. According to Convince and Convert more than 41% of businesses don’t even know if their Social Media efforts are actually paying for themselves. Social Media ROI isn’t always easy to identify, but it’s not impossible either.
You can download my free Social Media ROI Calculator Spreadsheet. This is seriously the coolest thing I’ve ever given away for free. There are three tabs on the spreadsheet to track your costs, your earnings and the third tab that just calculates it all for you. I don’t know about you but I don’t like math, this thing is amazing.
To track your returns you need to understand what Social Media ROI is, it’s relevance to your business and how to effectively measure it.
So what is Social media ROI? ROI, or Return On Investment has it’s roots in business and finance. It’s used to identify dollar returns on dollars invested. It’s to identify what you’ll get back from the time, efforts and resources you commit to Social. For Social Media you want to understand the amount of return you get from all your Social Media marketing initiatives. This means you have to understand how much you invest in your Social Media efforts and how much money your Social Media achievements are worth. By understanding your Social Media ROI, you’ll be able to avoid wasting time on social efforts that just aren’t working, you’ll be able to channel where your energy is most needed and you can check which Social Media platforms work best to give you the bast bang for your buck.
A clothing brand for example, may get better results just by simply focusing their entire Social Media marketing efforts on Instagram, or Pinterest. While the restaurant may work best with an active Facebook presence. Simply put, your Social Media ROI as your best advisor on what works and what doesn’t.
How to measure your Social Media ROI.
Step one, earnings, define, measure and track your goals. Before you measure your return, you need to understand your objectives, these should be quantifiable and linked to your campaigns. In simpler terms, make sure you can assign a number to it. These could be either purchases, downloads, email list, registrations, etc. For your goals, make sure they’re called to actions that your customers would do, don’t prevent any metrics, shares and likes are great, but they shouldn’t be your main goal. Once you’ve defined your goal, the next step is to track them. The tracking part is really important so you can understand how your followers are responding to your Social Media efforts. The easiest way to track is through Google Analytics. You can use this to set up goals and understand how each goal can contribute to each performance. You can put dollar amounts on each successful goal that wasn’t reached, enabling you to determine how much you earned for each Social Media marketing effort.
Step two, cost. Track how much you’ve spent. In order to figure out whether you’re generating positive or negative ROI through your Social Media campaign, you’ll have to measure how much you are spending. Here are the key figures that should be part of your calculations. Man hours, place a dollar value on every hour of work done for your Social Media efforts. Content development cost, how much did you spend on developing your content, did you hire a graphic designer, or a writer to help, keep that in mind. Social Media tools, factor in additional tools you used for tracking your Social Media performance. Advertising cost, how much did that sponsored post cost you?
Step three, calculate your return. Once you have your returns and costs figured out, it’s time to calculate your return. Calculate your net profit minus your total investment. You can calculate your Social Media ROI for each platform you want. After looking at the results, you will be able to decide which social platforms and efforts you should focus on, and which you may want to abandon. But beyond these numbers you also need to understand the secondary results of your efforts. For example, your users may be creating awareness and users generate content that others are seeing. While it’s to difficult to measure these results, they can also positively impact your ROI. Measuring your Social Media ROI is not impossible, you just need to understand the numbers and their impact to your performance. Don’t forget to also measure the intangible benefits of your initiatives, though they may not directly contribute monetary value, they can also indirectly effect your ROI.
If you want to learn more about the other Social Media metrics to help you succeed in Social Media marketing, you can download my free and insightful guide, Numbers Tell a Story: Social Media Metrics Made Easy.