15. Social Media ROI
In order to fully grasp the potential of social networks and the effect they can have on business, you have to understand what social media ROI is. ROI stands for return on investment, and it is a term often applied in marketing. With the development of social media marketing, this term has found its way into this discipline as well. The reason why you need to measure ROI is because this way you will be able to measure the success of your social media marketing. You will also be able to evaluate the effort you invest in social media activity, so that you can compare the benefits you get in terms of revenue and growth of your brand and business.
Even though it seems a bit difficult to measure the ROI of social media, this can be done if your social media marketing is well organized and you have managed to implement measureable metrics.
You should start by defining the metrics you want to track and follow. Having determined the social networks you are going to use, you can now define the metrics you want to improve. This improvement can be tracked and monitored only if you have already decided what you want to accomplish. For example, maybe you want to increase the number of followers, or you want to improve click-through rate, in order to drive more traffic to your website or blog. You could also track reach, leads, conversion rate, etc. Determine the metrics and insert them into the table of things to be monitored during your social media marketing strategy.
Set up goals
Goals are the inseparable parts of social media marketing. They also help with social media ROI, as you will have an exact estimate on what you want to achieve with social media activity. This way, you will be able to compare the results and analyze the performance, whether you were not able to achieve goals or you have achieved more than you expected. When it comes to setting up your goals, you should try to quantify the expectations, instead of using general tendencies. For example, setting up a goal to increase the number of followers on Facebook, has no real value when it comes to measuring the performance. This kind of goal is vague, as increasing the number of followers is not an exact goal that you can measure and determine whether it was achieved or not. That is why you need to quantify the objectives. Instead of increasing the numbers, you could set up a goal such as increasing the number of followers on Facebook and you want to get 1000 new followers during your social media marketing activity. Once your activity is over, you can really tell if you have managed to achieve this goal or not.
Quantifying goals can sometimes be difficult, as occasionally you will encounter metrics that cannot easily be measured. While you can quantify the number of social followers in terms of actual number, it will be more difficult for you to measure the actual amount of assets those followers are worth. Since social media activity requires an investment, which includes paying for the person managing the accounts, paying for the graphics or any type of content that will be used in the social media marketing, etc. You will plan these assets in the initial planning phase of the social media strategy. However, you need to compare these assets to the outcome of your social media activity, which has to be evaluated in order to be compared. This means that you should analyze your social media performance, as well as the results you have achieved in terms of sales and profit, in order to set a value for the specific metrics, such as followers, leads, etc. This can be done by an in-depth analysis of your social media activity and the operation of your business, using advanced statistics options. For example, determine the exact number of followers you attracted during the specific social media strategy. Compare this to the sales, and you will see how it affected sales. Let us say that we got 1000 new followers, and this resulted in the increase of sales up to 200 sales per month. This means that those followers are worth the value of 200 sales, which allows you to compare the costs of acquiring those followers to the revenue you have earned later on. In addition, you have to have in mind the recurring sales which results in good quality and trust in the certain brands. So maybe this number of followers resulted in 200 sales this month, but perhaps you will keep those customers and acquire the same number of sales the next month. You have to evaluate the benefits as realistically as possible, in order to get the exact figures and be confident in your evaluation of ROI of social media.
While you can try to quantify some goals in order to measure ROI of social media, some goals are indeed hard to quantify, in which case you will have to establish some qualitative goals. Instead of providing the exact value and calculation, the evaluation of qualitative goals will rely on descriptive assessment of goals. One of the most difficult metrics to quantify is the influence on a particular social network. The influence of your accounts is the result of popularity, the engagement you can create, as well as trust and loyalty you gain from your social followers. Branding is also something that is difficult to measure, but it certainly affects your business, as it is the association people have related to your business or products.
Instead of trying to measure these goals, you will have to provide descriptive analysis of the initial situation and the results after social media marketing strategy has been conducted. You will use feedback and statistics to assess which way social media has affected your business, in order to provide a descriptive evaluation.