5 Steps for Measuring ROI in Social Media
Relatively speaking, social media as a marketing platform is still in its early days. While marketers almost unanimously feel that social media is the single most important marketing initiative to invest in, there are still a lot of questions about the tangible value that social media delivers. How is return measured in social media when it is difficult to definitively link a “like” to a sale? This is one of the most common questions we get asked when we are working with our clients.
Determining whether or not your Facebook program was “worth it” is not unlike the challenges marketers face when evaluating impression-based media such as billboards, or even TV ads. Over the past few years as social media has grown, there are many measurement tools and platforms designed to help you figure this out. The reality is that it remains difficult to determine ROI with 100 per cent accuracy.
Here are a few tips to keep in mind that can help you track social media effectiveness and increase its benefits:
1. Outline your overall goals.
Different brands will approach social media with different outcomes in mind. Just as you would determine a goal for any other marketing initiative, social media also requires strategic planning. For example, it may not be a dollar value that you are initially searching for. Many small- and medium-size businesses approach social media to develop brand awareness, or to boost their Google search ranking. The key is to understand why you are on social media before you determine how much you’re going to invest in being there.
2. Define Key Performance Indicators (KPIs).
After setting your end goals, it’s important to determine benchmarks that will help you assess your progress along the way. How are you measuring your performance? In social media, two key sets of KPI’s are important to track: community size (likes, followers, fans, etc.) and engagement (shares, re-tweets, pins, re-pins, etc.). These can be directly correlated to more traditional digital metrics such as web traffic, click throughs, email subscribers, and so on. Finally, these can be tied back to higher value activities such as coupon downloads, and direct online purchases (for ecommerce driven businesses).
We have found that Google Analytics can be useful in tracking KPIs for digital channels in the form of an easy-to-read report. You can assign a value to each goal and Google Analytics will measure the performance of your social initiatives as they relate to your given business model.
3. Don’t lose sight of the “bigger picture.”
Although there are a number of social media metrics you can track, they’re not necessarily going to give you what you’re looking for. You need to take a step back from obsessing over fans, followers, likes and retweets and focus instead on things like reach and engagement. These are the metrics that can help you most closely correlate social media activity to sales volume and revenue.
4. Think holistically.
Social media is only one part of the marketing story. Oftentimes, the best performance is delivered when you have a robust marketing program incorporating and integrating multiple marketing channels and initiatives. Not only does social media deliver a way to engage your customers directly, it also helps tie other marketing initiatives together.
Tradeshows, mass media, retailer programs, events, etc., can all become amplified and linked when using social media to connect the dots. In addition, social media can be used to turn passive dialogue and “tire-kicking” into bonafide leads by creating calls to action to sign up for email newsletters, register for events, or even buy online.
5. Build relationships first, and the sales will follow.
Many business owners make the mistake of giving up on social media too quickly because they don’t see measurable activity. But social is not necessarily where customers click and transact – it’s where relationships and brand value are developed.
In social media, like many other marketing channels, there are always uncontrollable variables that can affect the success of your programs – challenging economy, the weather, the day of the week, etc. It is and will remain difficult to create a direct attribution of social media engagement to revenue growth.
But this doesn’t mean that social media doesn’t deliver real business benefit. Take the time to build the relationships and engender trust, create content to engage and dialogue, and provide the opportunity for customer and prospects to learn more about your brand, products and services. The result will be a set of engaged potential customers that will be ready to transact when the timing is right for them.
Patience is and always will be a virtue when it comes to your social media marketing.