As with anything a business invests in, returns are expected. Social media is one of the best and most widely used forms of digital marketing available to businesses. However, trying to determine a clear return can be tricky. Nevertheless, these activities must be measured to ensure that goals are met. Here are ways to determine the ROI on social media.
Social media goal setting
There are various goals that your social media campaigns and activities can have. Without goals, the data you collect means very little. Here are some of the most common goals set for social media marketing:
- Increase brand awareness
- Increase engagement
- Improve customer service
- Build a loyal community through customer relationships
- Generate leads
- Establish authority
- The lifetime value of your customers, which can tell you how much each potential visit is worth when multiplied by the conversion rate
How to measure social media performance
There is ample data available to marketers as a result of their social media campaigns and activities. Some of these are sales-based, where you can derive monetary insights into ROI, while others are intangible and pertain to brand perceptions. These are the KPIs you’ll need to track to see if your goals are being reached:
- Number of leads generated
- Value of sales pipeline
- Brand perceptions
- Number of views and traffic to the website
- Direct sales revenue
- Customer satisfaction
- Customer advocacy including user-generated content, reviews and referrals
- Engagement with content in terms of likes, shares and followers
Social media platforms have become more business-friendly, with various tools available to them to track this kind of data. However, this often provides surface-level metrics. Those who use programs that schedule and post content for you, such as Hootsuite and Buffer, can provide you with detailed analysis reports. These not only make sense of the numbers for you but can automate your activity and act as a hub for all of your social media platforms, making the management of social media more accessible.
If you use HubSpot for your CRM, you can access reports that help you to determine the exact value of your social media marketing. With this, you can track the revenue from customers transactions that began with social media as the source. If you trade online, you can also look at similar figures, including the use of discount codes shared from social media.
What's next for social media measurement?
Turning data into insights and analysis requires you to take a step further. To be effective, the data needs to be applied to your plans and strategy as we advance. This is how you can effectively act on opportunities, avoid threats, build on your strengths and improve your weaknesses. It is an endless cycle for marketers of plans, actions and evaluations.
What we’ve established is that it can be tricky to determine the ROI of social media due to its ability to provide a business with various tangible and intangible benefits, as well as its ability to spew out many figures that could mean everything in some cases and nothing in others. For instance, the number of likes was once the critical metric for marketers, though it is now considered a vanity metric that don’t translate to much.
Other aspects that make it tricky to measure are the fact that there is a lot that goes into social media marketing. How and what you do can have a tremendous impact on your success online. It can be intensive yet highly rewarding, with many aspects to take into account when it comes to investment - for instance, the time required for these activities and the costs of the tools or personnel necessary to make it all happen. These are essential resources that are necessary for social media marketing.
While marketers can find success with low budgets and accurate targeting, it also generally requires time and consistent, concerted efforts to create content that makes a real impression within your community. Therefore it is essential to consider the many returns that social media can bring, including that which goes beyond monetary values and is, quite literally, priceless.
Social media is complex, requiring the planning, creating and sharing of content. Then, community management is needed to manage engagement. With these considerations and resource requirements, social media is measured to determine what is most effective and therefore, what makes the most business sense. This extends to channel selections, and campaign launches - this will ensure your scope is broad enough.
Since there are various metrics available to marketers, they will need to utilise the correct insights for specific stakeholders. Marketers, sales and the boards of directors require different details when it comes to drawing exact investment figures and returns.
From the goals you need to set, to the aspects you need to measure, and how to make sense of it all using attribution modeling, determine the ROI of social media marketing is vast and complex. By having the appropriate KPIs, tools and analysis in place, you can improve and excel in this fruitful part of digital marketing. Experienced agencies have both the tools (and software) as well as the experience to set up measurement metrics for your business to allow you to understand the ROI of social media like the example below taken from HubSpot.
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