Social media ROI has been an elusive metric to track throughout the history of inbound marketing. Unfortunately, the tangible return on a tweet or Facebook post is not as easily measured as say, a bottom of the funnel (BOFU) offer.
The conversion opportunities that lead a prospective buyer through the funnel and - hopefully - into the hands of sales to close the deal can be measured in terms of the sale that results. But tracing a deal back to social media can be more difficult, and your goal with social media may not align with that result.
So, what is the best way to calculate a true return on investment on your social media strategy?
What are your goals?
Before you do anything, stop and think. What are you really trying to achieve with your social media efforts?
To put it in terms of New Year's resolutions (for those of you who used January as a practice month, like me) you can't measure the ROI of your gym membership if you don't assign a value to the results you hope to achieve and measure against those results.
If you find that you can't define a goal, you need to go back to the drawing board and re-evaluate your social media strategy. Put a plan in place that has clear objectives outline and then define the metrics you want to use to determine success in your efforts with social media, first.
This step must be completed before you attempt to calculate ROI.
What do you Measure?
Typically when measuring ROI, there is a simple formula to follow.
ROI = (Return - Investment) / Investment
Seems simple, right? However, for social media there is not as definitive of a link between dollars and Tweets or LinkedIn articles. So, how do you tie back return and investment to a monetary figure?
You will need to define two things:
- What exactly are you spending (investment) on social media?
- What are the monetary implications (anticipated return) of your goals?
When measuring your investment, don't limit your scope to obvious expenditures. Also, take into account things such as hours spent. In most cases, you can attach a monetary rate to hours spent by using hourly wages of the person responsible.
Another way to measure the input is any third party fees or subscriptions that allow you to utilize social media. For more abstract ideas that cannot be linked to money you will want to determine what the steps you need to take mean to you; what is their value?
You can also lump in paid social media advertisement spend, but we recommend you measure that separate to really valuate the true cost of your free social media efforts.
In terms of linking your return to monetary values, you will need to determine what your goals are and how much meeting your goal actually means to you. If you're stumped on the goals you should be shooting for, think about your overarching hopes when posting to social media.
Are you hoping to achieve brand awareness, increase sales or get your content in front of more people? Once you know that, you can align it with a more measurable and tactical goal.
Here is a quick list to get you started:
- Visits to website from social media
- Net new followers
- Form completions/conversions
- Link clicks
- Online sales
Measure and Monitor
Don't forget, once you assign your goal, you will need to closely track the results/outcome of your efforts to truly realize social media ROI.
As we always say, what gets measured gets managed!
How do you calculate?
In order to calculate using the formula above, you need to define the dollar amount associated with your return.
You could calculate the cost of clicks/social media reach by assigning that metric the same cost it would be to do the same through paid social advertising. If you have no data on this currently, you can run a five-day experimental campaign through the Buffer App to get benchmark data specific to your business.
(If you don't have time, or would prefer to use existing data, they have done it for you!)
- Facebook like average – $0.50 per page like
- Facebook reach average – $0.59 per thousand impressions
- Facebook click average – $0.50 per click
- Promoted tweet – $3.50 per thousand impressions
- LinkedIn – $2.00 per click
You also have the opportunity to calculate the customer lifetime value (CLV) with this handy tool.
Whatever you measure, you will want to define your goals, what they mean for your business in terms of monetary value and the value of the return you expect to get.
How do you get ROI from your social campaigns?
This is a loaded question. Your ROI will depend on your strategy performance. If you aren't seeing ROI, completely ditching social media is most likely not the answer. The lack of performance could be a symptom of a larger strategic issue you are having.
- Are you targeting the right platforms?
- Are you speaking to your audience in a way that will engage them?
- Are you posting a healthy mixture of self-promotional and educational content?
If you aren't sure, or if you answer no to any of these questions you should take it back to square one and re-evaluate your social media strategy.
What's your social media ROI?
Now that you have the tools and formulas, what did you come up with? I'd love to hear what results you are getting or hope to get moving forward. Tweet me, or leave a comment below!