Let’s be very honest about this. Social media marketing is one of the most prominent strategies to grow your business nowadays, and therefore companies spend and invest a lot of money on social media marketing.
According to comprehensive research done by the Content Factory, you spend almost $4000 to $7000 monthly on your social media marketing, and let’s be honest; it’s a lot sometimes some of the best social media marketing companies take $10,000 per month for the social media marketing. Moreover, if you are going to tell a social media marketing agency to do the work from scratch, to build your social media account from scratch, they will charge you $3000 to $15,000 per month.
And if you are spending this much amount of money on your social media marketing, it is necessary to see how much ROI (Return of Investment) you are getting from your social media. Yet 60% of the marketers don’t even bother to check the ROI, and only 37% of the marketers are very confident in their ROI metrics.
But there are still many companies that are not able to determine what the actual ROI of their social media is? And how much revenue you are generating out of all the social media activities you are doing? So, how can you demonstrate that your social media activities are benefiting the bottom line? This article will tell you how to analyze and evaluate your social media ROI in three simple stages.
But, first, let’s understand what social media marketing is? What is Social Media ROI? and how do we calculate it?
Table of contents
What is Social Media Marketing?
It doesn’t matter at all if your business is small or large, every business needs to understand the importance of social media marketing because it is the best way to connect to the audience you are looking for. So, if you are not taking advantage of that and speaking to your followers directly via your social media networks, then you are missing out on a lot of opportunities! Because most of the brands are humanizing themselves, and your customers are directly communicating with them via social media. If you have a great marketing strategy then that can help you to take your company to new heights.
What is ROI in Social Media Marketing?
“Return on Investment is the profit gain attributable to marketing divided by the total amount invested on a marketing campaign.” And, it is given as a percentage.
Let’s understand it by an example, if the objective of a sponsored social campaign is to improve brand visibility and impact, ROI could be assessed by a raise in following base or post engagements.
The criteria used to calculate social media ROI for your company should be entirely determined by your goals.
How to measure ROI?
ROI = (Revenue – costs) / Costs * 100%
ROI = ($50 – $40) / $20 * 100%
= $10 / $20 * 100%
= 50%
So hereby the example, we got to know that we’ve earned an ROI of 50%. That means what we understood here is that for every $1 we spend on our social media marketing, we earn a profit of $0.50.
Let’s compare that to the recent sale we did, where the revenue we generated was $100, and the cost was $90. Therefore our profit is $10, and our ROI is only 25%, which means we need to step up your social media marketing game.
Why is it important to measure ROI?
“The ROI of social media is that your business will still exist in 5 years.” – Eric Qualman
In basic terms, your Social Media ROI should be measured to see if the effort and money you spend on your company’s social media is worthwhile. It will assist you in keeping your efforts as efficient as possible. In a sense, with social media ROI, you can get feedback for improvement on your performance. In that manner, your social media ROI can influence your business social media marketing strategy.
You may delve deeper into your approach with social media ROI. Are you putting your energy into the proper social media network? Measuring your return on investment in social media gives you an answer. If you do not achieve the intended outcomes, you might wish to re-evaluate the platform you would like to join.
It also helps you in giving the answers you want to know, are you publishing the post at the proper time? Is the content that you post on your social media network giving you the desired result? Also, do you need to post very often, or once a day is more than enough? Still, there are so many social media networks that you won’t be able to give proper time to all of them, and if you are going to provide all of your time to social media marketing only, when are you going to do the other tasks for the business? Then you should install a plugin like Social Auto Poster so that you can schedule a bunch of posts and publish different types of posts on all of your social media accounts according to your need.
In a sense, when you do the ROI of your social media, it’s like an audit, so it is essential as well as necessary to make important decisions regarding the social efforts you are doing. And as I have explained in the earlier example, social media ROI is not always based on the money, but on what the brand wants to achieve from their social media.
Some brands want to increase their followers, some want to convert the leads, and others wish for good reach. It totally depends on what they want.
But the question remains, how do you measure the ROI?
Steps to measure ROI.
1) Determine your social media goal
Understandably, well-defined objectives are critical to ROI. Can you picture attempting to determine outcomes when you have no idea what you’re trying to achieve?
And for that, you have to set reasonable goals, and engage with people on social media, and determine what you want to achieve. Do you want to manage and create an outstanding customer experience? Or do you want to humanize your brand? Or build the authority of your brand? Or are you trying to spread brand awareness? Or do you want to increase the subscriber count?
Regardless of your goal, you just have to make sure that whatever you are doing for social media marketing is realistic and consistent with the business model. The goal you will set will help you determine how many resources you should use for social media marketing. And, they will help you guide the content and what will be the tone of your brand.
You have to be S.M.A.R.T. with your goal.
- Specific:- As previously stated, set forth business objectives, but always be clear about what you hope to achieve through your social media activities. Don’t act naively and set a foolish target like increasing followers daily, but set a specific goal that you will increase by 50% of followers by the end of July.
- Measurable:- You must ensure that you can measure any objective you establish. What tools are available to help you monitor and measure the key performance indicators (KPIs) of your goals?
- Attainable:- Nobody enjoys overpromising and underdelivering. Set attainable objectives. Do you truly believe that by July, you may increase your Social media followers by 50%? Look into your history and find your prior growth rate if you have recent analyses for your social networking sites. Do not make objectives, which are not achievable — this will put you in a position of failure and deceit.
- Relevant:- No matter your social media strategy, you need to make sure that it goes hand in hand with your overall marketing strategy.
- Timely:- Make a start as well as an endpoint for yourself. You will keep track of predefined dates and deadlines and focus on crucial methods to evaluate your social ROI.
2) Choose the Right Metric
Now with the SMART goal you have set, you have defined the goals that you want to achieve. Now, what will be your next task? It is to choose what metrics you will use. You have to make a proper choice, and also, you need to make sure that whatever metrics you are going to pick are relevant to your goals.
So before adopting a metric, you need to ask yourself these questions so that you want to be caged and be able to choose the perfect metric for your website.
- How choosing this metric will help in relating to the goal you set?
- Does this support social media marketing decision-making?
- And the metric you are choosing is achievable or not?
When you can find a good metric for your website, choose a complementary metric for your site too. Let’s understand this by an easy example, take that you want to increase the click on your website. Do you want to see how many people are clicking on your site? So with that, the complementary metric you should check is the Bounce rate. By adding this kind of complementary metric to your primary metric, you will get a better picture of the performance.
Bounce Rate
The web traffic bounce rate lets you know about people arriving on your website and leaving before starting any other actions or events, such as a second-page view. He arrived, he looked, and then he left. The visitor arrives at the website via the home page or landing page. These visitors merely look at that one page and then leave the website on the very same tab.
For example, about 200 people read a blog, 150 of them went on to other pages of your website, and 50 of them just left. As a result, the bounce rate was 25%. Bounce rates are frequently used to assess the effectiveness of e-mail campaigns, websites, advertising campaigns, and specific landing pages.
Mentions
Social media mentions are also one of the essential metrics that you should keep track of. Because of the mentions, you know how much your business is in talk among people and how many of them love your social media work, and by keeping track of your mentions, you can also compare it with your competitors.
Likes & Shares
You want to cultivate an engaged community, so check which posts are receiving thumbs up from your followers. Keeping an eye on this number allows you to see how these people are receiving your typical post.
Quality lead
High-quality leads are those that have a high likelihood of becoming paying clients. Your leads will be more inclined to buy your goods or services if they are of better quality.
3) Learn from your Competitors
“Once you stop learning, you start dying.” – Albert Einstein
Learning is a never-ending process, and it doesn’t matter who you are taking notes from, your family or your foe. You should never stop the process because half-knowledge is equal to death.
Start learning and comparing your ROI with your competitors, and start studying their campaigns and how they do their campaigns. For what purpose are they doing the campaign? They want to increase the quality of the lead, or they want to improve their reach; where are they investing? and why are they investing in that particular area?
You can also analyze their website. How many pages do they have on their website? Are they writing blogs? Do they have social share buttons on their site, as well as their blog? How many people are there who comment on their blogs?
If you are analyzing their social media presence, you should check the number of likes, reach, comments, retweets, reblogs, feedback, and all the other forms of engagement out there.
If you learn more and more about your competitors and make the necessary changes in your social media marketing, then you can rise above them in a short period of time.
4) Improved customer Experience
Improving customer experience is a must. You need to track how your campaign is doing overall and also take feedback. If the feedback is positive from most of the customers out there, you turn that customer into a loyal one, and here you get one more benefit out of the loyal customer, they will be your brand advocate. These loyal brand advocates will help you reduce the cost of customer acquisition because they will share all your products on their social media platforms, and they will even recommend you to their friends and family.
5) Quality over Quantity of the followers
Everybody who wants to be famous nowadays intends to show that they are big and therefore there is a vast market out there of getting fake followers so that they can show off and boast about their company. Accordingly, some of the biggest social media platforms have invested their time in deleting the fake followers’ accounts and suspending the accounts that bought these fake followers.
Another reason why quality matters over quantity are because organic reach is on the decline. So, what I am trying to say here is if you want to reach all your followers organically, that is not possible nowadays. If you have a low quality of followers who are not engaging much on your post, they are of no use because the lesser the engagement, the lesser reach you will get.
Alexis Ohanian, Co-Founder, Reddit says “Being effective at social media, whether for business or personal use, means capturing people who have short attention spans. They’re only a click away from a picture of a funny cat, so you have to make your thing more compelling than that cat. And that can be a high bar.”
So stop focusing on the quantity of followers, and start focusing on the quality.
How do you measure your Social Media ROI?
Companies must monitor and measure their social media ROI for transparency and effectiveness. This has a dual purpose: it ensures that your campaigns are goal-oriented and that your resources are allocated appropriately.
However, we would like to learn from you! How are you tracking your social return on investment? Any advice you’d suggest? Please let us know in the comments section below.
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