With 50% of the population worldwide using Facebook, Twitter, and other social media channels, there is a rise in pragmatic advertising like social media marketing. Many believed that the issue of wastage is resolved with social media ROI. Unfortunately, for marketers, social media marketing is driven more by faith rather than evidence. In fact, nearly 73% of new-age marketers believe that using social media has given them a competitive edge.
However, the claims they make are in stark contrast with reality.
Around 80% of businesses online feel that they deliver great assistance via social media, but only 8% of their customers agreed. Despite putting in a lot of effort, many marketers hardly reach their targeted sales. It is because they struggle to measure the impact of their social media efforts on their sales.
So, the question is, amidst massive data that often changes with greater momentum, how do we measure the impact of our social media bent?
You wonder how to assess the cost of social media efforts and articulate the benefits we reap and the sales these translate into. Your social media efforts impact your product perception and add to brand equity. But, is there any way to help you with measuring your efforts?
If such thoughts keep your mind busy, you are in the right place. Today, we are going to learn about measuring social media ROI and understand how it contributes to the success of your social media campaigns. So, let’s quickly start with it:
What is Social Media ROI?
If you are a business owner and want to know what you are getting out of your social media campaigns, social media ROI will help you track your efforts.
ROI stands for “Return on Investment”. It entirely depends on the objective of your social media campaign which could be increasing online visibility, generating profit, delivering better user experience, and many more. To put it simply, it is the comprehensive set of social media activities in terms of money, awareness, reach, engagement, and so on that reveal your social media dominance.
Social Media ROI% Calculation
Revenue/investment (resources, time, your budget, and so on) X 100 = social media ROI%
For example, if you invested $1,000 and made a sale of $2,000 out of it through social media, you gain $1,000
Based on the above formula, you will calculate the percentage as:
$1000 gain / $1,000 investment X 100 = 100% ROI.
However, it is not necessary that your ROI will always be calculated in the form of profit, but it can be in terms of engagement, reach, customer loyalty, reach, and leads.
Why Measure Social Media ROI?
Today’s environment has become extremely competitive as businesses have started vying for audiences’ attention. The reason behind this is social channels are becoming the go-to source for consumer purchase inspiration. Truth be told, social media channels inspire around 37% of buyers to make a purchase.
As a result, businesses have started to put in more and more budget into social media campaigns to make it stand apart. But, what kind of results are they getting in turn? To prove this, you should calculate your social media ROI which many organizations cannot quantify.
Further, a report from MDG Advertising says, around 28% of marketing firms battle to quantify the impact of social media campaigns. Also, 55% claim they can measure it roughly but, 17% only can prove their social media ROI and provide accurate data.
To calculate your social media approach results, you need a better understanding of your social media ROI. When you analyze your social media ROI, it points out efficiencies in your marketing campaign. You can think of increasing your marketing budget based on the benefits received on investments. If your ROI is low, it will point out the inefficiencies in your social media strategy. So, you can identify the loopholes and start making improvements.
In addition to this, measuring social media ROI will help you determine the value you are delivering to your audience. If you get a high number of conversions, it indicates that your messaging is relevant and well-received.
Tracking Social Media ROI is the Key to Success
You can track which social media marketing campaigns are working best. You get to know the social media channels that are most beneficial to you. This gives you the idea of where you need to boost investment and what you need to abandon.
Well, you might have realized the importance of calculating your social media ROI, the question arises, how will you measure it? Let’s move ahead to calculating it as a whole.
How to Calculate Your Social Media ROI?
If you are keen to measure your social media ROI, take a look at our four-step formula.
#1 Set Your Goals
Goal setting is essential, and the first step towards calculating the marketing ROI. First, you should concentrate on the KPIs that define your key areas where you need to improve. Here are the areas that you should be focused on to calculate your social media ROI:
Getting good impressions is important because if social media doesn’t show your content, how will you improve your online visibility? So, it should be your first social media goal. It relates to the complete set of goals followed by reach, engagement, leads, etc. Increased impressions will lead to:
- Improved brand awareness
- Increased number of sales
- Improved brand sentiments
- Improved connectivity with the audience and public relation
Most importantly, impressions can be compared to views in paid campaigns. These impressions increase your community size and improve engagement.
After impressions, the second most important goal you should be focusing on is reach. It is the volume of people who are actually getting your message. It relates to the spread of social media messages. You need to ascertain the potential audience who saw your message to understand the intensity of your message.
Engagement measures the number of likes, shares, and comments that you receive on the content you post on social media. It is far beyond the accumulation of followers.
If your followers are seeing your posts, but not reacting to it, what’s the use of posting your content? It will not reap any benefits of your organization.
After the engagement, the next important thing is getting leads out of your campaigns on social media.
It directly impacts your revenue that depicts whether it is actually producing value or sales for your business or not. It tracks whether people are interested in purchasing from your business or not. The message you amplify in the public gives triggers to your audience or not.
Conversion is the number of acquired customers who make a final purchase. You need to understand how much value in terms of money your social media campaign has generated.
Another important goal is increasing customer loyalty. Your accumulated followers depict your customer loyalty, who continues making a purchase from your business. They stick to your brand on social media.
To gain customer loyalty you have to work on delivering the best as your first user experience would determine whether your customers would come back or not.
#2 Identify Social Media KPIs that Align with Your Goals
Another important step after goal setting is to identify social media KPIs that align with your goals. To simplify things, we have segregated different social media KPIs for different goals. So, let’s start:
Social Media KPIs for Reach
Followers are essential while calculating your reach. A customer that is logged in and follows your content within a period of 30 days is your active follower. Also, check your fake followers who are inactive most of the time. It will help you understand who all are genuinely interested in your content.
Impressions are a useful social media metric – it signifies the number of times your post content was displayed, no matter a user has interacted with it or not.
These impressions may increase or decrease depending on customer behavior. It is either because your customers are following or can increase when someone else from their network has shared or liked it. If you have a higher number of impressions, it provides you with an excellent opportunity to connect a large number of people with your post.
- Share of Voice
Share of Voice is an important metric that lets you compare your social mentions with that of your competitors. It depicts the buzz that surrounds your brand and evokes conversations. If your brand is excellent at driving conversations, it indicates that your marketing strategy is working.
In case you are lacking in evoking conversations, you can look up to your competitors to explore more on different social media campaigns.
- Traffic Data
The traffic you generate through your social media posts depicts your efforts. In case you have significant traffic, you don’t need to stress on it. You can change the call to action and work on improving the customer experience. But, when you lack good traffic, you need to expand your reach. So, people can see your posts.
Social Media KPIs for Engagement
Clicks depict the quality and ways you pitch your content. Low clicks indicate low engagement where you have the margin to improve. You can change titles and visuals in different ways that attract the audience that they feel triggered to click on it.
Likes also depict engagement that indicates people want to see your content. If you have low likes on your posts, you need to work on your content and building authority, which will get you the desired higher spot in search results.
After likes, shares are important to assess the intensity of engagement on your social media posts. Shares act like recommendations for your brand. Large shares depict your quality content. Shares and retweets are the best way to track real engagement on your posts.
Comments also play an important role in the success of your campaign. Some campaigns are focused on getting maximum reactions and establishing communication by way of comments. Comments spark a conversation, which makes it a great KPI for engagement. Positive or negative comments help you assess the intensity of impact that your campaign has left on your followers.
- Brand Mentions
Brand mentions depict that people are aware of your brand, and it has sparked a conversation on social media. This KPI emphasizes more on brand awareness and engagement that it has sparked.
- Profile Visits
Profile visits may not be as important as other factors while judging your engagement, but it surely indicates people’s interest if they visit your profile regularly.
Social Media KPIs for Leads
When it comes to measuring leads, there isn’t any definite KPI. Shares and likes in masses can help you analyze the quality of content. However, the focus should be defining the bottom line that will help you track the genuinely interested people in your content.
You will find endless possibilities when defining leads for your business. Supposedly, you have a few followers, but your channel is generating an enormous amount of new leads then, do you need to stress on it? On the other side, if you have a large community of followers, but the leads are very little that depicts that you are working on the wrong platform. So, you have to change your strategy.
Consider the following KPIs while running social media ads for new business leads:
- Potential Reach
- Number of Leads
- CPL – Cost Per Lead
- CTR – Click-Through Rate
Social Media KPIs for Conversions
- Number of Clicks
An increase or decrease in your number of clicks relates to the latest adjustments you made in your social media schedule. It lets you analyze what led to such increases or decreases in the clicks.
What can you do to increase conversions?
Always use high conversion keywords such as check out, discount, deals, increased, reduced, share, promote, discover, etc. Don’t forget to retweet and share your content across different social media platforms to get better clicks.
If you use paid social media campaigns, you can resort to CPA to ascertain the cost incurred to acquire a customer. It helps you identify those social media channels that aren’t performing well, and you will probably have to abandon them.
Consider the following while calculating CPA –
- Take a look at direct sales conversions from a channel while keeping in mind the last click.
- Next, consider multiple visits on your social media handles that have led to the sale. It will help you know assisted conversions.
- Sales Revenue
Sales revenue is crucial in calculating social media ROI. It depicts actual sales from social media handles. It will help you calculate the value of each customer in the complete sales process.
- Non-Revenue Conversions
Everything cannot be calculated in terms of revenue – other factors also play an essential role in determining the success of your social media campaign. This could be a simple action on your customer’s part, like signing up for your newsletter. It will help you understand what instigates your customer to act.
Social Media KPIs for Customer Loyalty
- Customer Acquisition Rate
It calculates the number of new customers you have acquired in a specific timeframe. Here’s how you calculate it –
Total no. of customers acquired/Total customer base x 100
- Customer Attrition Rate
This KPI indicates the loss of customers in a given timeframe. Here’s how you calculate it –
Total no. of customers attracted / Total no. of customers x 100
- Customer Retention Rate
This KPI depicts how long you can retain customers. Here’s how you calculate it-
Total no. of customers retained / Total no. of customers x 100
- Customer Wallet Share
The customer wallet share depicts the consumers’ buying ability as to how much he can spend in buying a product.
Budget spent on the company product/ Total budget for the product x 100
- Prompt Action
How prompt are you in responding to customers’ queries? If you are active, it will help establish a great relationship between your brand and your customers.
This makes your customers realize your brand worth. It keeps them under the impression that you are always keen to provide a solution.
- Customer Lifetime Value
The lifetime value of your customer reflects how long you can hold on to your audience. It is crucial to establish connectivity with your customers and maintain it for a longer time. Your association with the right people ensures improvement.
#3 Measure Your Social Media Expenditure to Know the Investments
It’s important to trigger your audience the right way, so they make a final purchase from your business. However, it takes a lot of effort in evoking conversations and actions in terms of resources, time, and money which needs a serious check. You need to measure your spending on social media to check whether you are gaining or losing out of your social media campaign.
- Measure Your Time and Effort
To measure your time and effort you need to multiply the cost of labor per hour with the number of hours you are working on it. You can choose the timings which could be either week, a month, or for each campaign.
- Measure the Cost of Your Social Media Tools
It is necessary to determine the cost of social media tools you use while execution, during a social media campaign. It will help measure the outcomes with more accuracy. You need to calculate weekly or monthly costs for which you have to divide the annual fees by 52 and by 12 respectively.
- Measure the Amount Spent on Advertising
Advertising cost is also very important in determining the social media ROI you generate after a social media campaign. You need to figure out the amount of money you spend on advertising. It could be the money spent on boosting your Facebook posts, or promoting tweets, etc.
#4 Final Formula to Calculate ROI
After all the social media spending and expenditure, the final formula is to calculate ROI on social media.
Profit / Investment x 100 = Social Media ROI %
Here profit is the sales you made or the amount you get in return for your efforts.
Investment refers to the cost of efforts and time that we calculated in the previous point.
Instead of calculating the ROI with the basic formula, you must go one step ahead to calculate the profit earned from the current social media marketing campaign. You need to deduct the Manufacturing cost/infrastructure cost/human cost etc. from your profit. It will help you reach the next level of analysis to understand the profitability of your marketing efforts. So, you can plan further marketing strategies and set a budget.
Actual ROI= Profit-Manufacturing cost/infrastructure cost/human cost
Important Note – Before you get on to the final stage of calculating the ROI of your social media efforts, please be very clear about your business objectives. Otherwise, you will be confused, which will further pose issues in the process of calculating the ROI. Thus, you may lack the right direction. For instance, if you are concerned about brand awareness, you should calculate your ROI in terms of engagement, new followers, or mentions.
Our Stance on Measuring Social Media ROI
When you calculate social media ROI, you need to understand your goals. Merely getting fame doesn’t define profit or higher ROI.
Align your goals with different social media KPIs. Be firm on your lines, and track what’s needed and do justice to your goals. This is only going to measure your true success.
We hope it was a useful read for you.
Need assistance to track your social media ROI and skyrocket your social media campaign? Trust Mentionlytics.
It is a next-gen social media monitoring solution that helps access the brand mentions, find social media influencers, track leads, and grow your online presence that contributes to the growth of your business.