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How to Measure Social Media ROI

As a marketing and sales tool, social media has quickly matured over the past few years. Whilst once it was all but impossible to accurately measure the results from social, now there are all kinds of tools available to help us to achieve this. However, many marketers still struggle to prove ROI and justify increasing social budgets. For the most part, this is due to a lack of strategy and the alignment of business goals to social activity.

At times I feel a little like a broken record, as I seem to write about how vital planning and strategy is to all aspects of business on a weekly basis. But this is where many marketers and business owners fall down. If you don’t understand why you’re using social media and what you hope to achieve, then it is extremely difficult to prove ROI.

Measure Using Analytics

For example, perhaps your goal is to drive traffic to a certain landing page in order to grow your list. This needs to be quantified so that once your social campaign is underway, you can measure how many people arrived at the page from social and what action they then took.

Measurable metrics on social include:

  • Traffic to your site
  • Reach and impressions
  • Leads
  • Signups/conversions
  • Revenue

To effectively measure these, you will of course need to use analytics. Social media sites now offer their own analytics to help you, and you should couple the use of those with further tools such as Google Analytics and Hootsuite tools.

Link to Specific Products

Linking the use of social to organisational goals allows you to more effectively demonstrate that social media is worth the investment. So, if you wanted to use social to drive traffic to a product page, in order to boost sales of a specific product that perhaps wasn’t doing as well as the company would like, you would measure how much traffic came from social and how many of these users then went on to click through and buy.

You could also just implement a buy button on social sites that support this and take a direct sales measurement from there. However, even this takes work. Fans on social media won’t hit that buy button unless you’ve already built a relationship and a certain level of trust. So again, even a metric that’s simple to measure has to be approached from a strategic position.

With this in mind, you should come up with a strategy based on your goal(s), which should encompass:

  1. How you gain followers – are these targeted or are you simply following those who follow you? You should have a buyer persona document and use this to identify your customers on social. There are tools that can help you with this, such as Followerwonk, that allow you to search for followers based on their interests and demographic.
  1. How you engage with followers – will you be producing content which can spark discussion, or will you be curating content? You should consider too how many times you post a promotional post as opposed to an educational/fun one. We’re so accustomed to marketing messages now that these go right over the heads of our followers if they're posted too often, so do bear this in mind.
  1. What’s the best time to engage followers? – understanding when your customers are most active on which sites will help you to connect with them more effectively.
  1. What tools you’ll use to measure engagement and track customers – social and other analytics tools.

It’s these analytics that will allow you to effectively track followers in order to measure ROI. To use them, you should first decide how often you want to generate a report. You may need to create a quarterly report for the finance department, but you should also create reports so that you can track your efforts on an ongoing, regular basis. This will allow you to see at a glance if you’re close to meeting your goals and to tweak as necessary.

To see how you can do this using Google Analytics, check out Chris Sietsema’s article The Top 5 Google Analytics Reports for Social Media Marketers. For Hootsuite, which has a suite of analytics tools in its scheduling software, you should take a look at the reports section on Hootsuite University. The UberVU add-on for Hootsuite also allows you to create comprehensive reports that offer a nice clean, understandable interface.

Working With the Numbers

You will of course have to break down the numbers in order to prove ROI. As the marketing manager, you should be aware of all the costs associated with your social activity. These include:

  • Time spent on social
  • Advertising charges
  • Cost of producing content

Once you understand the reach that you’re achieving, from there you can go on to reverse engineer the maths.

For example, say that your goal is to create 250 conversions from social media. So, according to Nichole Kelly, the formula would be:

# of leads you want / average landing page conversion rate / average click through rate

Based on averages, this would then work out as:

(250 / 2% landing page conversion ) divided by 1% click through rate

So in order to achieve those 250 conversions, you would need a reach of 1,250,000. However, these figures are based on averages so you can further increase the click through rates by optimising and targeting your posts and ads. As Nichole points out, it’s much easier to do this through paid social advertising. This is because it allows you to segment groups and to remarket to those who clicked through but didn’t convert.

Understand Your Audience

In order to be effective at social and to be able to prove ROI, it’s necessary to fully understand your goals and how those align with those of the business and to understand exactly who your customer is. As discussed earlier, you should have one or more buyer personas (free template from Hubspot on the link) set up to help you to do this.

This will allow you to craft content that suits the audience and boost engagement (and with it, reach). Analytics can further inform you on how your audience are engaging with the content and what they like the best. You can then tweak your strategy to suit and gain even more ROI.

Social ROI is more than achievable. All of the bigger social networks now have analytics and insights tools which you should make full use of alongside other, third-party tools for further analysis.

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