Often companies are resistant to using social media as a consistent part of their marketing strategy. Most of the time the issue boils down to not understanding the role of social media in achieving overall business goals. And this stems from not being able to prove ROI with social media metrics.
Return on investment for social media can be a little tricky to calculate, but by following this simple guide you’ll be well on your way to proving the value of your efforts.
Choose Your Goals
The most important question to ask about social media is what is the ultimate goal for your business? Is the main purpose to generate new leads? Or close deals with new customers? Or are you trying to engage the interest of, or start conversations with, current customers or leads? Perhaps you're simply trying to drive attendance to an event.
Whatever the case may be, it is important to decide on a goal for your company. While it may be tempting to try to focus on all of the above, narrowing it down to one or two key goals will allow you to focus your efforts and build a strategy that gets the desired results.
Use the Right Social Media Metrics
This may be easier said than done. For some companies, social selling is an important part of their strategy. So this may mean you have to track all deals closed with customers that originated from social media, whether it’s from your business’s social page or a salesperson’s account.
Making sure all leads and closed deals are correctly attributed in your CRM to social media may be the best way to track this goal for your business. Just be sure you are using the correct metrics to determine your results.
If you’re more interested in generating website traffic than tracking customers gained, using Google Analytics to track social sessions is probably the better way to prove this metric. You can even set goals in Analytics based on what you determined is a realistic expectation for your business.
Calculate Your Expenses
Now that you know what you want from social media and how to track it, you want to be sure you are keeping track of your expenses. Social media can be a very low cost marketing tool, but you want to be sure to determine how much is being spent on social media management tools, the employees or vendors to run your social media, and any other costs.
Calculate Your Return
The hardest part to proving ROI with social media metrics is choosing the monetary value of each action you are tracking. If you choose to track customers from social media, you could either look at the lifetime value of a customer, track how much you would have paid through PPC ads for the same interaction, or use some other method that makes sense for your particular business.
Use the ROI Equation
ROI = (return - investment) / investment
If you determine that your return is $100, but you spent $50 to generate that number, then the equation would be: (100-50) / 50 = 100%. Your ROI for social media is 100%.
This equation really comes down to assigning monetary values for the goals you are striving for, and carefully tracking those goals. With the right social media metrics you can begin to determine exactly what your social media ROI looks like.
The best way to prove your efforts with social media is by clearly outlining the ROI with the right social media metrics. This can also demonstrate areas where you can improve your social strategy or cut social spending. And if you find yourself in the negative, it may be time to rethink social media for your business.
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