There are five basic steps to computing your social media ROI. They are as follows:
1. Identifying your KPI’s (Key Performance Indicators) refers to anything you can measure to determine if your company is reaching key business objectives. Social media ROI cannot be determined by looking at revenue alone. You must analyze any results that are valuable to your company, even if that value is not monetary. After all, non-financial outcomes like follower growth, engagement, online reviews, and positive public relations can lead to higher profits later.
Popular metrics to look at are reach, follower growth, traffic, leads, reviews, and conversion rates. Different business owners have different goals, so it’s all about figuring out what you want for your business.
2. For your efforts on social media to translate to real-life ROI, your KPIs must be linked to overarching business objectives. 43% of social media users report buying a product after sharing or favoriting it on Facebook, Twitter, or Pinterest and 71% of consumers who have had a positive social media experience with a brand are likely to recommend it to others.
So how can you link your KPIs to your business goals? That’s simple! If you want more brand awareness, you’ll focus on followers and engagement. If you want to generate more sales, the focus should be on leads and/or conversions. If you want to generate more traffic to your website, you should focus on link clicks.
3. Regardless of what your goals are, you’ll need some way to track them if you want to know your social media ROI.
Most social media platforms include built-in tracking tools. For more in-depth tools, consider hiring a social media marketing company. Companies often have access to third-party data tracking tools that can give you much more detailed results than the free tools offered on your social media accounts. This technology can be extremely helpful when it comes to tracking your social media ROI.
It is important to check your results regularly. This way you can address issues right away and fix errors before they become major problems.
4. The next step in figuring out your social media ROI is to assign monetary values to your goals. How much would you be willing to pay for a new follower or a new lead? What about a website click? Different business owners value certain KPIs differently.
Assigning values to your KPIs can be very subjective depending on your budget and business goals, so you may want to contact a social media marketing professional to help you determine these values.
5. Once you’ve assigned monetary values to all your KPIs, it’s time to do some math. To get your total social media ROI as a percentage, use the following equation:
Benefits-costs) x 100
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Costs
“Benefits” refers to the added value of all your results with your KPIs. “Costs” refers to the total amount of money spent on your social media, including ad spend as well as labor costs including fees from marketing companies, graphic designers, employees hired to run your social media accounts, etc.
Benchmark your results against your own goals as well as your competitors. This way you can see if you’re meeting your own business goals and if you’re on the same track as other companies in your field. No one wants to spend money on something if they’re not sure it’s working. That’s why determining your social media ROI is so important!
