When your boss asks you how social media is boosting the bottom line, do you know what to say? You can rattle off statistics about tweets and clicks and likes, but you should also know what that means in terms of new customers, higher sales, and a more valuable brand. Just as important, you should be able to argue whether social media efforts are worth what they cost.
To measure social media ROI, you need to identify when a conversion occurs and what other interactions and metrics, if any, you should be monitoring. Then you can assign dollar values and measure progress. Your content marketing partner should give you the tools (and the story) to prove that your campaign is working cost-effectively to achieve overall goals.
Identify Your Conversion Metrics
You’re not using social media just to get clicks and likes — though, those are nice metrics and interactions to have. You’re ultimately trying to drive revenue for your company. Quantifying social media’s impact on sales looks different for each business. First, you have to identify what measurement will help get you there. For one company, that might mean measuring social media referrals to the website; for another, it may be about email subscriptions. Ultimately, you’ll want to be able to tie the factors you measure to a dollar figure. Here are a few successful methods that we’ve used:
With the help of a capable customer relationship management (CRM) platform or digital media strategist, you can identify which visitors to your website came via a social media referral and track them. How many of these visitors convert to customers? Can you assign lifetime value to those customers? How much more can you discover regarding these referrals? Here’s an example: For one client, we found that consumers who subscribed to that client’s email list via their Facebook page had an average order value that was vastly higher than their typical customer.
The informational possibilities are endless — but, alas, not everyone has the technology (or the bandwidth) to analyze it. Which brings us to our next point.
For many companies, like ours, sales take place offline. You can still measure social media ROI by tracking referrals to your website and conversions to lead forms and points of contact. If you’re able to take your leads and assign an average sale value to them, you immediately have a measure of how much revenue social media referrals generate.
Regardless of whether you’re able to tie social media ROI to sales or leads, you’ll want to measure overall awareness and engagement. Content marketing is all about the inbound sale; pulling the customer in rather than pushing product out at them. So, you’ll want to measure factors that indicate awareness. Engagement factors such as comments and shares are also critical here. Check to make sure your social media is converting to website traffic, including social media referrals, number of pages viewed, bounce rates, and time on your site.
Tying awareness to revenue figures involves a little more art than science, but you can start by tracking overall brand lift — like month-to-month sales — and relate that to changes in awareness indicators. You can perform surveys of your social media followers to gauge how many of them are customers, their intent to buy, awareness of services, etc. For one of our customers, we perform annual surveys to show how much specific channels and the overall content program impact sales. It’s a powerful tool for the client when advocating for the overall content marketing strategy.
Calculate Social Media ROI
The next step is to look at how much it costs to generate social media leads and conversions. Add up expenses like salaries, vendor payments, computer equipment, software, subscriptions, and any other expenses directly related to content marketing, as well as a prorated share of general business expenses like rent, utilities, and overhead. Voilà — the sum is equal to your investment in ROI.
Now you can calculate social media ROI by subtracting investment from return (so you have net return) and then dividing it by your investment, like this:
Determine Your Ideal Social Media ROI
To optimize your program, you’ll need a baseline survey of indicators you’ll be measuring so that you can determine whether your program is improving month over month. Set an average benchmark for your conversion factor, such as cost per acquisition, leads, referrals, etc., and set some goals.
What’s considered a “good” ROI can vary depending on what you’re trying to accomplish, as well as the unique characteristics of your business, but one way you can evaluate how you’re doing is by benchmarking your social media ROI against other companies in your industry. You’ll also want to monitor ROI over time so you know whether your program continues to be cost-efficient and effective.
Get Started Today
Measuring social media ROI accurately — and continually — can help you identify what’s working in your program and what could use some tinkering. It gives you the tools to make the case for your program. And it can significantly boost your impact on the company’s bottom line.
For more information about how D Custom can help you get started on a social media marketing strategy that drives conversion, contact us.