How to Define Social Media ROI for Your Business
Are you a business owner or a digital marketing expert?
Your social media investments are major revenue drivers and indicators of your ROI; so, you have to be very careful while shaping your social media strategy. Don’t you wish to know what are you getting out of your social media campaign?
Let’s understand what all it takes to measure your social media ROI and assess what you are delivering to your audience:
Steps to Calculate ROI
1. Set Your Goals
Goal setting is primary to calculate ROI on your social media strategy. There could be dozens of metrics to define KPIs, but you need to concentrate on key areas that determine your goal. Here are 6 areas that your social media KPIs should be focused:
A. Impressions
This should be your first social media goal because it ties to the overall marketing goals of your organization which includes:
1. Brand awareness
2. Sales increase
3. Improve brand sentiments
4. Connectivity with audience and public relation
Impressions are comparable to the views in paid media which increases the community size and helps improve engagement.
B. Reach
Reach refers to the volume of people who are actually getting your message or how far your message has travelled. However, it could be misleading at times as it just an estimate of potential audience who saw your message.
C. Engagement
It measures the amount of likes, shares, and comments that you receive on every update that you do on social media handles.
D. Leads
Once you get good reach the next thing is to understand whether your social media handle is actually producing leads or not. How many people are actually giving you business? Whether they are making any purchase or not.
E. Conversions
Conversions refer to the number of actually acquired customers who click through your website and make a final purchase.
F. Customer Loyalty
Customer loyalty depicts the number of people continue following you after making a purchase and stick to your brand on social media. Your first user experience would determine whether your customers would come back or not.
2. Identify Social Media KPIs that Align with Your Goals
After you have defined your goals in social media strategy, you can proceed with the following social media KPIs that align with your business goals.
Social Media KPIs for Engagement
• Clicks
Amount of link clicks are great KPIs to understand engagement as they depict the quality and ways you pitch your content. If you get low clicks, then you can work with changing titles and visuals in different ways to get better clicks.
• Likes
The more the number of likes you have on your post the more engagement it will create. If you have low likes on your posts, then you should work on building authority because great content deserves a higher spot in search results.
• Shares
After likes, shares are prime KPIs to assess engagement as they work like recommendations for your brand. If your posts are shared on a large scale it depicts your quality work. You should track shares and retweets if you are looking for real engagement on your posts.
• Comments
Commenting on a social media platform is a conscious decision and it sparks conversation which makes it a great KPI. Whether you are getting positive or negative comments, it helps you assess the intensity of impact that you are making on your followers.
• Brand Mentions
Tags and brand mentions depict that people are talking about your brand. This KPI specifically emphasizes the relevance as it shows that you are maintaining awareness on social media about your brand.
• Profile Visits
Profile visits are not crucial when it comes to judging the engagement through your social media handles. But, it does indicate interest if people regularly visit your profile.
Social Media KPIs for Reach
• Followers
If a customer is logged in and interact with your content within a period of 30 days seems to be your active follower. Well, you can have a check on your followers who are fake or inactive most of the time. It indicates who all are genuinely interested in your content.
• Impressions
It shows the number of times your post showed up on timeline or newsfeed. It could be either because of your customers’ own following or someone else from their network has shared or liked it. A higher number of impressions depicts the opportunity as to how many people can connect with your post in one go.
• Traffic Data
The amount of traffic your social media handle gets to reflect the effort and time that you have invested. You must track this; if in case you aren’t getting a good number of traffic, you can work on expanding the reach of your post so that more and more people could get to see it. If you have a good reach, then you can work on making changes in your call to action.
• Share of Voice
Share of voice metric depicts the buzz around your brand and how successful is your brand at evoking conversations. If you are good at driving conversations, your marketing strategy is working and if this is not the case, then you can look up to your competitors and explore unique ways of campaigning on social media.
Social Media KPIs for Leads
Well, there aren’t any definite KPIs to measure the leads of your social media handles. Getting shares and likes in masses could make you feel confident about the quality of content that you are sharing with your audiences. The pinpoint should be defining your bottom line for which you need to track the people who are actually interested in your content.
If you have a small number of followers, but your channel is generating enormous new leads then, don’t you think you should stress on it? And, if this is not the case it means you are working on the wrong platform and might need to change your strategy. You can use Google Analytics to get an insight into your leads.
But, if you are running social ads for generating business leads for your business you can the below mentioned KPIs:
1. Potential Reach
2. Number of Leads
3. CPL
4. CTR
Social Media KPIs for Conversions
• Number of Clicks
If you notice an increase or decrease in your clicks, it can be related to the latest adjustments that you make in your social media schedule. It helps you understand the dynamics as to what increases or decreases the clicks. You can use high conversion keywords such as check out, discount, deals, increased, reduced, share, promote, discover, etc,. You can also retweet and share your content more to get better clicks.
• CPA
This metric is useful in paid social media campaigns where you can actually ascertain the amount that you are paying to acquire a customer. It is completely based on your marketing effort and strategy pertaining to the allocation of budget on paid advertisements. It helps you identify poor performing social media channels that you need to discontinue.
Your analysis should be based on the following:
1. Check the direct sales conversions from a channel considering the last click.
2. Consider the multiple visits on your social media handles that has led to sale which will give you an idea of assisted conversions.
• Sales Revenue
The sales revenue that you drive from your social media handles reflect as to how many customers are actually buying a product or service through it. Especially if you have a long sales cycle each potential buyer can go into your sales funnel directly. It helps you ascertain the value of each customer in the sales cycle.
• Non-Revenue Conversions
All conversions are not focused on driving profits some are as simple as promoting an action on your customer’s part like signing up for your newsletter. It is important to track non-revenue conversions as it helps to understand what instigates your customer to take action.
Social Media KPIs for Customer Loyalty
• Customer Acquisition Rate
It measures the new customers acquired in a given time period. You can calculate it by the following formula:
Total number of customers acquired/Total customer base x 100
• Customer Attrition Rate
It indicates the customers lost over a given time period. Use the following formula to calculate it:
Total number of customers attrited / Total number of customers x 100
• Customer Retention Rate
It measures your ability to retain customers for a longer period of time. Check out the formula to calculate customer retention rate:
Total number of retained customers / Total number of customers x 100
• Customer Wallet Share
Customers’ wallet share indicates how much a consumer can spend in buying a product.
Budget spent on your company product/ Total budget for the product x 100
• Prompt Action
Your quick response to your customers’ query would establish a sound connection between your brand and your customers. It is an opportunity to make your customers realize the worth of your brand. Most of the customers expect a quick response and if your brand fulfills this desire then, this is evident that you respect your customers and are keen to provide a solution to them.
• Customer Lifetime Value
Improving the lifetime value of your customer reflects your capability to keep hold of the audience for a longer time. It is crucial for maintaining a strong relationship with your customers. Your constant connectivity with the right people ensures improvement in your customers’ lifetime value. It could be a great KPI in understanding how successful your social media marketing strategy is.
3. Measure Your Social Media Spending
It’s true that evoking conversation and increasing participation on Twitter, Facebook, takes a lot. Here are some key points to measure your spending on social media.
1. Your Time and Effort – Multiply the cost of labour per hour with the number of hours you are working on it. It could be for a week, a month, or for each campaign.
2. Your Social Media Tools – Another one is the cost of social media tools you use while executing a campaign and measuring its outcomes. Find the weekly or monthly costs by dividing annual fees by 52 and by 12 respectively.
3. Amount spent on Advertising – The amount of money you spend on advertising such as boosting your Facebook posts, or promoting tweets, etc.
Also Read: The Role of Social Media in Building Customer Loyalty
4. Final Formula to Calculate ROI
Here’s the formula to calculate ROI on social media
Profit / Investment x 100 = social media ROI %
Profit is the actual sales or money you accumulate through social media marketing.
Investment refers to the efforts and time you put in your social media marketing to reach a specific goal.
You have to be very clear with your business objectives otherwise it may complicate the process of calculating ROI. For instance, if you are concerned about brand awareness, you can calculate your ROI in terms of engagement, new followers, or mentions.
Review Your Actual Marketing ROI Here
Actual ROI= Profit-Manufacturing cost/infrastructure cost/human cost
Go one step ahead to review or calculate the profit from running social media or any other marketing campaign. Deduct the Manufacturing cost/infrastructure cost/human cost etc. from your profit to get the next level of analysis for your marketing efforts. This is how you would be able to budget and plan further marketing strategies.
EvenDigit’s Take on Measuring ROI on Social Media
You need to understand that every customer is different and reacts differently. Merely hitting like doesn’t define his interest. All social media KPIs are vast out of which you need to pick the relevant ones that resonate with your goals. So you are advised to track what’s needed and does justice to your goals. This would actually reflect your true success.
Hope the above mentioned points are useful. If you need guidance to skyrocket your social media campaign then contact us
