As with “conventional” so with “Social Media marketing”, campaign effectiveness needs to be assessed to determine success. With social media spend increasingly taking up growing shares in marketing budgets, it’s become imperative to determine the returns in the form of sales realized from social media marketing investment.
Step #1 : Change in attitude :
-Being a relatively recent medium and an ever evolving one at that , marketers tend to think of Social media marketing more in terms of “having a presence” for awareness and generating excitement about their brand – but not exactly as a means for achieving hardcore sales oriented goals. However , the truth is – “Social media campaigns can make companies money ” – and it is this change in perception that should promote marketers to calculate ROI of a SMM campaign in terms of sales and not just likes/awareness and fans.
– Step #2 : Set Your Conversion Goals:
With all the creativity going into campaigns to drive engagement , all campaigns seem unique. However, a key characteristic of all successful campaign is to drive consumers or fans to an action, an action that has monetary value.
some example conversion goals might be –
Making an online purchase – OR Filling out a contact form OR click link to dealer website OR View a video.
Step # 3: Track conversions
Depending on the social media platform being used and the IT systems set up at your organization the ways to track conversions will wary. in most cases Google analytics and other inbuilt trackers on social media platforms should cover everything.
The top 5 metrics for Social Media marketing remain –
1 Reach – Number of fans and followers
2 Traffic – number of website visitors
3. Leads – potential sales
4. Customers – actual sales
5. Conversion Rate – lead conversion rates
Step 4: Assigning monetary value to each conversion:
Now there are two approaches that may be followed ,
When Historical Data is known –
If the average life-time value of each customer is known, than a reverse calculation will lead to finding out the value of an action .
For example – If the LTV of a customer is 200$ , and 1 in 20 people who view a facebook video buys becomes a customer , then the value of viewing the video is 10$ ( 200/20).
Method #2 : When data like LTV is not available
When historical data is not available , use the guesstimate method to arrive at conversion value. For example, if you were to receive 1000 signups for your company newsletters – what would you be willing to pay per signup ? go with that number for the start – as you build up more data and observe sales trends, revise that number.
Step #5 : Measure total benefits by channel :
Collect incoming traffic and conversion numbers by site from your social media analytic tools. Use simple spreadsheet analysis to link these numbers to the total monetary value of these conversions.
For offline conversion rates or to track certain specific posts and hash tags – use coupon codes for purchases to track sales from these campaigns.
Step #6: Determine total costs –
While calculating ROI for social media marketing campaigns , professionals almost always choose to not include costs of the actual sales , like logistics support for the product to be actually delivered. It is important to understand that the actual sales aren’t possible without support functions that actually make the sale happen.
Step 7: Analyze Results and Improve :
ROI = [ (Benefits – costs) / costs ] X 100
Keep monitoring and improving on regular basis .