There is a lot of scepticism surrounding social media being a good channel for marketing. The main reason for this is that companies do not believe social media cannot help them make more money. This is a misconception that most companies have and this is the reason they do not leverage social media. Tracking the return on investment (ROI) in a social media campaign maybe a tad bit tedious but is definitely possible. Below are described some steps that can be followed to calculate the ROI of a social media campaign
- Set conversion goals:
Different organisations will have unique social media conversion goals. But in all cases, the company will want the customer to take a measurable action that ultimately has monetary value. Examples of some conversion goals are
- Make online purchase
- Fill out contact form
- Use online quote feature
- Click on link to dealer website
- Sign up for newsletter
- Download document
- Spend time on important webpage
- Engage in social media interaction
- View any video posted
- Track conversions:
How the conversions are tracked depends on the social media platform being used. Google analytics and built-in trackers on the social media platforms will cover most situations. There are also many apps that allow more sophisticated tracking. Some of the metrics for the conversions are
- Reach: More the number of followers on social platform, greater is the ROI for any campaign.
- Traffic: Getting visitors to the company’s website where conversion may happen is a major goal of any social media plan
- Leads: This is probably the most important measure, ratio of leads coming from each referring site.
- Customers: Track the number of social-media generated leads that become actual customers
- Conversion rate: Tracking percentage of visitors on social media platform tells you what’s working and what’s not.
- Assign monetary value to each conversion:
- Using historical data: If the company knows the life-time value of each customer through historical data, it’s easy to backtrack conversion value.
- Guesstimating: If there is no historical data available, experience will have to be used and decision will have to be made on how much the company is willing to spend to get similar number of conversions through any other medium.
- Measure total benefits through the channel :
Collect incoming traffic and conversion numbers by site from the analytics tool. Create a spreadsheet that correlates the data to the total monetary value of those conversions.
- Determine Total costs:
Add up promotional account fees, labour costs and sundry costs that is invested into the social media channel.
- Analyse results and calculate ROI:
Use the data from the total benefits and total costs to calculate the ROI for the social media channel. Now the results of the social media campaign per channel for each campaign or promotion is available to share with the management and clients. Also this data can be used to determine where the investments can be increased in order to achieve better results.
Now that we can actually show the benefits of social media campaigns, go ahead and launch your social media campaigns with more confidence!