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Measuring social media ROI goal: As a social media marketer, you know well that networking adds value to your business. But can you measure the ROI of your social media marketing efforts? Social ROI can be difficult to prove.
A study by LinkedIn found that 58 percent of digital marketers need to demonstrate the ROI of social media to receive approval for future RFQs. However, only 37% were “very confident” in their ROI metrics.
Measuring social media ROI goal is also key to building and refining your social media marketing strategy. Your strategy tells you what works and what doesn’t, so you can adjust tactics and resources to make them more effective.
This article gives tips and tools (including a free ROI calculator) to test and improve social ROI.
Definition of ROI in Social Media
ROI stands for Return on Investment. Social ROI represents the return on investment of your social media activities.
In general, social media ROI measures all social media actions that create value divided by the investment you made to complete those actions. What is the return after all the time, money, and resources you have invested?
Below are Simple Formulas for Measuring Social Media ROI Goal:
Value/investment (people, hours, advertising budget, etc.) X 100 = ROI in social networks (in percentage).
How to Measuring Social Media ROI Goal in Business?
Exactly how you calculate ROI depends on your business goals (brand perception, sales, customer satisfaction, etc.). For this reason, the formula above uses value, not sales or profit, as the starting point.
For example, Johnsonville Sausages has a pervasive social listening program. They use their networks to gain valuable information on what types of new products to develop.
Instead of making a financial calculation, they base the ROI of their social listening on the amount of information they can share with the product development team. The value is in the knowledge that could be collected rather than sales or revenue.
1: Define Clear Goals for Social Media
This is where you define what value in terms of social media results means for your brand.
According to Altimeter, only 28% of companies believe they can value business results driven by social media. Having clear social media goals helps you define how social actions align with organizational and departmental goals.
Think of several ways your investment in social media could generate value, such as:
- Business conversions (for example, customer acquisition or lead generation).
- Perception or brand perception.
- Customer experience or loyalty.
- Employee trust.
- The trust of their partners.
- Safety and risk reduction.
Be sure to include all of your social audiences in your goals. Unsurprisingly, the Altimeter survey found that a brand’s customers and community are its top social media audiences. But employees, suppliers, partners, and shareholders were also identified as essential target groups.
If you don’t think about all your audiences, you lose value when calculating your ROI.
2: Set Smart Goals
Once you’ve set clear goals that tie the ROI of your social media to actual business results, you need to set goals. What is the difference?
Objectives define where we want to go—goals, how and when to get there.
Here are some simple examples:
- Table showing the differences between objectives and goals
- We recommend using the SMART method for goal setting:
For example, set a number and deadline to improve customer service on social media. For example: “We will reduce the first response time by 10 minutes by the end of the year.”
If you aim to get additional conversions, a good plan might be a certain number of leads you want to generate through social media by the end of the quarter. Or increase homepage conversions by 10% by the end of the year.
Whatever your goal, be sure to measure past performance to set benchmarks. Then set improvement points and understand each plan’s value to your brand.
3: Track the Right Performance Metrics
You need to track your social media metrics to see if you are hitting and reaching your goals.
So-called “vanity metrics” like likes, comments, and shares get a bad rap (but they can have value). Use them to assess the overall health of your social presence, compare yourself to your competitors, and determine what content resonates with your audience.
They should only be measured as “vanity metrics” if they don’t align with your business goals.
Other metrics you can track to prove ROI is:
- Audience interactions
- website traffic
- Leads Generated
- Subscriptions and Conversions
- Income generated
When deciding which metrics to use, ask yourself the following:
- What does your audience do after being exposed to a campaign?
- Does this metric align with my goals?
- Does it help me make decisions (what do I do more of, what do I do less of, etc.)?
- Do I have the means to measure it effectively?
Check your metrics regularly. You can receive reports in your inbox on specific weekdays, so you don’t have to worry about reviewing them yourself.
However, measure your results over a reasonable period of time-based on your sales cycle. LinkedIn studies found that 77% of digital marketers measured their results within the first month of a campaign, despite knowing their sales cycle lasted three months or longer.
However, Oracle Data Cloud found that only 47% of a campaign’s value is executed in the first four weeks.
If you calculate the ROI of your social media marketing at the beginning of a campaign, you lose the value presented later. Do not miss it!
Step 4: Calculate How Much You Spend on Social Networks
You need to understand your overall investment in social media to determine if you’re getting a good return. There are several essential things to include:
Cost of tools and platforms:
Most social networks are accessible, but are you paying for a premium version of a social media management platform?
Budget spending on social advertising
This is very easy to track as the cost of each Facebook post, or Instagram ad is followed in the ads dashboard of the platform.
How much did creating the materials you shared on social media during a particular campaign cost? Did in-house writers or freelancers make your blog posts? How much does the author earn per hour? How many hours did it take to create these blog posts? Also include the time of your editors and content strategists.
Time spent by your social media team
From meetings to posts, content promotion, and ad serving together. You can do this over some time to determine the ROI of a campaign or calculate how much time your business spends on social media each month or year. Don’t forget to include education and training.
Agencies and consultants
If you use them, include their rate in your calculations. Use the appropriate part of your rate for the specific campaign or period.
Step 5: Create an ROI Report
According to a LinkedIn study, only 60% of digital marketers share their ROI results on social media, which means 40% do not. However, reporting your ROI is of real value to your team and budget.
First, go back to the formula for calculating ROI that we shared at the beginning of this article. At the end of this article, you’ll also find some tools to help you track and calculate ROI.
Here are Some Tips to Help You Create a Great ROI Report.
Bonus: get a free template to create a social media strategy and start planning your design quickly and easily. Use it to track results and present your social media plan to your boss, teammates, and clients.
Use a template
Analytics templates allow you to track each campaign without creating a custom report.
Use simple language
Not everybody understands social media data as well as you do, so it’s essential to present the information as clearly as possible.
Talk about relevant business goals
That’s why you defined them at the beginning of this whole process.
It’s much more appealing to your boss to hear, “Our goal is to increase sales by 10 percent, and this is how social media is helping,” than to hear, “This is how many shares our posts are getting on Facebook.” this month, “…
Realize what you can (and can’t) do when measuring ROI. Show what is possible with your data, but also make it clear that it is impossible to measure.
Don’t forget to set the right expectations for the period. That means you can’t test the sales cycle of three months after only one campaign month.
How to Get ROI from Social Media?
Measuring social media ROI goal is about justifying past actions. But then again, it can also help optimize your strategy in the future.
1. Test and Optimize
Do you have ads on social networks? Experiment with targeting your audience in different ways and with other ad formats.
As we describe in our A/B testing guide, there are endless things you can edit to see what gives you the best results. As you create your social media ROI report, clarify what you’re learning and how those lessons impact value and benefits.
For example, when charity: water started using Facebook Ads, it didn’t hit its revenue goals immediately, and it took almost a year. But that year, they steadily gained value by learning what worked and didn’t work for their organization.
“We saw flashes of ads that worked throughout the year,” said Amy Zhang, senior demand generation manager. “We kept iterating and testing everything we could (audiences, ad copy, messaging, images, videos, carousel ads, etc.) until we were successful.”
Facebook Charity: Water Ad about Scott Harrison. In the end, they achieved a 5x return on ad spend.
2. Use the Data to Test Hypotheses
This also plays a role when you use ROI to adjust your marketing strategy over time.
For example, maybe you’ve noticed that tweets with more than one product photo drive more conversions or that giveaways seem to perform better than your how-to content.
But are you sure? Start by clearly formulating your hypotheses and writing them down.
Then set up capabilities to measure data to test whether or not your hypothesis is correct (using the tools below).
If your hypothesis calls for a new strategy or investment, propose a low-risk pilot program. Leaders may be more willing to try something new if they don’t have to make a long-term investment and commitment before seeing results.
3. Repeat Social Networks are Constantly Changing.
The content, strategies, and channels you use to connect with your audience today may not be effective tomorrow.
You need to update and adapt your strategy over time. Are your audience’s needs and pain points changing? Has your company changed its priorities or resources? What new platforms and technologies are changing how your audience uses social media?
All these factors will impact how well you get a good return on your social media investment.
Remember that the mere fact of collecting this information adds value to your organization
4. Remember the Big Picture
Don’t get so focused on chasing short-term ROI that you lose sight of what makes your brand valuable and unique.
“We don’t do things just for short-term performance,” said Marc Verschueren, director of marketing and online sales for Happy Socks. “Everything has to be aligned with the brand; otherwise, this could damage the brand in the long run.”
Branded posts are instantly recognizable, and not all focus on creating instant sales.
78% of people who responded to the Altimeter above survey said that social media had improved brand health. This is a trustworthy source of value.
ROI (Return on Investment) defines a campaign’s success. It is challenging to determine whether a campaign was successful or failed without calculating ROI.
In short, social media ROI is what a business receives after the time, money, and resources invested in marketing through them.
This allows us to economically quantify whether an advertising campaign or your social media marketing strategies have been commendable. This is calculated from the investment and the profits we get to get the rate of return of said investment.