If you ever had to justify a social media budget, then you’ve grappled with this question.
The answer isn’t as simple as you’d think. Traditionally, to measure ROI you calculate the number of leads you generated from your marketing campaign. You track which ones turned into sales. If you can prove that your marketing efforts resulted in actual profits, then you’re doing great and you know that you are getting a good return on investment. Your boss will love you.
Tracking social media ROI isn’t so simple, and here’s why:
Social media is not just a sales tool
Social media is so much more than a sales tool. In fact, generating direct sales from your social media campaign should only be a small part of your overall strategy (depending on your type of business, of course).
Not that you should never expect sales to come from your social media efforts. A post to Facebook or Pinterest can promote a sale or direct people to a landing page where you gather their information. However, people don’t respond too well if you have too many self-promoting social media posts on your page. Social media is about interaction and engagement. It’s back-and-forth, and if you’re always asking for money from your “fans,” they’re going to get annoyed and disengage with your brand.
So what is social media, if not a sales tool? Aren’t you in business to make money?
Social media sits in an interesting position within your overall marketing efforts. It can create brand awareness (much like a billboard or TV commercial is designed to do). It can be a valuable “listening” tool to discover what your customers have to say about your product. You can use it to generate customer reviews, encourage your customers to become “brand ambassadors,” and directly engage with unhappy customers to turn around their bad experience into a positive one.
So how can I measure social media ROI? Well, it’s complicated
It is possible to measure social media ROI. Not only that, there are ways you can prove that social media is a worthy investment, deserving of big marketing dollars.
All it takes is an adjustment of expectations. You’re not going to be able to track each Facebook post directly to a sale. You can, however, measure things such as overall engagement and customer reach.
Let’s break tracking social media ROI into 5 simple steps:
1. Align your social media goals with your overall business goals
Think social media operates in a vacuum? Think again.
Social media is more than a sales tool, and in reality it’s more than a marketing tool as well. Here are a few benefits of using social media outside of general marketing efforts:
- Customer service. Many of your unhappy customers will voice their complaints on social media. This gives you an opportunity to respond and prove your commitment to customer service.
- Reputation management. Search for who is talking about your brand, and find ways to positively influence the discussion.
- Public relations. Search for ways to get your brand promoted by social media influencers.
- Market research. Test out new ideas with a select number of social media fans. Solicit opinions and input from your most loyal customers. Listen to what people have to say.
- Customer education. Distribute tutorials, manuals, videos, surveys and more quickly and efficiently to your customers through social media.
If you approach social media with the intent to only push a specific promotion, or to only drive traffic to your site, then you’re missing out on the big picture. Instead, align your social media goals with the goals of your entire organisation; everything from product development to customer service and client retention falls within the scope of social media.
People will be checking you out on social media to see if you resonate with them. Make sure you’re putting on your best face, and that your social profile actually represents your business values. Your long-term goal should be to gain trust with your potential customers, so that further down the road they will be more likely to make purchases.
2. Determine the metrics you’re going to track to make sure you’re meeting your goals
When you track the success of your customer service department, you’re not exactly looking for sales. Therefore, sales shouldn’t be your main focus for social media, either.
But you do need to understand how social media works in order to track it successfully. Social media gives your customers an opportunity to engage with your brand beyond the traditional “consumer – product” relationship. Therefore your metrics are going to be less about dollar signs and total inventory moved. You’re looking for “social” metrics.
What are social metrics? Here are just a few examples:
- Social mentions (people mentioning/tagging your brand on Twitter, Facebook, etc.)
- People “liking” or “favoriting” your social media posts
- People “sharing” your posts
- Comments on your posts, responses to Tweets
- The overall “sentiment” of people who engage with you on social media (was their experience positive or negative?)
- Social reach (how many people “like” your page, how many Twitter “followers” you have)
- How many times you respond to and interact with your customers (a great way to measure your customer service efforts)
- The number of people finding your website through social media; your website “traffic”
- How much “traffic” turns into “leads”(this depends largely on how well your website performs, and whether it’s aligned with your social media strategy)
There are many ways to gather these metrics. A few of our favorite tools to track social media metrics include Google Analytics, BuzzSumo, and HootSuite. In fact, there are so many tools available; it comes down to testing them out and picking one that works best for you. Which one cuts through all the data and gathers the information most relevant to your business and your customers?
3. Commit to stick with it
You can expect all these metrics to grow over time, but they won’t explode overnight. Social media takes time to build and make effective. It takes months to build up a substantial following on Facebook and Twitter; and even longer to build true authority.
Social media is going to require an investment in time and effort at the start, especially if you’re starting from scratch (and you want to catch up with your competitors who have been using social media for years).
Without a healthy dose of sticktoitiveness, your social media campaign runs the risk of sputtering and dying. And when potential customers come searching for you on social media, and they find an inactive “dead” page, then they won’t trust you enough to do business with you.
4. Analyze social media metrics over time
Just sticking with social media over time isn’t enough. In fact, it’s always possible to do more harm than good with any social media campaign.
To avoid wasting time on a poor strategy, you need a healthy dose of analytics.
Never be so attached to any particular strategy that you can’t let it go if it’s not bringing you any measurable results. You might not be able to attribute x amounts of sales to any single post, but there needs to be some indication of its success (interactions, comments, likes, etc.).
5. Include your social media ROI with your overall marketing, PR, R&D, customer service, etc.
Your expectations for social media ROI need to be split up among your overall business goals. Ultimately, the “bottom line” is what’s most important, but if you can show that social media supports and enhances your PR efforts, then you can by extension show its success (as long as your PR campaign is successful as well). It works the same for customer service, brand management, and even research and development.
When making reports on your social media efforts, keep its overlap in mind. It may require some extra time to prove your campaign’s success, but it also adds more credibility to your efforts. In the end, when you’re calculating social media ROI, you’re telling stories.
“Calculating social media ROI is storytelling”
Take, for example, Taylor Guitars, who through some social listening (and the social ineptitude of United Airlines) were able to generate some awesome press for their brand. In 2009, a musician published a video on YouTube singing about how baggage handlers for United Airlines broke his guitar. The airline refused to do anything about it except give him $1,200 in flight vouchers (his guitar was worth over $3,500). When the YouTube video went viral, (tallying millions of views ridiculously bad PR for American Airlines), Taylor Guitars offered to replace the guitar. The guitar manufacturer made their own video as well, explaining their reasons why it breaks their hearts every time a guitar is damaged. Their response massed hundreds of thousands of views itself, generating millions of dollars worth of positive press for their company.
Taylor Guitars knew that social media had the potential to be a powerful PR tool, but it required them to stay attentive, stay patient, and always look for opportunities to engage with their target customers.
That’s a great story, complete with heroes and villains. Is it too much to expect your social media campaign to be as dramatic as Taylor Guitars story of success?
Not at all–your brand tells a story (the story of your customers), and social media is one of the platforms where you get to tell that story. You not only get to tell that story; your customers get to help.
Remember: social media is more than a sales tool. It’s a powerful way to make your brand personable, and as such it operates at the core of your business.
So to answer the original question, “How do you measure the ROI of social media”: by measuring how your social media improves all aspects of your business.
If you can do this, then you’ve tapped into the true power of social media.