Ah the golden question and one I get asked a lot. What is the ROI of social media? Well here’s my answer.
Many companies I work with have got their heads around how to work out the ROI from PPC and SEO, but are still struggling to work out the value of social media as business tool. One of the common request I get is, “oh can you do some social for us too”? My reply is always, “why”.
Most companies I come in to contact with feel they need to be active on social, but don’t really know why. “Well my competitors are doing it, so I need to”. What often leads companies and individuals to lose faith in social or feel that you need an endless pot of money to make it work is, due to the fact that there is very rarely any goals set for the social campaigns. Do you want to build brand awareness amongst your potential customers, do you want to create leads, or do you want to drive more sales via your site?
Once you have worked out what your primary goals, you can then think about what metrics you need to monitor and also begin to develop a social media strategy.
But let’s put social in to perspective.
Social media is probably my joint favorite method of marketing along with search marketing and you could argue they are one and the same now. The reason for my love of social media is you have the ability to create a good piece of content quickly and get in right in front of your target market within minutes and then, monitor tens of different metrics to see if that content resonates with them. In essence you get to fail or succeed quickly! You can track who clicked on your link, if they shared that link and to which network. Over how long did the sharing, views, comments and clicks continue for and also did that generate me any sales or leads?
If we compare this to a newspaper ads or a billboard signs, ok maybe 50,000 people will drive past a billboard sign that is well placed, but how do you know that a sale was specifically driven via that one particular billboard sign? I suppose you could send them to a subpage /billboard or /offer, but my guess is that they would just jump onto Google and type in your brand name and look for you there.
Also let’s think about the cost of a billboard or offline campaign. You need someone to design the artwork, then a company to print the billboard, several times depending on how many locations you are targeting. And how many days or weeks would it take to get this advert live from initial conception? Not minutes I can assure you that.
Also there is no ability or more importantly not reason for somebody else to tell another person about that sign, one reason social media works well is due to the fact that people can easily share content at the click of a button. And the reason they will do that is because those sharing that content will enhance what others think about them. Such as people sharing a video of a new band, this shows that they are at the for front of the music scene, a web agency trying to tweet about the latest Google algorithm up date, this shows them to be industry leaders and very on top of what’s going on in the world of search. Social works because every share enhances that person or brand in some way, shape or form.
Ok, that’s great but come on how do we actually measure the ROI of Social?
It’s really very straight forward it’s a case of setting your goals and then drilling down on the metrics that will prove time on social has made the right impact.
Improvement in sales
Very easy once you have Google analytics set up correctly, you simple track which sites sent the sales. So if you see that t.co (twitter) sent you 10% of your overall sales that month you can work out how much time you spent on twitter, whether that 10 minutes a day was replying to peoples issues, or posting links to your new clothing ranges or interacting with others.
So over a month’s period you spent around an hour a week on twitter and let’s say for arguments sake that 10% of your turn over equated to £3,000. That means that those 4 hours you spent on twitter equated to you earning £750 per hour. Does that make twitter worth your while?
Leads / Inquiries
Again very simple to work out as it’s exactly the same process as above in terms of using Google analytics, you just need to add into the equation are the quality of leads better from social and also is the closing rate better? I.e we make 7 out of 10 sales with leads from social vs 5 our 10 sales with leads from other sources.
Another metric to consider with lead generation is how much does each lead actually costs. You may be spending around £30-£50 per lead currently, but after having a member of staff spend 4 hours a month on social they generate 10 leads. So that’s 4 hours x £25 per hour / 10 leads = £10 per lead. Looking good!
Now this is a little trickier, however some people with very expensive tools may be able to track this a little better. Tools like Sales Force Marketing cloud and Adobe marketing cloud will be far more precise, but here’s how to track it without spending 5k plus a month.
Tools like Hootsuite, Sprout Social and Social Bro are great for seeing the “social reach” of your social profile and even each tweet, post or update. Facebook insights is also a great tool, which shows you how many people saw you Facebook update, how many likes that individual post received, along with how many shares it had. They also give you an over view of if your “reach” has improved over the past week or month.
Now while social reach is still quite a loose metric it does give you a pretty good interaction of how many people are seeing your brand and its social media activity. You can then track which content gets the best reach, interaction and shares, which will in turn help you develop your social strategy in the long run.
I hope this post was helpful in explaining how to track the ROI of social media and was detailed enough.