Social Media ROI: The Ultimate Guide
November 22, 2017//4,239 words
We all know that social media can touch a lot of people, right? Because of that, the vast majority of us use social media for both business and pleasure. But did you know that hardly anyone actually knows the benefits that they are receiving for their business through social media?
Consider these stats:
75% of customers say they use social media as part of the buying process.
Over 70% of all internet users are active on at least 1 social network.
86% of marketers believe that social media is important for their businesses.
88% of public relations professionals say their businesses regularly engage on Facebook.
Sounds about right. Now read these:
Over half of CMOs say they aren’t able to quantify if social media made any difference.
70% of online businesses don’t even bother to try to measure.
Businesses are literally just crossing their fingers when it comes to social media marketing. Think about how some businesses have entire social media teams but are likely in the majority of specialists who don’t even bother to try and measure.
Are we just so consumed with the buzz that is social media that we feel like we should be involved with it even if we don’t know what we are doing?
I am giving a presentation on this to a group of professionals in the non-profit industry about how they can be in the minority and know how to measure the return on investment in their social media efforts. I wanted to put it into a blog post for others to benefit as well.
Let’s disect why people are so enamored with social media and then go through the process of setting your goals and measuring results.
Why does everyone want to be on social media? Well, because …
The Social Media Audience is Huge
Consider these numbers:
Not much analysis needed here except that social media is very large, has many active users and is growing rapidly.
Did you notice that YouTube is number 2 for active users? Did you know that YouTube is the second largest “search engine” behind only Google? Keep that in mind when considering where to spend your social media efforts!
We’re throwing some big numbers around here. Let’s talk about something that we may be a little more familiar with – the Super Bowl. Sure, it reaches a very large audience in and of itself, however, it’s a platform that we have been more familiar with as perhaps the largest advertising event for the past 50 years.
This is a picture of its growth year over year since 1990.
Good growth, but nothing compared to the 10% growth experienced by social media last year. And the viewership is 114 million people which only compares the active monthly users of Pinterest.
So what would the $4.5 million I would have to spend on a 30 second Super Bowl commercial guarantee me?
Ok, so 112 million viewers. Basically assuming that nearly 100% of viewers of the Super Bowl stayed on the couch to watch my commercial.
How do we measure brand engagements? That’s a little vague. Do we measure by how many people visited our website for the next week or next month? Store attendance? It’s a tough call and very subjective.
What would that same $4.5 million get me on social media? Let’s assume we are running a single campaign with $4.5 million spread among different social media platforms. What could we expect based on average ratios?
Wow, what a difference. I would compare the 576 million impressions as slightly less effective as unique viewers of a Super Bowl commercial who are mostly talking and eating instead of intently watching the commercial.
The 125 unique viewers on social media I would rank higher than that of the super bowl because they are likely more plugged in.
And the number that gets me is 27 million brand engagements. That refers to likes, comments, shares, retweets, basically any social media-based metric. That would also include click-throughs. That’s an incredible number and very measurable. Much better than the subjectivity that goes into determining the success of a Super Bowl commercial.
I think that the social media dollars are better spent here than the Super Bowl dollars.
So we can admit that social media is huge and can be a great tool for us, but …
Why aren’t Businesses Measuring their ROI?
Lack of Analytics that Matter
For one, most analytics today are focused on last-click attribution, meaning, I care most about the last place that the customer was before they completed their purchase.
Well this doesn’t fit well with social media because it usually starts the process. Points to the top of the sales funnel, not the bottom where the sales are executed.
Also, a lot of marketers are too focused on social-only metrics such as likes, shares, and followers. These are beneficial, of course, but they should be secondary, or at least measured in comparison to actual sales and conversions.
Additionally, you will find different values depending on the people who follow you or engage on social media. You may have a follower who just finds you entertaining and thus the follow, and you have also have high quality – ready to make a purchase followers. It’s tough to know the exact make up of your audience.
Social Media and Measuring takes a Long Time and is A lot of Work
Additionally, social marketing can be more work than you initially thought. While the process of measuring your ROI can be simple (we’ll get to that in a bit) it does require a process.
If you are a one-man or one-woman team, you should expect to take at least 12 hours per week if you’re truly serious about making social media marketing work for you.
That 12 hours consists of planning, implementing, measuring and then more planning, implementing and measuring.
You also needs to have consistency. If you step away for 2 weeks and then return with a few quick advertisements about your brand, well that’s just going to rub your followers the wrong way. They are following you because they think that they will receive value by following you. You should seek to consistently entertain and engage and be focused on them – social media should not be used as your own ad billboard.
So this is why people are not measuring. There are some valid reasons in here, however, what are the benefits to measuring that far exceed the negatives?
Benefits to Measuring Social ROI
Proof that your Efforts are Working
You’ll be able to see that your follower base grew from X to Y during a certain campaign or period of time.
You will also be able to see proof that your website is gaining traffic from social media. And you can also drill-down to see exactly where that traffic is coming from, when they are coming, and which campaign brought the most traffic.
You can also view how many direct purchases, downloads or signups were made directly because of your efforts on social media.
See where you can Improve
Maybe you see a great increase in followers but because you are closely measuring you notice that there is no positive change in total conversions. Good to know so you can either tweak your message or campaign, or perhaps spend less time on the platform that is under-producing.
This will also objectively reveal to you if one network is working more than another. Perhaps you really enjoy Facebook, but it’s not producing results and because you’ve been measuring you know that. If you didn’t measure, you might not pick up on that because you’re biased.
Maybe you notice that a lot of people are visiting your website through social media but then they are leaving right away and giving your website high bounce rates. This is terrible for user experience and SEO. You can then review your campaign and see that perhaps your personality or style of talk is different on social media (more fun or conversational) than on your website (corporate and professional). Well people visited your website expecting one thing and then left when they realized it wasn’t what they were looking for.
Fine-Tune your Social Media Goals
Maybe you’ve seen some concrete results from your efforts to grow your follower base. Now you can shift your focus to a new goal – perhaps seeking engagement. You can then focus on that goal for a while until you decide to review again.
Having set measurements in place will allow you to focus on specific goals instead of broad, general ones. You see, many people will focus on a goal of everything on social media because they don’t know how to measure. Focusing on everything will likely give you nothing. Your audience will be confused because your message and content will be inconsistent.
You will be able to see which platforms are working and which ones aren’t so then you can spend more time on the ones that are and cut out the ones that aren’t. There is nothing that says you need to be involved in every platform. In fact, I’d suggest that you pinpoint your 1, 2 or 3 most effective platforms and do only those.
The benefits to measuring ROI clearly outweigh the negatives, so let’s start the process …
Establish Your Goals
The first thing that you need to do in the process to measuring your return on investment is to establish your goals. They can overlap, but you should determine your specific goals that you want to accomplish. Make them achievable, specific and cover a set time period.
Let’s go through some great ideas of what your goals might be.
A month ago I decided to tackle my long-dormant Twitter profile. It sat there for about 4 years with about 13 followers.
I decided that I wanted to get something out of it so in the middle of March I started going after followers. You can actually read my personal story on how I gained 500 organic Twitter followers in 1 month.
I can see the results of my goal on Twitter.
Make a Purchase
Perhaps we want to target people at the end of their life cycle who are ready to make a purchase.
See what Brit + Co did on their Twitter page to point people directly to making a purchase of their fanny packs.
Maybe you have had great success in the past with email marketing and you just want to gather contact info from your audience.
See how Mabel’s Labels offered some of value to their audience in return for contact information.
Drive Traffic to Website
Maybe you have just optimized your website and you want to test it out or just get your audience a step closer to a conversion.
This is an example from Mullin/Ashley’s Facebook page with a link right on top to the home page.
Sign Up Directly for Newsletter
Maybe your audience already knows that you can and will deliver value with a regular newsletter.
See how Mailchimp makes it easy for people to sign up to receive their newsletter.
Recommended as at least a secondary goal to all campaigns. This is what social media is truly about. It is about communication and should not be viewed as your own personal ad billboard.
Use social media to get to know your customers better or perhaps even gain new ideas for your business!
See how Target made it easy for their audience to converse with them.
Now that we have determined and then implemented our goals, we need to track our results.
In reference to my Twitter goal of growing followers, I can see during the past month how many impressions I received as well as other engagements. I can also measure my exact follower growth from week to week or even day to day.
By going into Google Analytics and looking at Acquisitions, you can deep-dive into your website acquisitions and see where your traffic is coming from specifically.
We can continue drilling down and see if this traffic is converting. And then we can track these results per channel.
After we have tracked our metrics and drilled down through Google Analytics, we can start determining our ROI.
Assign Monetary Value
To assign a monetary value to every single metric of social media, we need to start with the bottom of our sales funnel and work our way back up.
Start by determining the final number – lifetime value of a customer, sale or average sale of a customer.
Once you have determined that, we will look to the Behavior Flow from Google Analytics.
We will continue from where we were earlier looking at website acquisitions. After drilling-down to social media acquisitions and then specifically Twitter acquisitions, we can follow the traffic path.
We can follow the entire path of this track all of the way to the end. We will input a Google Analytics code on the link that confirms the purchase so we know for sure that this traffic led to a sale.
Now you implement your social media metrics (likes, comments, etc.). Let’s assume that we ran one campaign to get these results.
Do you recognize what that is? Solid, concrete and measurable numbers. You can put a dollar figure on even a metric such as impressions. Now, I wouldn’t put too much weight into one small campaign, however, it is a number that you can and should write down.
Now let’s dive a little deeper and look at the ROI for each of our channels. We’re going to assume that we used 4 main networks for our single campaign.
First, we’ll determine our total benefits or sales driven directly from each network.
Then don’t forget to add in all costs – time, designs, ads.
Now let’s put it together and get our final return on investment numbers by using the following formular …
That’s it! We have our numbers that prove what we have been doing is or is not working!
In this example, we can see that maybe next time we should spend more time on Twitter and less on LinkedIn. I would be careful after just one campaign, however.
Maybe your particular message just resonated with a certain platform over another. Keep these ratios and then compare to your next campaign.
So, now what?
What can you expect?
Doing this procedure will provide you with some concrete answers and put you in the vast minority of people who actually measure and know that their social media efforts are actually having an impact on their top-line sales!
After following these steps, you will have pure, objective numbers to work with and track going forward.
You will know if certain channels are working and when to cut out the channels that aren’t.
You will have ANSWERS! No more crossing your fingers that all of this time and energy is going into a black hole.
It’s not as difficult as perhaps originally thought. The hardest part is perhaps setting up your Google Analytics codes but even that only requires a few steps.
Congratulations, you’re now smarter than over half of CMOs out there!