Launching social media campaigns is crucial. It allows you to connect with your target audience on a personal level, build brand awareness, foster loyalty, and drive conversions. Measuring the exact return on investment can be challenging. However, social media provides a powerful platform to engage with potential customers, shape brand perception, and ultimately achieve your marketing goals.
Here’s the formula for measuring the impact of social media. At first glance, it sounds simple enough…but is it?
At its base, social media ROI is net profit divided by cost multiplied by 100.
Let’s face it: measuring the return on investment (ROI) of social media campaigns can feel like trying to nail Jell-O to a wall. The indirect impact, the ever-changing algorithms, and the sheer volume of data can send even the most seasoned marketer into a bit of a sweat.
But here’s the good news: while a perfect ROI calculation might be elusive, we can still build a strong case for the value of our social media efforts. We’ll discuss why it can be so tricky to measure, along with ways to improve your social media for a better ROI measurement.
There are some marketers who feel that trying to nail down the impact of social media is like trying to swim in quicksand. “Here’s why:”
- Multi-touch Attribution: The customer journey is rarely linear these days. Social media can touch a customer at multiple points, influencing their decision but not directly causing the sale. This can make separating social media’s impact from other marketing channels a difficult task.
- Indirect Impact: We all know that social media is capable of building brand awareness, loyalty, and customer sentiment, which are crucial for success. The challenge is applying a dollar value. Likes and shares might not directly translate to sales, but they can be a sign of a strong brand connection.
- Data Overload: Social media platforms will generate a ton of data. Trying to find the metrics that matter can be frustrating.
- Constant Algorithm Changes: Social media platforms constantly tweak their algorithms, making it challenging to maintain consistent performance and accurately measure results over time.
Vanity Metrics vs. Actionable Insights
Focusing on vanity metrics like follower count can be misleading. Here’s how to distinguish between vanity metrics and actionable insights that provide a clearer picture of how social media is impacting your bottom line:
Vanity Metrics:
- Follower Count: While a large number of followers might look impressive, it doesn’t necessarily translate to engagement or conversions.
- Likes: High numbers of likes can indicate popularity, but they don’t provide information about deeper engagement or customer behavior.
- Shares: Shares can extend your reach, but without understanding the context or the resulting actions, they remain surface-level metrics.
Actionable Insights:
- Engagement Rate per Impression: This metric shows how well your audience is interacting with your content relative to how many people have seen it, providing a more nuanced view of engagement.
- Website Traffic: Tracking the amount of traffic your social media channels drive to your website can help you understand the effectiveness of your content in attracting visitors.
- Conversion Rates: Measuring how many social media interactions lead to desired actions (like purchases or sign-ups) helps directly link social media efforts to business goals.
- Customer Sentiment Analysis: Using AI tools to gauge the sentiment behind comments and mentions can provide insights into how your audience feels about your brand.
- Social Share of Voice: This metric measures how much your brand is being talked about compared to your competitors, giving you a sense of your brand’s prominence in the market.
- Customer Lifetime Value (CLV): Understanding the long-term value of customers acquired through social media can help you allocate resources more effectively.
- Return on Ad Spend (ROAS): Measuring the revenue generated from social media ad campaigns relative to the amount spent provides a clear picture of ad effectiveness.
By focusing on these actionable insights rather than vanity metrics, you can gain a more accurate understanding of your social media’s true impact on your business goals.
From Reacting to Leading: Top Tools to Boost Your Social Media ROI
You can follow the trends, or you can set the pace.
You can unlock the true ROI of your social media efforts by shifting your strategy from merely responding to trends to proactively setting them. The following tools can help you get the job done.
- Hootsuite: Offers comprehensive analytics and reporting for various social media platforms. It provides insights into your audience, engagement, and post performance.
- Buffer: Helps schedule posts and offers detailed analytics on post performance, audience engagement, and growth over time.
- Sprout Social: Provides robust social media analytics, including engagement reports, audience demographics, and campaign performance metrics.
- Google Analytics: While primarily a web analytics tool, it offers social media tracking features that help you understand the impact of social media on your website traffic.
- Brandwatch: Utilizes AI to provide deep insights into social media performance, audience behavior, and sentiment analysis.
- Loomly: A powerful tool for managing and analyzing social media content, offering features like post optimization and detailed analytics.
- Falcon.io: An integrated platform that offers social media listening, engagement, publishing, and analytics to provide a holistic view of your social media performance.
- Later: Focuses on visual content, particularly for Instagram, and provides analytics on post performance, engagement, and audience growth.
- Iconosquare: Specializes in Instagram and Facebook analytics, offering detailed insights into engagement, follower growth, and content performance.
- HubSpot: Includes social media analytics as part of its broader marketing suite, offering insights into campaign performance, engagement metrics, and ROI.
- Klear: An influencer marketing platform that also provides social media analytics to measure the impact of influencer campaigns and overall social media performance.
- Cyfe: A business dashboard that integrates social media metrics along with other business analytics, providing a comprehensive view of your social media performance.
There’s No Such Thing As “One Size Fits All”
Social media is like a sweater – what fits one person perfectly might be a tangled mess on someone else.
The beauty (and sometimes frustration) of social media is that there’s no one-size-fits-all approach. This is definitely true of social media where demographics, behavior, and interests are always considerations. The metrics used to measure success are unique to target audiences and business goals. Are you aiming to drive website traffic, increase brand awareness, generate leads, or improve customer service?
You CAN measure the ROI of your social media activities. You CAN show your clients or boss examples. It’s more than possible. You just have to know how to do it.
10 Case Studies Prove ROI of Social Media Promotions
Not all of these examples should be used to describe ROI, especially if you have an audience that needs dollar signs. For example, the Jamba Juice case study ends with “The coupon campaign drove tens of thousands to Jamba Juice stores.”
Of course, it’s a Return on Investment of a sort, but it doesn’t show the bottom dollar. Neither does the KRAFT example (#5) unless the entire purpose of the campaign was to increase Twitter followers. Increased Twitter followers don’t necessarily translate to increased sales.
The case study for Hautelook (#3) is well worth a serious look, however. Although it doesn’t share an exact dollar amount, the final sentence says it all:
“Not only did Hautelook generate thousands of new fans they also generated tens of thousands of sales in just one day and a return on investment of more than 5x and over 20% of purchasers were first time Hautelook customers.” (emphasis mine)
How Social Media Helped Cisco Shave $100,000+ Off a Product Launch
The title alone should be enough to excite any executive. The money quote, however, is buried in the content of the article:
“’It was classified as one of the top five launches in company history,’ said LaSandra Brill, senior manager, global social media. (emphasis mine)”
Case Study: Social Media Customers Are More Valuable Customers
Don’t miss this one. Here’s the money excerpt:
“What CareOne found was that the personal connection for consumers (having some sort of social media contact with the company) led to a longer buying cycle (24-28 days versus as low as 30 minutes for those without a social media relationship with the company), but an incredible jump in successful conversions through the sign-up process and ultimately the point of purchase.
How much of a conversion? Social media connections filled out the consultation (lead-generation) form at a 179% higher rate than the typical customer. Sales?
They were 217% more likely to make their first payment. For one particular problem area (people who partially filled out the sign-up form then quit), social media prospects went back and completed the form at a 680% higher clip than non-social media leads. They made their first payment at an astonishing 732% better rate.”
Now, that’s real lead generation.
The Business Funnel: Test and Retest
The business funnel is married to social media by guiding potential customers through stages of awareness, interest, decision, and action, leveraging targeted content and engagement strategies to convert followers into loyal customers.
At each stop within the business funnel, you’re going to have to address the elements of customer awareness, acquisition, engagement, conversion, and retention. Data and metrics will be considered at every stop. Always choose the best key performance indicators to help determine if each step is successful.
Many successful business owners don’t always begin their journey with a college education. As a result, some may lack knowledge of business processes when starting out. One essential concept that every entrepreneur should understand is the idea of a business funnel.
While there may be variations in how the funnel is structured, the standard components typically include the following:
Awareness (or Reach): This stage is straightforward. You can’t guide people through your business if they are not aware of it. Ways to raise awareness could include;
- Word of Mouth (WoM)
- Discovering your company website through search engine results
- Advertising in newspapers, magazines or websites
- Any other means by which someone learns about your business
Acquisition: This stage is defined by InvestorWords as “gaining control of a target corporation through stock purchase or exchange whether in a friendly manner”. It represents the moment when potential visitors transition into visitors by clicking through from search engine results, external websites, advertisements or other unspecified methods.
When your company connects with people on media or through any interaction that involves consumers, that’s a moment.
Engagement refers to responses that don’t directly impact the business objectives of a company. It’s a concept that can be somewhat complex.
For instance you might not immediately link YouTube comments to boosting sales.
Yet a YouTube comment could catch someones eye, lead them to visit your website, ultimately resulting in a purchase and potentially turning them into a lifelong customer. So did the YouTube comment directly contribute to achieving your companys business goals?
In short; not exactly. There are steps from point A to point Z. Even though the YouTube comments kickstarted a process that led to sales there are stages in our hypothetical sales funnel where factors could positively or negatively influence the conversion process.
- Hence instances of engagement could involve customers;
- Sharing something you’ve written with friends
- Watching your videos listening to podcasts, etc.
- Discussing your company, articles, blogs and website
- Engaging with you on social media
Conversion is somewhat akin, to engagement. However the definition varies slightly; “a response that actively and directly impacts the company’s business objectives.” If one of your websites business goals is to attract leads then a visitor reaching out to your company for a proposal counts, as a conversion.
When visitors willingly provide their details to access resources this also qualifies as a conversion.
In the past, conversion primarily referred to sales. In todays landscape with touchpoints, processes and diverse offerings, on a site a conversion occurs whenever the visitor takes the desired action, whatever that action may be.
Retention entails the engagement of recurring customers or visitors. If one of your visitors converts and becomes a client they fall into the “retention” category.
When a customer becomes a repeat buyer this represents retention. If the open rate of your email newsletters remains consistent you have retained that readership size. Simply put if they make another purchase they have progressed through the stages of the business funnel.
The Takeaway
Sometimes the challenges get a bit rough. When you need a better understanding of how your business is performing, working with a professional marketing team can be a smart decision. Reach out to us. We can help you make sense of it all.
