How to: Measure social media ROI

Measure social media ROI

It is the biggest opportunity out there – and a thorny problem. Social media has lit up the roads to wider distribution, to a direct audience connection and, perhaps, to profit for brand marketers.

But how do you know when social media works and when it doesn’t? I am reminded of the old saying: “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.”

This still rings true today. Small and large brands alike are now spending plenty on creating and updating their Twitter, Facebook and other channels with content to snare followers. But how can we be sure any of this resonates? How do you quantify the return on your social investment?

1. Aim low at first

These days, online marketing gurus are pushing hard toward a world in which every action, every crumb a customer leaves on the data trail, is attributable in the wider purchase journey; where ROI is discerned by cross-referencing an end sale against the part a social investment played in it.

But social dances to a different drumbeat, and the possibilities are less clear-cut. Social media is no storefronts, and although big data about the on-network actions of users is often crunched to generate social analytics, it can still fail to translate into actionable selling intelligence-measuring ROI.

Businesses can deploy a ‘Buy Now’ button on Facebook, or similarly on Twitter with a Shopify integration. But unless you are active in ecommerce and doing a vast majority of your business on social, which is unlikely, these buttons will not capture a majority of your business, and social will continue to sit at the top of your sales funnel.

2. Don’t rely on vanity metrics

We’ve established you can’t rely on hard-and-fast linear data to judge your ROI. Let’s look elsewhere. Social networks all have their own data points that make the medium. Follows, likes, shares, comments, clicks-through… these all offer proxies that can be considered barometers on the quest for ROI.

But understanding these metrics does not unlock the door to understanding actual return on social media spending. Over the years, some people have attempted to quantify the monetary value of, for example, a Facebook like – but this is far from an exact science and is different in everyone’s case.

Treat social media metrics as they come – a worthwhile directional indicator of audience resonance, but not an answer your accountant would accept.

3. Do your own sums

To really quantify your social media spend’s worth, you are going to have to use a combination of platforms’ tools and your own ledger book. In other words, you can deploy conversion tracking.

Conversion tracking works by bridging the gap between your end sales (which social platforms can’t see) and the social messages that may have started a customer on the road to purchase.

Unfortunately, the technicalities required to enable this mean smaller businesses that are already struggling to allocate resources to extracting the most out of social don’t always get to benefit. To do so, embed social tracking code on your web pages and link it with your ad account on Twitter, Facebook etc.

Of course, Google Analytics remains a powerful tool in this respect as well, so it is always worth the effort to dig into the platform and see how much of your traffic is coming from social media for example, and where it’s landing on your website. Set up goals in Google Analytics to understand how social media is leading to conversions.

4. Commit to a long-term relationship

The best approach to social media ROI is to serve customers, not to expect an immediate sale. You wouldn’t expect a customer to buy from you without browsing – so don’t be pushy. All good metrics come to those who wait, and to those who nurture. Nurturing leads over time is what builds customer loyalty, and loyalty is the basis of a long-term relationship, especially in B2B.

While many businesses are turning to subscription models to lock in loyalty on a pay-to-play basis, social media is about creating this loyalty in a more organic fashion. Social media engagement metrics are a strong indicator of loyalty at the end of the day. We know that 71 per cent of social media users are more likely to purchase from a brand they follow, so striking this relationship is critical. But, once it is established, a social relationship should not be viewed as a one-time event.

Recalibrate your expectations from social media ROI. Focus on relationship first, sale later. You are best placed to join the dots in between.

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