How to track ROI from social media marketing

The first question many businesses have when considering the decision to invest in social media marketing is: what kind of ROI should I expect? Many people view ROI as revenue/cost equation. Under this presumption, if a business brings in more money than they spent on a marketing campaign then they have a positive ROI. If they bring less money than they spent they have a negative ROI. This revenue/cost model should be altered to compare total cost with total value gained, not total revenue.

It’s easy to keep track of your businesses costs associated with social media marketing. There are hourly/salary costs associated with employees who spend a certain amount of time maintaining and updating social media accounts. There are agency fees associated with any outsourced work done for your business on social media. There are direct costs for advertising. Finally, there are miscellaneous costs for additional time, money and resources allocated to social media. Calculating value is not as easy.

The first thing to look at when analyzing value is revenue and sales. Like costs, this is also pretty easy to track. Setting goals will help you measure your success. Consider creating different “calls to action” for your website or Facebook Fan page that track conversions, and then track these conversions to see if they become clients. Beyond revenue, there are additional ways to measure value:

• Measurable goals (other than revenue): Generating leads is typically a necessary step to achieve before you generate revenue. Having the proper follow up process in place, like email marketing and newsletters, make these leads extremely valuable. Also consider improvements in website bounce rates, average time on site, unique visitors, etc.
• Customer Feedback: Additional knowledge that you gain by interacting with individual clients and get feedback from them about your products or services
• Industry Expertise: Putting out a consistent message that is both unique and valuable to your following on social media
• Testimonials & Referrals: It’s great to have testimonials on your website. It’s even better when happy customers are raving about you on social media. Even better than a testimonial is a referral.
• Customer Satisfaction: Improvements in various metrics can often indicate that clients are more happy with you product, service or brand.
• Improvements in other marketing efforts: Social media can often improve the effectiveness of a business’s other marketing efforts. Email marketing, direct mail marketing and mobile marketing campaigns are typically more successful and well received if your prospects have already connected with you via social media.
• Branding: This is a hard thing to measure analytically, but long-term brand recognition is easier to achieve if you put out a consistent message and identity for your business via various outlets of social media.

The tough part about assessing ROI with social media is that many of these benefits cannot be measured with analytics and other tools. Often times companies get too caught up with statistics, like “number of Facebook Fans”, “number of opt-ins” or “number of click-throughs”. These things measure value, but that is not really value in itself. Real value is measured over time. One happy customer that tweets about their experience to their 5,000 Followers could potentially lead to dozens of new clients. If you can track each of these new clients back to this tweet then you can determine the monetary value of that one happy client. However, how do you attach a value to the collection of happy clients who collectively make your brand well received, potentially leading to more business down the road? More specifically, how do you measure the value of a survey that you conduct through social media that leads you to promote one service more heavily over another?

The answer to these questions is that businesses need to determine what these values are before getting started with social media. Determine what the most important benefits are to your company from using social media (other than direct revenue). Give each of these benefits a (rough) value and monitor them closely. ROI isn’t just about revenue.

If you want to learn more about measuring ROI or getting started in social media, contact Turbo Social Media today.

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About The Author:  Tom Sullivan is the senior account executive at Turbo Social Media. He has managed accounts for a wide variety of businesses, from small “Mom and Pop” businesses to multi-million dollar corporations. His success in business stems from his entrepreneurial drive and his desire to do “whatever it takes” for his clients to be successful. Tom received his BA in Business Management Economics from the University of California at Santa Cruz. He is a former collegiate rugby player and he enjoys playing softball, golfing, camping, and snowboarding in his spare time.

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