Calculating ROI for social media marketing can seem like a daunting task. After all, this marketing method is fairly new, and ROI calculations run well only in a dollars and cents world, an idea that sometimes defies social media. To really understand how to calculate your ROI in this space, then, you have to expand the idea of returns.
It’s what you literally get back from the time, effort, and resources you commit within your company to this unique platform, and coming up with a hard number to show off at the next roundtable discussion of what’s working and what’s not in the world of social can be rough. So, what can you do to come up with some numbers? This quick guide can help.
It All Starts with a Goal
Before you can even begin to calculate your returns, you have to think about what your social media goals might be. There are lots of options, no matter what platform you’re using. You could be looking for new followers. You could be looking for click-throughs. You could be looking for users to do something specific like download an ebook or fill out a form. You could even be looking for something more direct like a completed purchase.
Once you know what you want, you can actually begin to track it. Use Google Analytics or another platform to track those downloads, sign-ups, or even direct conversions so you begin to get some idea of what your numbers actually look like.
After tracking, you’ll want to begin thinking in dollars and cents again to calculate the cost for social media marketing. There are really only a few options here. You could consider the lifetime value of a customer. That means you need to calculate how much you typically earn over the lifespan of any given customer. You could also look at how much ever potential visit to your site is actually worth to you. Finally, you could consider the average purchase through your site.
Once you know what value actually looks like, you’ll need to add up what all of those clicks are actually costing your company. Sure, your Instagram account may actually be free, but the tools you’re using and the people who are posting day after day probably aren’t free.
Begin by taking a closer look at the time involved. Just multiply the cost of the labor by the number of hours everyone committed over the last campaign cycle. Then add up the cost of the tools and the services you use to help you manage your social media campaign. Add those two numbers together, and you'll be able to see your overall investment.
Why Bother?
Wondering why you’d ever want to do that math? It should actually be a fairly high priority for your company. First, it can help convince everyone in your company that social media marketing really does matter. More than that, though, it helps to prove that the strategies you’re using right now are driving results within your company.
It can also help inform the budget for the upcoming quarter for your social media efforts. Maybe most importantly, though, tracking the ROI on your social media efforts is going to directly inform what you do next. Part of your strategy right now might be working, but it’s possible that part of it isn’t. Find out what is working so you can fix what isn’t.
Measuring the ROI of your next social media campaign may not be easy, but it is more possible than ever, and we can help. Give us a call today to learn more about how social media can profoundly impact the success of your company.
