Are you unsure about how to measure your social media ROI?
Have you heard of phrases like ‘return on influence’, ‘return on conversation’, or ‘return on engagement’, which some social media marketers use to try and justify your social media expenditure?
The truth is, as Nichole Kelly explains in her new book How To Measure Social Media, ROI is always financial. Rather than trying to silo social media and measure it with confusing or irrelevant metrics, it’s better to fit Social in with your wider marketing picture.
But how would you go about measuring your social media marketing efforts in financial terms? This article explores how social media should be implemented in a way ROI can be measured, what to measure and how it should fit in with other marketing methods.
What Are Your Touch Points?
You are probably already familiar with the term ‘sales funnel’, where a large number of potential customers come in at the top and are gradually filtered down to interested buyers, then customers at the bottom. Previously, this sales funnel would have been very simple, for example it might have taken six phone calls or visits to your shop to convert a prospect into a customer. However it’s a little bit more complex now, thanks to the myriad of different marketing channels available.
Now, when a prospect is looking for a product or service, they may be exposed to several of your touch points before they make a decision. They may read a review about your new product in the newspaper, search for you on Google, then follow you on Twitter, and finally visit your website before phoning you and placing an order. As a result, your social media strategy needs to fit in to your wider marketing message rather than being put in it’s own silo.
How Should Social Media Be Treated?
To begin to understand how to measure your social media ROI, you first need to know how it should be treated. Should your Facebook brand page look and act like your website, or is it more like SEO or PR?
For the answer, let’s return to the sales funnel. This can be split in to two sections, upper and lower, which each have different contents and functions. The upper funnel contains soft leads, which are prospects who have only recently been exposed to your brand or who have only just begun considering you as a supplier. Marketing touch points that cater to soft leads focus towards increasing awareness of your business.
As awareness increases, more soft leads fall into your sales funnel. A percentage of these will turn into hard leads, who are prospects that are more likely to buy. They have a closer relationship with you, whether that be through signing up to your email newsletters, phoning your sales team, visiting your website or researching you online.
With the hard and soft lead categories defined, let’s take a look at where these various marketing touch points fall:
|Soft leads generated by:||Hard leads generated by:|
|TV, Radio or Newspaper adverts||Website|
|PR campaign||Email Marketing|
|SEO or PPC||Salesperson|
Social media has been placed in the soft lead category, along with advertising, PR, SEO and PPC (pay per click). Why is it here, and not categorised as a hard lead along with your website, email marketing, telesales and salespeople? It’s down to user behaviour.
Facebook, Twitter, LinkedIn, Pinterest, and in fact any social network, are popular because they put the user’s own experience first, much like a newspaper. Newspapers would not have become popular if they only contained adverts; there must first be interesting content which delivers sufficient value for people to read it in the first place.
Social networks work in a similar way. Their value is based on the strength of the network, as if no one logged in and posted content, there would be no content for other users to read or engage with, and as a result, there would be no value in having an account for that network.
What Should Your Social media Objective Be?
To understand what your objective on a social network should be, it’s best to compare social media with PR.
PR and social media have very similar aims and cater to prospects at the same soft lead stage at the top of the sales funnel. The aim of a PR campaign is to generate awareness, create authority and establish yourself as a ‘thought leader’ in your industry. You would never have your PR agency put an order form at the bottom of an editorial column about your product and expect orders to start coming in. Similarly, such a strategy wouldn’t work with social media.
To understand what your social media objective should be, avoid falling into the trap of considering your Facebook brand page as a mirror of your website. Your social media strategy should instead follow similar objectives as your PR campaign, with the aim to add more soft leads to the top of your sales funnel by building awareness and interaction.
Use Common Metrics To Measure Your Social media ROI
Now that we’re clear where social media should fit into your wider marketing strategy and what it’s similar to, it’s easier to begin to work out how to measure your ROI. Currently, the trend among social media marketers is to measure metrics such as mentions, retweets, likes or followers. But what do these really mean from a business point of view? What is the value of a retweet?
Since we’ve established that social media fits in the same category as PR, SEO, PPC and newspaper advertising, it would make sense that the ROI is measured with similar metrics. Cost per impression would be a good one, as this is used in PPC marketing. A similar metric can be estimated from newspaper advertising, for example what was the cost of publishing that article or advert divided by the circulation of the newspaper. Using common metrics like cost per impression makes it easier to compare the performance of different marketing channels, helping you decide where to invest your time and money.
Drive Prospects Down The Sales Funnel
Measuring social media purely by cost per impression has it’s downsides. While you’ll be able to see your progress in expanding the top of your sales funnel, tracking this metric exclusively will not show how many prospects are travelling down the sales funnel and becoming customers.
As we’ve already examined, potential customers will likely make contact with your company through several different touch points before a sale takes place. With this in mind, it’s important that your social media ROI is measured with metrics employed elsewhere in your business, like cost per sale or cost per lead, rather than any social specific metrics, which can be confusing, unreliable, or don’t tell the whole story. These metrics are also more revealing than cost per impression, giving you a bigger picture of your marketing as a whole.
To ensure your social media is successful in demonstrating an ROI using these metrics, it’s important to make sure your profiles are optimised for moving prospects down the funnel. As we’ve established, social media is a touch point for a soft lead, so for a sale to progress, the prospect needs to be transferred to a touch point more suitable for hard leads, such as email marketing, or driving traffic to your website.
These methods can be implemented on most social platforms. Facebook and Mailchimp make it easy to add an email sign up form to a tab on your Brand Page, while a content marketing strategy integrated with your Social media efforts creates links back to your website, turning soft leads into hard ones.
Track Your Campaign
Now you know how to move prospects down the sales funnel and what metrics to measure, a strategy needs to be put in place to measure this. Google Analytics is one of the best tracking solutions out there, offering detailed insights, ease of use and best of all, free to use.
It’s important that you set up Google Analytics to accurately track all your website visits, not just through social media, but via SEO, PPC, mentions on blogs or others. Otherwise, your social media ROI could not be compared to anything, or worse, a lack of tracking for other channels could result in incorrect social media measurements. Remember, since most buyers make contact with multiple touch points before they make a purchase, it’s important that everything you do is tracked and measurable.
By setting up ‘goals’ on Google Analytics, it’s possible to measure the effectiveness of your online sales funnel. A goal is something you want your customer to do, which might be make an online purchase, join an email list, request a call back or fill out a survey. Consider what you want your website visitors to do before you set up any goals, which makes it easier to measure your activity and optimise your marketing strategy.
Ensure Your Tracking Is Accurate
There are a couple of things you should do to make sure your social metrics appear correctly in Google Analytics. Currently, link shortening services like Bit.ly are popular with many social media marketers, as they can turn a long URL into a more visually pleasing one. Unfortunately, Google Analytics cannot track these correctly, meaning you wouldn’t know whether these inbound visitors were coming via Facebook, Twitter, or elsewhere.
The solution is to use Google’s URL builder tool. Using this, you can create a custom URL appended with tracking information. These can then be run through Bit.ly, and enables Google Analytics to accurately track social media visitors, and in turn, your social media ROI.
As a result, you are able to track your customer’s journey, from reading a tweet, to visiting your website, to ordering a product or even giving you a call if you have a unique phone number system set up. A major benefit of tracking leads using Google Analytics and custom URLs is that your social media efforts become directly measurable against other methods of online marketing, such as SEO or PPC, helping you to decide how to effectively use your resources.
This allows you to measure social media in terms of cost per sale or cost of customer acquisition, rather than social-specific measurements like retweets, likes or comments, which are difficult to translate into wider business objectives.
As social media is now a widely used method of digital marketing, it’s time to stop treating it as a curiosity, side project or a hobby. Thanks to the tools built in to Google Analytics, it’s possible to discontinue the use of confusing social-specific metrics, replacing them with easier to understand metrics like cost per impression, cost per sale or cost per lead.
However, while these metrics can empower you to measure the contribution of social media to your business in the same way as SEO or PPC, it’s important to avoid seeing different methods of marketing as competing. Since consumers now are exposed to several of your touch points before making a purchase, your analytics should be used to patch up any underperforming channels and improve your overall online experience.
Similarly, the tracking methods described here need to be applied to all aspects of your marketing and PR activities. What’s the use of tracking your social media ROI if you have nothing to compare it to, or worse, if your tracking is incomplete and you loose sight of your leads through the customer journey? These ideas should empower many businesses to continually analyse and optimise their marketing approach across all channels, not just social media.