A question often torments companies: how to measure the ROI of their social media strategy? It is difficult to define a single calculation method to measure this value, as the possibilities are numerous. But above all, measuring ROI is based on an essential factor: your social media objective!
Measuring the ROI of your social media strategy is primarily based on your objectives.
A social media marketing agency will define the elements that will enter the calculation of the ROI and the formula dedicated to this important metric.
THE DEFINITION OF ROI
The ROI, or return on investment, refers to the sum of all the quantified actions that bring value to your company. This value is defined according to your objectives. It can take the form of increasing your revenue, growing your brand awareness, or improving customer satisfaction .
If you are unsure of what to measure, ask yourself what sort of things your target audience did after being exposed to your campaign? Did these measures correspond to your objectives? Where have they failed? How can we improve them for the next time?
It is also on this last point that measuring ROI is essential: it shows you what is working and what needs to be improved. You can judge resource involvement and tactics to be the most effective.
THE KEY ELEMENT OF ROI: A CLEAR OBJECTIVE
The brand awareness created by social media is valuable, but not always sufficient.
According to Altimeter, only 34% of companies believe their social media strategy is linked to business results. However, to show the true value of your actions, you must set goals aligned with the objectives of the company and not necessarily those of the sales department …
Indeed, social networks do not have to be correlated with commercial performance. They may aim to:
- Acquiring leads
- Growth in visibility and brand awareness
- Managing your online reputation
- Improving the customer experience
- Optimizing customer service
It is by precisely determining the goal of your social media strategy that you will calculate a relevant ROI.
SOCIAL MEDIA PERFORMANCE INDICATORS
So-called “vanity” measures – like likes, comments, and shares – are sometimes frowned upon, but they have value. Use them to gauge the overall health of your social presence, measure yourself against your competition, and determine what content resonates favorably with your audience.
If your goal is to increase brand awareness and improve your relationships with prospects, these metrics shouldn’t be viewed as “vanity” metrics – on the contrary.
Other more concrete indicators can enter into the calculation of your social media ROI:
- The scope
- The engagement of your subscribers
- Traffic to your site
- Leads and income generated
- Subscriptions to your forms
To define which metrics to track, you need to ask yourself the following questions:
- Are they aligned with my goals?
- Can it allow me to decide (what more, what less, etc.?
- Am I capable of effectively calculating it?
TAKE INTO ACCOUNT SOCIAL MEDIA COSTS AND INVESTMENTS
There are 4 essential elements to consider in calculating the return on investment.
1. The investment cost of the tools
Most social networks are free to use, but sometimes you have to plan to invest in planning and analysis tools to better manage your social media strategy. If this is your case, then add up the monthly cost of your different tools.
2. The budget allocated to advertising
Have you boosted posts on Facebook and Instagram? Or create fan recruitment campaigns? Check the amount spent on social media ads to calculate your ROI.
3. The budget for content creation
How much did it cost to produce the material you shared on your social networks? Have you asked internal or external writers to write blog posts? Who took care of the photos posted on Instagram or Facebook live?
The ROI calculation also includes these functional costs.
4. The time spent managing your social media strategy
How much is the social media team spending?
Whether it’s meetings, content creation and promotion, or ad serving, it all adds up. You can do this for a specific time period to determine a campaign’s ROI or calculate how much time your business spends on social social media each month or year.
Once you’ve added all of the above together, you can measure ROI against your goals.
Additional tip : to calculate the ROI fairly, consider smoothing the costs over the same period. For example, if you pay for a tool license annually, but want to calculate the ROI monthly, divide the price of the tool by 12. Conversely, if you are performing an annual calculation, add up the monthly costs.
CALCULATION OF SOCIAL MEDIA ROI
Now that you know all the costs associated with managing your social networks, list the fallout for your goal. For example, the number of visits from social networks, impact from influencers, the income generated by your coupons (only published on your social networks), etc.
So, if you are using social media to drive traffic to your website, you can determine the cost of each visit (and therefore the ROI of your strategy) with a simple formula:
Number of visits via social networks / social media investment (person-hours, advertising budget, etc.) X 100 = ROI (in percentage)
To go further, you can use the number of visits from social networks, which turned into sales. Provided you have followed all the links posted on Instagram, Facebook, LinkedIn, Twitter, etc.
The measurement of ROI in social media gives your organization a valuable insight into the achievements of recent and future campaigns. Your goal for this year is therefore to have a better ROI.
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