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Measuring social media ROI can be a complicated process that takes time and effort. If you are a marketer or social media manager who struggles with this, you’re not alone. In fact, 34% of marketers around the globe said they were uncertain about their ability to measure social media ROI. Sometimes, it can feel like your job depends on a guessing game. Here, we will explain how you can make a case for social media ROI at your place of work.
Social media ROI (return on investment) quantifies the return or benefits an organization generates in relation to the resources, time, and money invested in social media marketing.
Measuring social media ROI is important because it enables you to:
Understand cost-effectiveness: learn how the social media results you're getting measure up to the money you've invested.
Review performance: Show what methods work and help you understand what messaging, timing, and channels give the highest return.
Optimize strategies: understanding cost-effectiveness and performance helps you make data-backed decisions and adjust your social strategy as necessary.
Proving social media ROI is essential for:
Knowing what works and what doesn't: many opinions tend to get thrown around about what marketing teams should focus on. Having data to back your decisions of where your team is putting their efforts helps eliminate speculation.
Demonstrating value: Measuring social media ROI should help you show the value of your work, whether it’s to management, the business, or your clients.
Increasing budget: once you demonstrate the value of your work, it gives ground to stand on when asking for more money or resources.
To calculate social media ROI, you typically compare the financial gains (such as revenue or cost savings) generated from social media advertising against the costs incurred (such as advertising spend, content creation costs, and employee time).
A simple formula looks like this:
(Value achieved – investment made) / investment made X 100 = social media ROI.
However, it's not always straightforward since "value achieved" can mean many things that don't always equate to a dollar amount. A more holistic understanding of return on investment for social media also includes return on influence and engagement.
For that reason, it’s essential in the social media strategy planning process to align with your stakeholders on what you’re trying to achieve through social media. Set realistic expectations and identify what stakeholders care about. Though this can be difficult, it’s not impossible.
For example, brand awareness can have a lot of positive impact on the business — long game it can correlate with an increase and sales and short term it can build trust that leads to being top of mind for customers when making a purchase decision. It can also lead to current customers recommending your product.
A foundation for measuring social media ROI, is considering your challenges and asking how social media can help solve them. What are your goals, and what are the right social tactics to achieve those goals?
Here are three key areas where we see social media having a significant impact on a business:
Let's look at each one and ways to measure them.
1. Brand awareness
Generally, brand awareness campaigns aim to get your brand in front of your ideal target audience rather than get a lead or purchase. Brand awareness is essential because it's the first stage of the marketing funnel, where people get familiar with and form an opinion of your brand through multiple interactions or touchpoints.
Dove’s #TurnYourBack is an excellent example of a brand awareness campaign. Rather than trying to sell a product, the campaign exemplifies its brand values, taking a stand against filters and unrealistic beauty standards.
Since results usually aren't directly tied to a dollar value, here are some other ways you can measure the impact of brand awareness:
Share of conversation
Moving the needle with your audience
Followers sharing your content
Followers talking to you
Number of non-followers reached
Growth in search volume
Growth in direct web traffic
2. Customer interactions
Customer interactions on social channels are more detrimental to a brand's value today than ever. A large part of this is promptly answering customers in their preferred channel.
Starbucks does a great job of customer interactions on social media — responding to comments, implementing customer feedback and reposting customer content.
Here are some ways to measure the value of your customer interactions:
Engagement and visibility driven by outbound messages
Cultivation of audience-driven passion
Brand love loyalty content created over time
NPS score: demonstrate the activation of high-value customers
3. Risk management
Brand boycotts are a growing social media trend no company wants to be in the middle of. When viral movements hit social media, they can quickly make or break a brand's value. Having a plan to ensure your brand holds its value is crucial.
Here are some ways that you can measure risk management on social media:
Monitor volume and sentiment benchmarks
Response time to conversations around topics your brand cares about (hint: with the right tools, you can set up trigger alerts for when there’s an uptick in conversations about topics important to your brand)
The number of brand advocates you have that support your position and share your messaging
No matter what metrics you decide to measure, they must align with your business objectives. It's also always a good idea to regularly revisit the metrics you're measuring.
Once you have decided which metrics to measure, you'll need a way to prove the return on investment of money, time, and resources spent. Here are some tips for how to prove social media ROI:
1. Set up a straightforward, easy-to-manage reporting process. Ideally, this should include automating functions to eliminate the tedious task of manually pulling results.
2. Tie results to business objectives. When you’ve collected the results, connect them to overall business objectives. It's also important to consider the audience you're trying to prove social media ROI to so that you present the results clearly and in a way that's relevant to what they need to know.
For example, your leadership team might only care that you had a 5% increase in social media followers that month if they understand how it creates value for the overall strategy.
3. Avoid using too much marketing jargon. Keep your language straightforward and easy to understand when presenting results to stakeholders.
Your social media marketing tool significantly affects what your measuring and reporting process looks like. Overly complicated or cluncky systems can hinder your ability to measure results, build reports and understand what's working and what's not.
Khoros' social media management tool allows users to quickly build reports without the help of a developer, making it easy for marketers to do it themselves.
If you're feeling lost and need some advice, we also have a team of social media experts that can help you determine which metrics make the most sense for your business and strategize a plan for moving forward.
Want more information about Khoros social media management? Click here.