Previously in this ‘measuring social media objectives’ series, we’ve explored:
- How to measure brand perception on social media
- How to measure brand awareness on social media
- How to measure lead generation on social media
- How to measure thought-leadership on social media
This week, let’s take a look at return on investment.
Return on investment is often misunderstood by marketers when looking at social media. Traditional advertising relies on some form of tracking so that conversions can be linked to specific ads – helping marketers to improve their investment in what works and reducing the cost of what doesn’t. The problem with social media marketing is that the path to conversion is often longer.
With PPC ads, for example, you focus very much on quick conversion. You are paying for someone to click on the link to your site, so you want to make it as easy and inviting as possible for them to buy from you. Social media is the opposite. It’s not about direct selling of goods and services but about interaction and building relationships.
Social media marketing costs time and money to manage, so there is a cost involved and you should be able to measure the return those costs bring you. The key difference between social and traditional is time.
Setting your benchmarks before you start
Before you can measure the ROI for social media marketing, you need to set benchmarks to compare with later results. If you are using Google Analytics, make sure you have goals or events configured so Analytics can report on conversions. You can then drill down into the data to find out the sources of those conversions – the path through the site to the conversion page, as well as the traffic source.
You can examine social traffic sources to understand which social networks are sending traffic to which articles.
You should also make a note of how many fans (likes) you have on your Facebook page, how many followers on Twitter, how many people have you in Google Plus circles, how many followers on Pinterest… Create a spreadsheet with your key benchmark metrics and make a note of the date, then use this as your starting point.
Next, evaluate your conversions from each social network to place a value on them, remembering to count interactions as well as first-click conversions. For example, if Analytics shows 20 enquiries that have come from clicks originating on Facebook, you can look at your Facebook page insights to see how many people liked or commented on the link. Some companies, for example, assume that x% of the total will be looking to buy. If you know that, say, 10% of all enquiries convert to sales, and you know the average value of a sale, you can calculate the value of each like on Facebook, or each enquiry. How and what you measure is up to you, but you need a way to evaluate the activity.
Remember the assisted conversions as well
Google Analytics has started reporting assisted conversions, which is a very useful way of showing how conversions don’t just happen in a single session. With social media this is very useful because you might find that a customer converted from a PPC ad, but they had previously visited the website from a web link on Facebook. This would imply that they may have remembered the company name and gone searching for it, hence it was social media that assisted in getting the sale.
Create and measure content for the buying process
Some smart companies are using social media to inform their content strategies. For example, if you monitor discussions about your brand or products on social networks (there are some tools and services that can help with this), you can spot which features are most important to customers, then focus your content around these.
Because the buying cycle is longer on social media, you should create content that helps customers understand and use your products better rather than just try to sell the product. Inform, entertain and teach people through your content, promote this content socially and measure the traffic you get as a result.
You won’t get sales right away so measure what happens in between. Measure sign ups to your email newsletter, quotation requests etc. Then you can place a value on each stage of the chain.
You should be able to measure the difference between when you started and any point in the future – whether it’s sign ups, enquiries, Facebook likes, content being shared, referral traffic increases, reduced cost of conversion etc.