We’ve been tackling social media intelligence and its advantages within inbound marketing in a few previous blog posts (here, and here), but we’ve yet to touch on an issue that is both a little more technical but essential for long-term success: measuring the return on investment (ROI) on your social media performance.
Regardless of what your social media intelligence data says about how “hot” or “trending” your business is in your social networks, you can’t determine your ROI if you can’t measure your social marketing performance. Sure, the attention is great and you’re building up your brand, but you simply need a a concrete way to measure your progress.
Define and Measure
So let’s say you have a Facebook Page and you have tons of Fans. What does that mean in terms of ROI? In other words, in terms of your reach and revenue, what sort of ROI does your Fan’s “Like” give you?
It’s a question of definition and measurement: you need to define the metrics that are important to you, and then you need a means of calculating them.
Share of Voice
For example, if we want to isolate the reach and revenue generated by a single “Like,” we can determine a value to its reach by using the computation for “share of voice” (or SOV).
Marketo (www.marketo.com/) recommends this SOV formula:
SOV = Your Brand Mentions / Total Mentions for Your Competition
In this case, SOV uses “Mentions” and not “Likes,” but the approach is the same. Your total “Like” share from this calculation can then be divided by your total “Likes,” (Like Share / Total Likes) giving you a measure of the influence of a single “Like” on your page.
This shows how much reach one “Like” has for you, and this number can then be used for both inbound marketing and social marketing A/B testing.
To measure the revenue gained from a “Like,” Radian6 (www.radian6.com/) recommends this formula:
Your revenue from “Likes” = Your Total Monthly Facebook traffic revenue / Your Total “Likes”
This is pretty broad, but it helps give you insight into your progress. Using your actual revenue figures will give you a good idea of what happens to your revenue from “Likes” when you test something new on your social campaigns or start integrating your social campaigns with inbound marketing.
The Value of a “Fan”
If you’re still here and the formulas haven’t made you want to switch over to YouTube yet, then let’s dive a bit deeper.
In summary, your total “Likes” merely reflect how many Fans you have and how many people are talking about you on Facebook. If you’re planning to invest in improving your “Like” metrics, you need to determine the “value” of these Fans first.
ComScore (Comscore.com) and Facebook say a Fan’s value is determined in three ways:
- Depth of engagement – strength of loyalty among your Fan community (branding)
- Incremental purchases – increased revenue generated from growth in social media “likes”(profit)
- Influence – how many Facebook users a single Fan can influence.
Remember that “Fans” can be both leads and/or influencers and while you want to increase the value of a Fan in all of the measures above, most of the time you will need to focus on only one. In sales, for instance, profit through incremental purchases would be the priority. For inbound marketing, word of mouth marketing as well as branding are the typical priorities.
If this all sounds like a little more than you want to deal with, fear not – this is why social media marketing and the mining of social media intelligence are done by specialists.
Your inbound marketing and social media partners will walk you through these and other assessments and will handle most of the gritty stuff, but you should know the concepts and the numbers.
Mining all this Social Intelligence will help you determine your ROI and measure your success through social media. Otherwise, why bother?