Twitter Facebook LinkedIn Flipboard 0 It’s not often that businesses will adopt a new marketing channel before even trying to get a rough idea of the likely ROI. However, with social media, all the usual rules seem to have gone out of the window as businesses continue to flock to Facebook, Twitter and, more recently, Google+ without even casting an eye in the direction of ROI. The most likely reason for this is that, given the pace that social media marketing is being adopted, companies are simply jumping on board because their competitors are doing it. When everyone around you is taking action, that’s often reason enough for others to join in for fear of missing out. In other cases, it may have been in response to PR disasters that were unfolding before their very eyes on social media so there simply wasn’t time to carry out a ROI analysis. Whatever the reason your company embarked on social media though, it is likely that you have already been asked – or are likely to be asked very soon – “what is the ROI of social media?” When people ask me this, the first thing I say is “well, that depends on your social media objectives” – not usually the answer they want to hear but, in my opinion, the only correct one at this stage. In order to calculate your ROI, you need to know what metrics to measure, hence, you need to have defined what your goals are. Example social media goals might be: Generate leads Increase visibility in search engines Drive traffic to your website Increase brand awareness Establish thought leadership Engage with prospects and customers Promote your content Create loyal and trusting relationships with your customers Support marketing campaigns Save costs eg. recruitment campaigns Monitor what people are saying about your brand Improve customer service Collect the data Once you’ve decided on your objectives, you need to identify the metrics that you will use to measure them. Metrics alone won’t give you your ROI though, they are simply numbers which show if indicators have gone up or down. Metrics might include: Website traffic (by referral source) Website registrations Number of downloads Increase in subscribers, fans, followers etc Online engagement eg. comments on your blog, number of re-tweets, shares Ranking positions in Google Increase in new sales and cross-sales from existing customers Decrease in costs Mentions of your brand eg. number of positives/negatives Length of customer service handling time Now for the ROI Once you know your benefits, you need to be able to assign a financial value to them. For example, did your improved rankings generate a prospect who then went on to buy from you? Or, did you engage with someone following a positive comment they left on your blog who then went on to make a purchase? Once you have assigned a value for your benefits, you just need to work out your costs (such as man power, outsourcing content creation etc) and you’re ready to calculate your ROI. The equation is: ROI % = (Benefits minus Costs x 100) / Costs I recently read an interesting article by Sudha Jamthe called 3 accurate metrics for ROI on social media campaigns which is worth a read. She talks about social media revenue conversion which measures how many people become customers through social media referral channels. Also social media engagement and social customer support metrics. She highlights the challenges and gives some good examples of what some businesses are doing to overcome them. Twitter Tweet Facebook Share Email This article originally appeared on Red Rocket Media and has been republished with permission.Find out how to syndicate your content with B2C Author: Michelle Hill Follow @VerticalLeap I am the Marketing Manager for Vertical Leap, a search marketing agency with offices in London and Portsmouth. I love swimming, nice food, red wine and being anywhere on a beach or up a mountain.… View full profile ›More by this author:5 Ways Shopping Behaviour Is Changing in the UKReport: Q4 2020 Google Trends For the Retail IndustryeCommerce Marketing Trends in 2019