How to Calculate Social Media Marketing ROI
Before you can even begin to work out the Return On Investment (ROI) for your business’s Social Media Marketing, there are a few things you need to think about.
Social media marketing is about communicating between you, your brand and your target audiences. That much is clear.
But the perennial questions are why, and how?
What do you need social media marketing for?
What’s its purpose? Consider things like: brand awareness, raising personal profiles, making new connections, generating business enquiries, or to fulfil a marketing pipeline?
Over the last 15 years Social Media has become THE way to communicate online. That means, marketing your business has become a whole lot more technical.
What's your strategy? Perhaps you’re just posting updates to let people know you’re still alive? To let them know what you’re up to? Or to show off how well you’re doing? These are all valid reasons, but is this of interest to your audience?
Whatever the reason, it’s a good idea to figure the strategy out first, then you can work out what you’re hoping to gain from it.
And from there – you can figure out the how.
How do you know who your target audience is?
Thinking about the types of people you’d like to attract who have similar values to your own means it’s more likely that they’ll choose your business over others and means a more successful lead.
By creating ideal customer profiles – what they’d like to see, what they’d be more interested in, what’s more relatable to them. At this stage it's mostly a guessing game based on your competitors, what you do/don’t know about the target audience and who your ideal client might be.
Write down characteristics about them, their age, where they live, their type of lifestyle, earnings, type of business and area of expertise. It might be helpful to find an image to help bring this person to life.
Once you know your audience, you’ll get a better understanding of which social media platform is most appropriate to find them. For example, for B2B professionals then LinkedIn is the best option, or if they are Gen Y or Z, then Instagram or Tik Tok might be better.
How do you know what to say on social media?
You can ultimately say all kinds of things about yourself, your products, services or take time to understand what your brand is trying to communicate.
When you communicate through written words, sometimes the intention or desired impact gets lost in translation and so it’s imperative to understand your core messages, before you begin drafting it.
Where's a great place to start when working out your core messages?
Social media marketing strategies often start with a comprehensive plan that includes content themes and pillars. For example, it might be that you want to educate, inform and inspire your audience - these are your pillars. Themes are a little more vast and rely on you having a good objective understanding of your brand and it’s motivations - for example, here at Ipsa we often write helpful snippets about marketing tactics, our ethos when it comes to sustainable business or the values we uphold day to day.
Audiences are responsive to authenticity. This is where knowing your personal and brand values can come in really handy.
All of this will start to lead to results, whether positive or negative – it’s all well having thousands of followers, but if there is no meaningful engagement or action, then what's the point? In a world where TikTok exists, how many followers you have seems to be what catches peoples eye these days but it’s not always in indicator of popularity.
The likes, comments, shares and connections are all well and good, but do they earn you money?
The more important thing about your business is, what does your brand say and what type of people do you want it to attract? Brand awareness is the more difficult thing to quantify, but if you’re attracting the attention of the right following, those are the people whose custom will ultimately earn you money.
So, how can Social Media ROI be calculated?
As with most answers we give in this blog, it depends… There are a number of results you might want and so below are some of the most popular metrics.
We need to know that the time spent on social media marketing is resulting in purchases, enquiries and engagement.
If we were to turn this into an equation:
Implementation X engagement (+time) = enquiries
Work out how much time it takes to strategise, make and design the posts and post them to each platform in one period of time.
Is resulting in the total of likes, views, comments, shares, views on your social media pages, in one period
How many of these follow the links to your other social media sites/your website or fill out an enquiry form.
Therefore;
The time it takes x the amount of interaction you get back results in enquiries. Over time, you’ll notice that there is a conversion rate. For every XX enquiries, you’ll convert YY% into sales.
What metrics should you be looking at?
Statistics – likes, comments, views – more interaction means more popular posts get more reach, which means getting more people interested in what you do.
Content type - which type of content is attracting the most engagement? Often this depends on the platform and your audience demographic, but usually selfies or posts that are honest and authentic get better engagement, rather than overtly salesy content.
Traffic - which social media sites are referring traffic to your website? And are those visitors taking a look around or bouncing straight off?
Brand awareness – more difficult to quantify - People who are invested in your brand and actively follow what you’re doing – ultimately to work with you.
Referrals - platforms like LinkedIn are great for peer-to-peer referrals. By making quality connections and developing relationships, online networking is a real opportunity in today’s landscape.
Enquiries - where are they coming from? Do you ask new contacts how they came across your information?
Results don’t happen overnight and it's only when you’ve built up a decent following that engagement becomes more frequent because comments attract comments.
What do the experts suggest?
Hubspot is a CRM (Customer Relationship Management) application which can “Grow traffic, convert leads and prove ROI with all-in-one marketing software” with its marketing hub. This type of tool can help you become more organised and efficient, and therefore more productive with your processes which can shorten the time it takes to close more deals and gain more leads.
Moz provides SEO (Search Engine Optimization) tools and software which can “Get the insights to help you rank higher, convert more traffic, and drive measurable results.” This tool can help you with Keyword Research to make sure you’re using the best keywords to rank higher, Rank Tracking to check how you’re ranking; and your competitors and Content Optimization to give you recommendations on how to improve your ranking.
To summarise, social media marketing is about starting small, looking at what works and how to implement that to see if it works better. For more information on how to build or improve your marketing strategy, book a strategy session with us!