November 09, 2010, Posted by Arturas Kvederis
09 nov
Social media and ROI, these two terms are hard to imagine together and I am sure that a lot of marketing managers have had trouble figuring out what is the best approach when talking about social media ROI. How to measure what looks unmeasurable at first look? By now you are probably already engaging in social media marketing and if you are not, well you’d better start, competition is not sleeping.
Social Media Marketing Benefits
Dozens of social media analytics tools were created in recent years Radian6, Visible Technologies, Scout Labs, Meteor Solutions, 20 Decibels just to name a few, but we have yet to see a “win win” solution. What are the main benefits social media marketing can bring to a retailer?
- Loyalty
- Trust
- Passion
- Interation
- Brand awareness
- Business intelligence
- Market research
One of the most important questions when talking about social media ROI is what exactly do we need to measure? What metrics are important for ecommerce websites? Is it the amount of our twitter followers? Mentions on twitter? Facebook fans? CEOs and CFOs don’t care that you have five thousand fans, or that you’ve been retweeted 47 times yesterday, they want to see the business impact. First of all when talking about return on investment you should understand that we are talking about monetary values.
Social Media ROI metrics
Whatever metric you will choose, you must be able to express it in your business value. Having specific goals and defined plan is crucial when you need to calculate your return on investment, especially for ecommerce websites. So determine what you want to measure before engaging and assign specific metrics to every campaign and channel (make sure you will be able to track them – use coupon codes, tag your destination URLs etc.). It is impossible to list all social media ROI metrics, as they vary a lot depending on the business, but here are some you might want to consider:
- Number of sales/new customers
- Email subscription growth
- Increase in referrals, inbound links
- Decrease in customer support issues
- New lead generation
- Conversion improvements
- Reduced sale cycle
- Inbound activity
Whatever metric you choose for your social marketing campaign make sure it is quantitative and qualitative, because if you are measuring only impact metrics (impressions, number of fans, number of twitter followers) you are not measuring social media ROI.
ROI Results
That was the easy part, no you need to take the metrics you defined and compare them with your website analytic tracking tools and see how they correlate to higher sales, conversions, customer retention, or any other business metric you’ve selected.
Now what you want to do is start calculating which exact sales, or any other business benefits, have originated from your social media campaign. E.g. has your sales increased during the last month, when you launched your social media campaign, if yes, then check the conversion numbers in your analytics software and benchmark with other traffic sources.
After you setup your measuring environment, you will be able to extract a lot of useful and interesting data about your social media campaigns like traffic trends after posting on Facebook and Twitter, how website sales data correlates with traffic from social media, decrease in support requests sent etc.
Conclusion
Measuring ROI of social media marketing campaigns is a trending topic, but still there are lot of issues and unanswered questions. Many simply give up and say it’s impossible to measure social media ROI, a lot of choose to measure CTRs (Click Through Rates), subscriptions and number of fans. If you are spending decent amount of your marketing budget on social media you should measure your ROI:
- Define business metrics that will be tied to your social media campaign
- Set clear goals prior starting the campaign
- Engage, review, update your campaign, repeat
In any case social media marketing is booming and retailers are adopting it within their marketing campaigns, if you still don’t have an effective social media marketing campaign, it’s time to start one. Feel free to share any tips, tricks or questions you might have about social media marketing ROI. Also if you'd need help with your social media marketing efforts, feel free to contact us.
