How to Measure the ROI on Social Media

How to Measure the ROI on Social Media
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This is not a linear process any more, so you need to measure all the interaction along the cycle. The best way to do this is to use a marketing automation system that measures every touch point along the way.

Whilst marketers understand that Social Media Marketing is massive for visibility, brand recognition, and ultimately sales, the Boardroom needs to be handled differently.  The boardroom (or your client) is usually full with financial people who need something to measure.  So if you want to get your budget approved, from your board or your client, you have to justify it in terms they will understand.

You can define leads in two ways:

  • Soft leads – these are people who have exchanged their email address for something and signed up for your newsletter.
  • Hard leads – these have been converted or are a qualified prospect.

The cycle normally begins with a soft lead, on which you could use email marketing to convert them into a hard lead.

Ways to measure

  • Cost Per Lead – most companies measure this way
  • Cost Per Acquisition – how much did it cost to get an actual customer?

These are 2 things that you can measure cross-channel.

Most people are trying to measure Social Media in the social channel, but the business value actually occurs on the website or through the building of a list.  So rather than seeing it as one funnel, we must look at SM as only one part of the whole story.

A Sales Funnel is what CEOs understand, but when people come through the buying cycle they may have access to 20 different pieces of marketing information before they convert.  This is not a linear process any more, so we need to measure all the interaction along the cycle.  The best way to do this is to use a marketing automation system that measures every touch point along the way.

How do marketers track how people converted to a hard lead?

  • In Google Analytics you set up goals and conversions, usually to a thank you page.
  • Every link you share, you add Custom URL Parameters – added codes at the end of the URL.
  • Add these to a database.
  • Then you can track the interest down to a specific conversion point.

How do you present this information to Management?
The matrix that Managers understand – which tweet converted the most, so lets do more of those.
Whilst this is very important for measurement, it is too general.
We like to use these 3 measurements:-

  • Cost per impression
  • Cost per Engagement
  • Cost per Lead

At Executive level these 3 are the ones that matter.  Social Media Marketing is just one of many budgets on their desk, so they don’t want the details.

Why should the marketer bother with measurement?
If you don’t measure, you are definitely going to go wrong and the budget will be cut anyway, so do it well and learn from it.  Nowadays the measuring has become easier and software to understand the results has become more sophisticated; it just makes good sense.

Are you going to be serious and intentional about using Social Media? 
If so you need to give it time, just like any other marketing.  If you just spend £50 on Google Adwords you can’t say that it doesn’t work, you have to give it time.

This is a human medium.  Don’t let ROI sway your judgment into not being yourself.  Continue to give value, but then you must track it through the sales funnel.

Tools to use:-

  • Google Analytics – goal conversions
  • Search ‘google custom url builder’, then shorten the URL in your social channels.
  • Then connect to the sales channel or CRM.

If you would like us to help you through the set-up, please, just make a comment below or contact us now.

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