Social media can be a great tool for any business, but it’s hard to know if it’s actually doing any good.
With all the different metrics and analytics available at your disposal, how do you know what to measure? How will you interpret those results? What is important enough to spend time on? And what isn’t worth your time at all?
What You Need to Know First
This may come as a surprise but, if you’re measuring your social media ROI today, there’s just a 50% chance that you’re doing it wrong. Here are three things to know:
1. The first thing to know is that the way we measure our social media ROI in 2021 will depend on what we call “social media.”
2. The second thing to know is how you define social media in everyday language (i.e., not in business terms). This will determine what your metrics look like and where the hard work begins.
For example, if you’re using Facebook for public relations or customer support – this isn’t really a “social” activity – it’s more of a customer service or business-to-business (B2B) activity. So, if you’re using social media to promote your brand, then the return on your investment will look different from a business that is using it for social selling.
3. Lastly, measuring ROI means defining “what’s in it for me?” and measuring the results. Does your goal depend on how many eyeballs see something or how many people engage with you as a brand? Is your goal based on increasing the number of likes, followers or subscriber numbers?
It’s important to decide before you start – what social media activity will bring revenue into the business – and then track your actions to back that up.
Why is it crucial to track your social media return on investment (ROI)?
You can obtain vital insight into how to substantially improve your social efforts when you effectively measure your social media ROI. It teaches you how to acquire and convert followers into consumers, as well as how to engage your audience.
More significantly, it identifies where your efforts and resources are being put to good (or bad) use, allowing you to change your plans as necessary. Measuring your social media ROI is essentially an opportunity for you to build your business, say, advertising agency, and differentiate yourself from your competition.
The Basic Formula
The simplest way to calculate your social media ROI is to compare how much money you spend on them (investment) to how much money you spend on them (investment). This is frequently represented in percentages and may be calculated using the following formula:
ROI = Profit/Investment x 100
ROI = (Revenue – Investment)/Investment x 100
For example, if you spend $500 on an advertising agency to promote your product or service and drive people to a product page and it creates $2,000 in revenue, you can simply calculate your ROI by:
ROI = ($2000 – $500)
$500 x 100
$500 x 100
= 3 x 100
This isn’t a one-size-fits-all formula, because different brands will have different goals and KPIs, and hence different metrics of success.
While there is no “one size fits all” solution to measuring social media effectiveness, here are some easy ways you could measure your efforts in 2021:
Check and Analyze Your Social Media Engagement
First, review the things you post – either via company newsletters or personal announcements from you or your employees – via Twitter, Facebook, Instagram and LinkedIn. Then look at how these same announcements are being greeted by the community.
To track engagement, you can use a tool like Scorecard Research to see which posts get more likes, shares and comments than others. Simply set up a study where you click on each of your company’s social media profiles and post something. Then see which posts get more attention than others.
You can also calculate the engagement following the formula:
Rate of Engagement = Total Engagement / Total Followers x 100%
- Total engagement is the sum of all interactions (comments, reactions, shares,etc.)
- Total followers is the number of people who follow your account or page.
For example, if you post on your Facebook account that amassed 20,000 fans and received:
- 400 likes
- 200 comments
- 100 shares
This means that their total engagement would be 700 (400+200+100). Let’s plug this into the equation:
Your Engagement Rate = 700 / 20,000 x 100% = 3.5%
Set Concrete KPIs
The next stage is to come up with SMART key performance indicators (KPIs) that are aligned with your goals. Specific, measurable, achievable, relevant, and time-bound are the characteristics of SMART goals. This entails understanding what to do, how to accomplish it, and when to do it.
If your goal is to manage customer experience and connections, for example, you may make it actionable by creating a KPI to reduce average response time on all social media channels from one hour to 30 minutes by the end of Q4 2021.
Similarly, KPIs can include motivating customers to execute a monetary-valued activity. This can involve the following:
- Online purchases
- Newsletter signups
- Filled out contact forms
- Video views
- PDF downloads
Know Your Worth
Some days, no one will show up on your website as a result of a social media post or some people might find their way to an outdated landing page from two years ago. This is where analytics tools like Google Analytics will come in handy.
Monitor which social media platforms are driving the most traffic to your site so that you can spend more of your time creating and posting content for them. And, don’t forget, you’ll need to track how many people click on a link from each post or where they come from so that you know which ones are working best for you.
Over the next two years, keep an eye out for three things:
- The number of new sales or leads generated from every social media post;
- How many people are engaging with you through your sites and blogs (not just following); and
- What is happening on your website based on where visitors are coming from via a social media post.
By focusing on these three things, you will know exactly how much your social media efforts are worth to your business in 2021.