4 Steps to Measure Social Media ROI

According to a new study from Awareness, a social media marketing software company, 57% of companies say that measuring the ROI of social media is their biggest challenge. Many businesses struggle to measure ROI because they didn’t create their social media presence with ROI in mind. Measuring results is an afterthought. They create profiles, share content and then wonder if all their hard work is affecting business growth. Tying social media efforts to results is difficult when you’re unclear on your objectives. The following 4 steps will help businesses measure their ROI effectively and will also create a process for using data to inform content strategy.

Step 1: Define Your Objectives

What “return” do you want to see by using social media? If you sell a product, you may want social media to bring you more sales revenue. If you want to sell more online, your objective might be to increase web traffic through social media. Your service-based business might need new leads from potential clients filling out contact forms. No matter what your business, you must clearly define what success looks like. If you aren’t clear on the return you’re trying to achieve, you’ll never come close to measuring the impact of the time and money you invest in social media.

Step 2: Identify Your Audience

Once you know what you’re trying to achieve, you need to clearly identify who your audience is through your social channels. Some businesses seek to engage all their market segments online. Others have a particular client or customer in mind that they’d like to engage. It’s important to know who you’re trying to reach so that you invest your time and money in the right channels. You might have the best Pinterest strategy out there, but if your customers are 18-25 year old men, you’re not likely to see results. Think about where your audience already spends time and meet them there. It’s much easier to engage with people in the places where they’re already used to spending time instead of trying to change their behavior.

Step 3: Develop Your Content

Once you know what you’re trying to achieve and who you’re trying to reach, you can begin to think about what type of content will support your goals and resonate with your audience. Too many companies skip straight to step 3 and gloss over the first two steps. They end up making two mistakes by skipping ahead.
Mistake 1: The company that focuses on objectives and neglects its audience will share content that is overly aggressive, sales-oriented and self-promotional. This is the company that only talks about its products, never asks engaging questions and uses social media as if it were a television commercial. This type of content doesn’t engage fans and over time, they’ll either tune out or opt out of receiving your updates.
Mistake 2: The company that focuses only on its audience will share exciting and engaging information. Fans and followers love reading the updates, watching the videos and participating in the discussions. But if this content is merely entertaining and not helping achieve any goals, there will be no return on investment. In order to see a ROI from social media, the content needs to both support your goals and provide value to your audience.

Measure and Adjust

Peter Drucker, the famous management professor, once said, “What gets measured, gets managed.” If you aren’t actively measuring your results, you won’t know how to adjust your strategy accordingly. Social media provides an enormous amount of data. The key to measuring your ROI is figuring out which key metrics will help you understand if you’re hitting your objectives. Measuring ROI can be challenging. If your objective is to increase sales on your website through social media, what metrics should you track? Conversions and sales for users that visit your site from a Facebook or Twitter link will help you track ROI, but what if you’re not getting any sales at all? How do you identify the problem? It may help to measure metrics along each step of your social media sales funnel. At the end of the funnel is your goal. In this case, the goal is to increase website sales. You also need to track different metrics along the funnel to identify problems and track results. If no one knows your company exists, you’ll have a hard time getting people to visit your website and purchase from you. That’s why you need to measure the number of fans and followers you have at the top of the funnel. These are the people who are aware of your company, product or service. Once someone is aware, you want to move them to engagement. An engaged fan not only reads your content, but also likes, shares, retweets and comments on it. This fan interacts with you. Ultimately, you want an engaged fan to take action by purchasing your product. Once your fans are customers, move them back up to engagement and keep them as loyal customers in the future. If you analyze your social media using this sales funnel framework, you can identify where you need to make adjustments. Your content strategy should change if none of your fans are engaged. You might need to invest in Facebook or Twitter ads if you don’t have enough fans reading your content. If you have highly engaged fans that don’t buy your products, you might need to improve your web design or adjust prices. Measuring ROI is a challenge, but it’s important to realize that you can measure it. If you aren’t clear on what you’re trying to achieve, you’ll find it very difficult to measure ROI. Over time as you measure your results and tweak your strategy, you’ll gain a clearer understanding of the right metrics for your company.