We all know how huge social media is– businesses big and small are jumping on board and making the most of what social media networks have to offer. Gaining likes and followers is fantastic, but how do you know if social media is turning fans into customers?
These days, you would have to have a very good reason not to be using social media as part of your marketing strategy. According to the latest Yellow Social Media report, 65% of Aussies are using social media, and 95% of those users are on Facebook, yet only 30% of small businesses are using social media. That’s a lot of missed opportunities! Learn more about why you should be using social media in the video at the top of the page.
The Yellow Social Media report also reveals that only 51% of large businesses are measuring their social media ROI. It is notoriously tricky to measure the ROI of social media because insights aren’t always available and the definition of “conversion” often needs to be altered. That said, even businesses with a small budget, can use a number of tactics to work out if their social media activity is working in their favour by using free tools and analytics provided by Facebook and Google Analytics and subscription based apps.
In measuring your conversions, ROI and overall success with social media, it is important to match metrics to the goals you wanted to reach by using social media. A return on investment could mean increased brand awareness, as well as revenue generation, so look at how many clicks, video plays, photo views, comments, shares, etc. your content is receiving. This will let you know if your brand awareness is increasing and where you might need to make changes.
Consider tracking anecdotes and correlation as a measurement for ROI. Anecdotal evidence could include asking your customers how did found you, or what drove them to make a purchase? You could measure by correlation if you seen an increase in sales at the same time as an increase in social media activity. If you’ve recently run a competition or have had particularly engaging or viral content, this could be linked to increased sales activity.
Google Analytics can help you track how many customers are visiting your website from your social media networks. Look at their activity on your site – depending on your goals, a download or subscription could be counted as a conversion.
Measuring the amount of traffic you need to drive to your website or store via social media can also be calculated. Start by calculating your Customer Lifetime Value, that is, the amount of revenue a customer will generate for a company during the customer’s engagement with a brand.
Say your CLV is $2000 and you allocate 10% of the CLV ($200) to use social media to acquire new customers. Now let’s say you’ve outsourced your social media to a consultant, who will cost you $1000. Divide the cost of the consultant by your social media spend and you will find that you need to acquire more than 5 new customers to achieve a positive ROI.
There are every evolving ways to calculate your social media ROI and this is just the beginning. Calculating how much bang social media is generating for your buck comes down to matching metrics to your company goals, looking at insights and developing measurements which best suit your products and services.