Investing time and money in social media marketing is hard to justify especially if you’re concerned about ROI. Social media, as part of your overall marketing efforts, can help increase awareness and recognition for your company, decrease customer service costs, increase sales, and make your company more credible in the eyes of your customers.
Regardless of the benefits, unless you see improved ROI, it may be difficult to justify dollars and time spent on social media. Calculating ROI on social media can be as simple as tracking visitors, bounce rates, and number of fans. Or if you’ve been involved with social media for awhile and have grasped a good understanding of your customer base, you can track changes in sales and costs involved with customer service.
Before you can begin evaluating whether or not your social media efforts are effective, you need to make sure you’re using the right tools. If most of your customers are using Linked In and you’re using Twitter instead, tracking user data and sales changes will be useless for your company.
Establishing measurable goals using the SMART (specific, measurable, attainable, relevant and timely) method is the first step in measuring the effectiveness of social media. Using the SMART method will ensure that you are setting the right goals and guarantee you can measure them. It’s also beneficial to make sure your goals will match a measurable outcome and you know what data you will use to measure those goals.
If you have a well-defined social media strategy and measurable objectives, you will be able to gather data on your users and measure KPIs. Data such as number of fans or followers, website visitors, click-throughs, retweets, bookmarks, likes, comments, time spent on landing pages and the like will provide useful demographic information about your visitors. Overtime, you’ll not only have more information about your customers, but have a better understanding of their level of engagement and the depth of their visit. This information will allow you to establish better customer service programs and/or sales programs, develop more effective landing pages, push products that better meet your target customers’ needs, and qualify leads.
Eventually the data you gather will allow you to determine if there is a corollary in sales or business expenditures. Although you can start mining data immediately, it’s best to wait till your social media efforts are more mature before you start calculating ROI. Before you start out in social media, make sure you have baseline data on sales and costs involved with customer service data, assuming that is the information you will use to calculate your ROI. After a six to 12 month period, you can overlay this information with current sales and support costs to determine ROI.
Results in social media will vary from company to company as each organization will have an entirely different set of goals. To be successful in social media and see an ROI, you need to make sure you’ve established measurable goals specific to your company. Comparing the results of your social media efforts to another company will not prove to be beneficial and will provide you with no real results. If you’re not seeing results after a year, it’s probably time to rethink your social media strategy. The data you’ve gathered in the meantime will allow you to improve your efforts in social media.