Social media ROI (return on investment) is the amount of money, perks, or visibility that your company gets in return for the money, time, and effort invested in social media marketing. However, there are many definitions of social media ROI out there, depending on who you ask. That’s because ultimately, the definition can change according to your goals. Most people expect a monetary return, but this is not the only thing that can help your business grow. In today’s article, we’re going to teach you how to measure your social media ROI and make it work for you.
Social Media ROI: The Basics
Think About How Social Media Helps Your Business Goals
As we’ve already mentioned, goals are important when talking about social media ROI. That’s because social media should be used as a tool to grow your business. Which means your social media goals should be in tune with the overall goals of your business.
When deciding on these goals, you should also consider the key performance indicators (KPIs) that will help you measure ROI. They depend on your goals as well. If you want to gain money from using social media, you should measure ROI in currency. If you want to simply gain visibility, the indicator should be something else, such as number of new followers per month.
Use Google Analytics
There are multiple ways to measure ROI, depending on what your goals are. Still, the easiest formula looks at investment and return. Basically, you want to calculate how much money you’ve invested in your social media efforts, from advertising, to social media tools and services, to people you’ve hired to be in charge of social media. The return also depends on your particular case. Maybe you want to measure your return in online purchases, or in number of signups for your newsletter, or even in time spend on your Facebook page. The choice is completely up to you.
Assign a Monetary Value
At this point, your goals should be in place. That’s because now, you’re going to assign them a monetary value. This can be done in more than one way. For example, you could choose the lifetime value method that tells you how much money you get from a customer on average. Another option would be the average sale value that looks at the average purchase a customer makes. The PPC valuation is yet another interesting option. This helps you calculate how much money you would pay if you were to replace ads with social media.
If you want to find out whether your social media efforts are paying off or not, make sure to calculate your social media ROI.
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