Defining return on investment is as easy as subtracting dollars spent from net profit. If only it was that simple to measure social media ROI.
Calculating social impact on current and potential customers is kind of like trying to figure out if you’re having any influence on the behavior of your teenagers. You’re pretty sure they know you exist because they’ve liked you at one time or another and you see them around occasionally, but they don’t seem to be hearing you, so you find yourself always looking for new ways to deliver important messages. And just when you’ve given up and don’t expect any change in their behavior, they show up and surprise you—sometimes months or even years later.
In these days of constantly changing platform algorithms and ever-shrinking organic reach, getting a grip on the value of your social media efforts—especially if you’re not paying to play—can be frustrating. A recent Manta survey found that small business owners are evenly split on their willingness to spend dollars to promote their business on social media. And among those who do invest, nearly 60 percent report no return.
Those numbers raise a couple of questions. What exactly does that ‘R’ in ROI mean? Is it relationship? Revenue? Return? How do you define social media ROI? What are the goals you want to measure, and how do you measure them?
Defining the ‘R’
Many people mistake the ‘R’ in ROI for revenue, and return can come in a lot of different forms. I would look at it in terms of what matters to your business, what are you looking to accomplish? Not what do you want social media to do for you, but at the end of the day, what are you hoping to achieve, what does success look like?”
Once you’ve pondered and answered those questions, you can begin to look at social media to achieve goals and measure something that actually matters to your organization. Is your focus on pushing a product or improving a current product? Is it customer service? Is it increased media placement? Is it lead generation? Is it building community and connecting with current customers? Or is it the Holy Grail, acquiring new customers?
Manta’s survey asked small business owners to define their primary goal for using social media. Nearly 37 percent identified acquiring and engaging new customers as their top aim, followed by driving awareness and marketing (17 percent) and gaining lead generations/referrals (15 percent). Only eight percent said building community was paramount.
Those results aren’t surprising, but they are perhaps a bit out of order because content isn’t a linear path to conversion. I actually think social media is better for maintaining or increasing touch points with current customers or people who are already in your circle versus acquiring new customers. Truthfully, especially for small businesses, your next wave of customers is going to come from people who are already connected to your current customers. That’s word-of-mouth 101.
Social media is the digital platform for word-of-mouth marketing. Set your objective, find out which platforms your current customers prefer (ask, research the social media habits of your desired demographic), what they’re talking about, who they’re talking to and why.
A great posture to have is to treat it like a community. The term target audience is used a lot, and to us, it is the wrong term because we think it makes it seem like the brand is onstage and entertaining and sending information out to influence the audience. And it’s more complicated than that with social media. We think the posture should be more like you’re sitting in the audience in the seat next to them, and talking with them and learning from them and creating rapport and inviting them to connect with you and do business with you.
Successful social media engagement that eventually leads to conversion is active, planned and ongoing. Listen and respond rather than sit back and observe passive one-way conversations. Here is a story about a client in growth mode seeking a younger restaurant clientele. His agency suggested adding a platform to their already successful Facebook efforts, and they suspected Twitter was the right choice but did a test to confirm. They ran a Facebook contest and as part of the entry form asked entrants what other platforms they used most often. Twitter was the overwhelming answer, so the next step was a platform search for brand mentions that resulted in a find of hundreds of tweets a week. We basically said, this is like people picking up the phone and calling your customer service and you not picking up the phone.
So you’ve planned, connected and shared your stories—now what? Social ROI calculators are easy to find, but may not account for the metrics necessary to set the stage for your particular social objectives. We suggest tracking a handful of performance metrics, specifically click-through rates (Facebook). And for content, track repins, retweets and shares. Use Web analytics to look at unique visitors from social and their time on your site. The ultimate goal is to have someone else saying this piece of content is so good that I’m going to take the time, and put my social reputation on the line for putting this content in front of my audience.”
Those non-linear conversions that happen because you’ve created a social customer relationship over time aren’t easy to track, but your objective planning will include campaigns—coupons, promo codes, contests that you can follow and measure in dollar-for-dollar return. And then you can account for all three ‘R’s—relationship, return, and revenue.
To learn more about social media marketing and paid social media advertising please contact us to see if it should be a part of your marketing strategy.