You feel great when your page gets new followers, your post gets liked and commented on, but how exactly do these contribute to the success of your organisation? Understanding what the ROI (Return On Investment) of your social media is ensures you don’t waste time and money.

The ultimate goal of all your social media marketing efforts is to drive in more business and, thanks to advances in analytics tools, you can now quantify your online social presence. Together, let’s explore the inputs and outcomes of using social media to promote your activities.

Before we throw ourselves into metrics, let’s stop and talk about the elephant in the room. I’m sure you’ve asked yourself many times how likes and shares translate into purchases. The first aspect that you should know about is that the return on social media activity can be tangible (sales) or intangible (engagement). The latter can be quantitative (likes, shares) or qualitative (influence, sentiment).

With 90% of purchases being subject to social influence, you will want a high word-of-mouth activity and a positive attitude from your followers. This will get your brand on more people’s newsfeeds. Then their connections will notice and get interested. If your business goal is to create more brand awareness, then, ding, ding, ding, achievement unlocked! Still not convinced?

Think of people who like and share your posts as the modern version of flyer distributors. Instead of putting flyers through people’s doors, they spread the word online and save you money! As a bonus, this creates trust for your brand since people naturally trust word-of-mouth recommendations more than brand self-promotion. Constant and relevant activity can also reinforce your brand image and strengthen brand loyalty.

Talking about business objectives, integrating the social media strategy within your wider business strategy is fundamental to calculating ROI. One simple way to do that is to correlate your business KPIs with your social ones. For instance, you could pair up your business KPI of customer retention or advocacy with the social KPI of likes and followers or brand value and engagement with your social reach. Ultimately, you want to measure your return on investment against your S.M.A.R.T. social and business goals.

In terms of quantitative returns, you can track different engagement options on different platforms, however, they are not very different from each other. For example, on Facebook you can track page likes, post likes, shares, comments and clicks, whereas on Twitter you will be able to observe favourites, responses, retweets, mentions and clicks. These will give you an indication of how your campaign is being received by your audience and will allow you to make any necessary amendments to your plan and tactics to make sure the outcome is positive.

Now the part you’ve all been waiting for. As author Oliver Blanchard explains in his book “Social Media ROI: Managing and Measuring Social Media Efforts in your Organization,” “financial outcomes are the culmination of any investment”. ROI is calculated by using a simple formula: (return – investment) / investment.

It’s free of charge to join and use social media services, so the investment element can be anything that costs you money in order to be active and engaging. It can include: labour, training, technology, agencies, consultants and paid advertising. The return element depends on your goals and it can be purchases or other desirable precursory actions such as downloading a white paper or registering for your email newsletter.

The upside of online marketing is that you can track your customer’s journey from social media to pages on your website. Your web analytics tool will be able to tell you how much site traffic is being directed from your social media pages, how many leads, sign-ups, conversions and, ultimately, how much revenue they generated. Even if there are no links directing customers from your Facebook page to your website (which I strongly advise against), you will be able to tell if a sudden spike in social engagement correlates with an increase in site traffic and sales.

Online social media services make it easy for businesses to make compelling invitations to action through different features such as the call to action button on Facebook (“Contact us”, “Sign up”, “Shop now”), Twitter cards and the “Shop now” button on Instagram.

The fundamental problem with social media ROI is that there is no common denominator. The return is different for every user because it is strongly dependant on individual business objectives and how they are measured. For a charity the goal might be gaining a certain number of signatures for a petition, whereas an ecommerce site will definitely want to see some purchases taking place.

Therefore, both the investment and the return parts of the formula will comprise of different inputs and outcomes. The most important aspect to keep in mind though is making sure that the social and business goals are aligned and measured accordingly.
So there you have it, the ROI of social media. If you’re still feeling a bit confused, don’t hesitate to contact us, we’ll be happy to answer your questions.