"Does social media really work? What's the ROI?"
Those are the most frequently asked questions I get.
Smart business owners understand that social media isn't actually free. Even when they are not active on it, they understand that to use social media effectively, it takes time and know-how... and they are often busy enough.
Investing your money on an expert may be better idea than investing your own time to become an expert.
So how do you measure your ROI for social media?
In Andrew Jenkin's article, Five Questions to Ask About Social Media ROI, Jenkins reminds businesses to ask themselves:
Are we confident about how we measure the results of our current sales and marketing efforts?
Let's start calculating your social media ROI by evaluating your current marketing efforts.
Step 1: Your Current ROI in Marketing
- Advertising, Online
- Advertising, Print
- Advertising, Radio
- Advertising, TV/Cable
- Cold Calls
- Direct Mail
- Promotional Products
- Public Relations
- SEO (search engine optimization)
- Social Media
- Strategic Alliances
- Trade Shows
Step 2: Your Customer's Buying Process
Do you have a sales process? (I hope you do!) Guess what? Your customer has a buying process.
To get the most out of your online marketing, including social media, make sure what you post, facilitates (and even speeds up) your ideal customer's buying process?
- Do they tend to do research first before they contact you?
- Do they ask their friends for recommendations?
- What information do you they need to know before they contact you?
- What is their preferred way to contact you?
As search engines themselves, social media is a research tool as much as it is a communication tool. How your customers shop will influence your social media investment.
Calculating ROI requires tracking the investment as well as the return. It can be a little tricky to categorize social media in budgeting terms. Instead of forcing it into an existing classification such as advertising, word-of-mouth, SEO, PR, or customer service, make social media an independent category – then you know exactly what you are putting into it.
Step 3: Track Your Return
Ask your customers how they heard of you. Do you know when a client lands on your website from social media? Do you know how many of those website landings result in a sale?
Once you’re confident about your current tracking system, you can calculate and interpret your business's social media ROI from a cold prospect to a hot referral.