When it comes to your business’s social media marketing, it can be difficult to determine what your return on investment (ROI) is. If you’re trying to figure out whether a campaign is a success for your business, then you need to know your ROI. Unfortunately, ROI can be very difficult to figure out when it comes to social media. There is no way to figure out exactly how much business your social media is generating and attempts to figure out this information can lead to misleading or inaccurate results.
While you likely will not be able to figure out the exact amount that your social media generates, there are ways that you can calculate the general ROI for your campaign. When calculating the effectiveness of social media marketing for Toronto-based businesses, here are four steps to getting an accurate ROI.
Begin with Measurable Goals for Social Media Conversion
To determine if your social media is a success, you need to know what will make it a success. Different businesses will have different objectives, which means what’s successful for one business may be a failure for another. Set measurable goals and objectives for your social media conversion; these could include goals based around clicks on your links, sharing or retweeting social media posts, or online purchases made.
Track Your Goals
Once you have set measurable goals, you need to start tracking your social media and determining how it measures up with your objectives. The easiest way to do this is through Google Analytics, which allows you to track social media conversions. However, there are also other tracking apps available for specific social media platforms. Using these tools, you can figure out your reach, website traffic, leads, and customers. When taken together, this data will help you determine just how many people your social media is reaching and converting into customers.
Assign a Monetary Value
Next, you need to determine just how much these conversions are worth. This is easily done if you know the lifetime value of your average customer, based on how much money they will generate for your business. Once you have determined their lifetime value, you can figure out how much each social media conversion is worth to your business. The idea is that once you know how much each customer generates for your business and the rate at which your social media converts people into customers, you will know how much each visit or conversion is worth to your company. For instance, if 1 in 10 people that visit your site become a customer, and each customer has a lifetime value of $50, then each visit to your site is worth about $5.
Calculate Your Investment
You may think social media is free but the truth is that you are paying for it, even if Facebook and Twitter aren’t charging you. You likely pay for labour (or pay with your own time spent), social media tools, and some advertising (such as promoting posts). Calculate a close-as-possible estimate of how much you spend in each of these areas. The sum will be your investment in your social media campaign. When you compare your investment to the monetary value of your campaign, you can figure out just how effective your social media is and if you have a good ROI.
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