Social media can be an incredibly powerful way to share, market and grow your small business. But it's also easy to get lost amid all of the available options and ways to use these platforms — and many people find that without the right strategy, social media just becomes a giant time suck for their developing company.
To best use social media marketing to your advantage, you must understand how to measure social media ROI. Tracking the return on your investment is critical to knowing what's working, what's not and what needs to change in the future. It's a critical step anyone running their own business needs to take. You already wear many hats in your one-person show — knowing what's working in your social media strategy will help save you valuable time.
Maximize your time and effort by following these five steps for measuring the ROI for your social media marketing strategy:
1. Establish Attainable Goals
In order to understand what your social ROI is, you need to be able to measure tangibles. You can do this by setting goals for your efforts. As a starting point, most soloprenuers should focus on the following metrics:
- How many new followers you get
- How many people click on a link
- How many times a post is shared
- How many new leads you generate from social media
Setting specific goals for your social media strategy will give you something tangible to work toward, providing a clear measure of success and ensuring your time and effort is put to good use. If you find that you're continually unable to reach one of the goals or maintain a certain level of engagement among followers, it's a sign that the strategy needs to be tweaked.
2. Establish the Value of Your Goals
Once you set your goals, it's time to assign a monetary value to the outcome of reaching each goal. The values for your business may differ from others, and vary between social media networks and platforms — but as your business' customer base and offerings grow, so too could the value of each interaction. If you earn new followers, how much could that be worth to your business in dollars? And how much is it worth if you increase engagement by having more people like, comment on and share your posts?
When establishing a value for your goals, also consider factors like the value of a single sale or the lifetime value of a new customer. If you're using social media instead of running paid ads, how much would a paid ad cost to give you the same result as your time on social media? The value of your goals depends largely on your business, but thinking about these questions will set you on a path toward better understanding what you want your strategy to achieve.
3. Track the Numbers
Next, it's time to actually track the numbers to see what happens once you start taking action. Determining what numbers are good for your business varies widely depending on factors like the size of your business, what you're selling and what your social media goals are. Most social media platforms include analytics dashboards that you can use to track activity on specific posts or profiles, or you can use third-party tools to gather the numbers you need. You can also install Google Analytics to your website if one of your goals involves getting social media followers onto your business's site.
4. Organize Your Information to See the Full Scope
Once you have goals, the value of your interactions and the data, the next step is to organize the information so you can understand the total value of the benefits of using social media for your small business. Track all the numbers in a spreadsheet on a monthly basis or use specific social media reports to organize the information. Once you have your data set up in an organized fashion, you can see trends develop over time, which will help you determine exactly what's working — and what's not — in your social media strategy.
5. Calculate Your Social Media ROI
This formula from QuickSprout allows you to plug in all the factors and determine your ROI. You simply take the value of your benefits (whether that's realized as profit or increased awareness) and subtract your costs. Multiply by 100, then divide the result by your costs. That gives you the percentage sum of your social media ROI in hard dollars, allowing you to see the results of your social media strategy.
The equation would looks something like: [(benefits value - costs) x 100) / costs = % ROI]
By measuring the data against previous months or your established goals, you'll be able to more clearly see exactly what changes you need to make moving forward.