Any time a client asks us how to measure return on investment(ROI) on social media my response is simple- “your ROI is brand loyalty and repeat customers- so how valuable is that to your business? That’s the ROI”. And it’s true.
We all want to obviously make money when we advertise or when we put a lot of time and effort into something. Social media should really be used for engaging with your fans, staying touch with the community and making your company personable. People do business with people they know, like and trust.
With that being said, here are a few ways to calculate or measure the ROI in other ways.
In order to quantify your ROI you must first define what is most valuable to you and your business.
If it’s sales, you can break it down into dollars and cents. If you spend $50 on an ad campaign and you make $500, your profit is $450 and your ROI is calculated by taking the $450 profit dividing it by the $50 investment and multiple by 100. The ROI in this example is 900%.
If engagement is the goal then it’s important to study the insights provided by your social media platforms. Facebook provides amazing analytics for all campaigns that you run. These analytics show you all the engagement metrics: likes, comments, shares, and clicks.
Reach is another possible goal to measure. Measuring reach is important because it gives you an idea of many people are seeing your content. You shouldn’t focus only on reach though as this just tells you many people may have seen your advertisement, not necessarily those who interacted with it. Reach is measured by the number of fans and number of impressions.
While engagement and reach are important, they are often referred to as “vanity metrics” because they don’t help the bottom line of a business.