Are you measuring the Return-On-Investment of your social media initiatives? If you answered “no” you’re not alone. There are those who say you don’t have to measure ROI. Really? Those sorts of comments may be good for selling books, but don’t do much for small businesses trying to increase sales, or decrease the cost of doing business.
Many businesses would like to measure ROI but aren’t sure where to start. Measuring ROI can be difficult. You need to have a baseline to start from, define your goals, identify and understand the metrics you need to track and then isolate the variables (your social media tactics) responsible for “moving the needle” or achieving your objectives.
This tongue-in-cheek presentation by Olivier Blanchard is an amusing introduction to measuring social media ROI.
- Clearly define your goals: what do you want to achieve with social media and how does this integrate with your overall business goals.
- Identify and understand the metrics you need to measure: social media offers numerous options be measured (followers, website visitors, clicks & CTR, fan page activity, etc) however there will be a few Key Performance Indicators (KPIs) that are critical to measure. You will need to identify those KPIs and know how you will measure them.
- Set-up the tools required to measure those metrics: most social media tools have built in tracking and analytics ( Hootsuite, Facebook, YouTube). You will also want to measure and analyze website activity. Google Analytics is your most cost effective tool there. Depending on the type of business you will have different methods for measuring sales and revenue.
- Create a baseline: this is critical to identifying gaps in performance and results and having something to measure against.
- Measure and analyze on a schedule: once the tools are in place, and a baseline has been established, create a schedule for measuring and analyzing the data. This will differ depending on the type of business you are in.
- Make sense of the data: this is the hard part. Correlating the data to higher sales, increased customer retention, or whatever your key performance indicators are. If your ultimate KPI is sales, look at your sales level. If it has increased, look at the referrers on your e-commerce website. Is it coming from Twitter, Linkedin or YouTube, are the coupons you offered on Facebook being redeemed.