In this method of figuring out your social media ROI, we will be estimating our ROI in terms of sales. However, you cannot quantify social media; there is not (as yet anyway), a way to say X interaction = Y Dollars, so we have to be creative. This is a three step process which allows you to give your social media ROI some value so you know what you have to do to make your campaign stronger.
The three steps are:
- Define Our social medial goal
- Based on this goal, we can define the return as a value of sales
- The hard dollar value is the amount of sales dollars
Still at sea? It’s ok, we’re going to go over it in as plain English as possible.
Defining your goal is easy; in this case, your goal should be ‘increase sales’ Bam.
However, the second step is trickier; how do you assign sales to a campaign without losing your marbles? It’s hard to get accurate numbers, but we can at least get a good idea using one of a few different methods.
Method #1. Last-Touch Sales. Using a web analytics program, you can track one user from the check out counter to where the user came from. If the user came from a social media campaign, you can knock a point into the social media campaign towards sales. This is a slow, but fairly reliable method.
Method #2. Coupons. By providing your users with coupons through you social media campaign, you can not only increase sales, but it provides an extremely easy tracking system.
Method #3. Damn the social media; forecast instead! Instead of tracking through your social media campaign, compare actual sales with forecasted sales. Assume that the actual sales are higher and you can use the difference as the value that the social media campaign plugged into the bottom line. This is more convoluted, but some people prefer it.
All of these methods work, but it’s best to use a combination so that you can get the full (or at least fuller) picture of what your social media ROI looks like. At this point, you can declare the amount of sales that you have gotten as a result of your social media campaign and call that your social media return. You can calculate this by using the following ROI formula:
Social Media ROI = (return-investment)/investment %
Example: Say last month you earned $2500 from your social media campaign. This is the social media return. With an investment of $1,000, we can calculate:
Social media ROI = ($2500-$1000)/$1000 % = 150%
Therefore, the business’s social media ROI is 150%; pretty good!
Of course, this is only one way to figure out your social media ROI. Next time, we will look at Social Media ROI based on consumer insights.