According to a 2012 Social Media Marketing Industry Report, tracking Return On Investment (ROI) has been the most commonly asked question three years in a row. How can marketers use social media effectively to generate revenue for their business? Do thousands of followers automatically mean new leads and more sales?
The answers –surprisingly– are not much different from the way most businesses use the traditional form of marketing in order to generate and track revenue.
For most C-level executives, anecdotal measurements resulting from social marketing campaigns such as public relations, engagement, numbers of fans and followers as well as customer service are all fine and dandy, but in essence these are what might be called “soft metrics.” Soft metrics do not always equate to measuring successful revenue generation.
To understand how social marketing fits in with monetization we must understand and connect this marketing channel into measurements that matter.
Influencing the Sales Funnel
For most brands, the initial process of lead generation begins with awareness. However, unlike traditional forms of advertising, the social channel offers opportunities to have an effect on the communications process when consumers seek out information regarding products and services.
The power under the hood is that the social channel provides a way to influence consumers in the “consideration” phase of the sales cycle.
Most self-respecting and successful organizations have goals. They measure every aspect of the process, according to online click-through rates, website visits, or sales. These same measurements are essential to understanding and setting goals for social marketing.
Setting specific and measurable goals and objectives for social media increases a brand’s ability to follow a path toward success. For instance, if the overall business goal is 100 new business leads in Q1, a social media goal may be expressed as generating 25 new leads via social channels in Q1.
Similarly, you may break down objectives to direct leads from social channels into an online lead capture system. One example may be expressed as converting five new lead signups via Twitter in 30 days.
Your social endeavors will create tactics that drive social audiences to take specific actions that (hopefully) result in meeting your goals and objectives.
Justifying Your Social Campaign
As opposed to soft metrics that only anecdotally lead to the belief that goals and objectives were met, hard metrics help you to justify the success or failure of your social media campaign. Setting up robust analytics tools will help you track the path of your social audience. For instance, you might learn that Facebook is driving a higher rate of traffic to a lead capture page on your website. Other hard metrics include bridging your converting sales leads from social sources into revenue while subtracting out your costs for implementation.
For example, you may calculate things like:
–Cost of Outside Services (design, software, writing, etc.)
–Media Buy (i.e. Facebook ads, Google, print, etc.
–Staff Time in $
Measuring your costs and subtracting them from revenue generated via social media will help you answer the ROI question with more confidence.
Expressed as a percentage ROI can be found using the following formula:
(Net Revenues – Marketing Investment) / Marketing Investment X 100 = ROI%.
So what is the value of a social follower? It may depend on what your numbers say.