Sep 22 2009
It is very difficult to measure ROI for social media but to move forward we should know what ROI is?
ROI (Return on Investment)?
ROI (Return on Investments):- There is a very simple way to measure ROI. The results you can calculate in percentage or ratio.
ROI= (Gain on Investment – Cost On investment)/Cost On investment
If the investment we are doing on any product is not showing a positive ROI, if there are some other products with higher ROI then we should not be invest money on the less ROI products. It is all depends on what we are including as return and cost.
Why measure ROI on Social Media?
There is a lot of money which is spending on marketing & advertising so ROI measurement should be there. For example if we spend $10K on any product in social media marketing then we should know the money we are spending is in right direction. As company spend money in social media then they would like to see some changes in revenue as well.
But if we are expecting changes in revenue and ROI through social media in starting then we are wrong. Social media is a long term process & it needs time to show results. My Blog post “What, Where & Why of social media” can help you to understand much better about social media process.
Steps to measure ROI on social media
1. Business Goals
You should have your business goals to start social media. If you are expecting leads & sales through social media on the same time then you are at wrong place. Your business goals can be:
Social media helps a lot in traffic generation. There are some social media websites which can help us to get thousands of visitors on our website in short time.
Social media helps in branding but it will take some time. There are some social media networking sites which helps a lot in terms of branding.
- Lead generation or Search new customers
Social media is a long term process. It can help you in lead generation as well as it finds some new customers for your products or services. These day’s companies started using social media as new sales channel.
social media is a place where you can share your articles, blogs, images, videos & news with all social media users. You can set a new communication channel between you & millions of users.
2. Requirements
As we know social media is not much expensive but there are some requirements for social media.
We should have some expertise in social media before starting it. We can hire a person for social media to show us some results else it is wastage of time.
- Companies selling social media as service
As social media need lots of time, which is not possible for everyone in this busy schedule. So some companies started selling social media as service. We can use them as well.
- Sharing internal knowledge
If you share your expertise with others then there are much better chance to learn more.
If you are on social media but not much active then you can’t see good results.
3. Your Customers Knowledge
You should have knowledge of your customers. Choosing the right customer will helps you to increase ROI on social media.
You should have demographic details for your customers in terms of Age, country so that you can search them on various social media websites as per your requirements.
- Customers & social media websites
If they are already on social media websites then it is easy for you to target them.
- Other communication channels
Do research and check if they are using any other communication channels.
Do a research on your competitor social media activities to track what kind of networks they are using to sell their products? What kind of audience they are targeting?
4. Social media Networks Selection
There are lots of social media networks but Digg, Reddit and Stumbleupon are the best in traffic generation, Mixx and Propler are best in terms of SEO ranking and Facebook and Twitter helps a lot in terms of branding.
you should do some research on social media websites before starting. Once you find your targeted social media network then you can start promotion activities.
Media selection plays major role in promotion & branding. There are some very famous examples which you can use for social bookmaking & social networking
Blogs (SB), Videos (SB), Images (SB), Tweets (SN), Fans Page (SN), Forums (SB), Webinar (LG).
social media only helps when you have good & informative content to share with social media network.
5. Results (ROI Measurement)
When it’s come to result then you have to see that do you reached your goal or not?
How many new visitors, new views, referral website traffic, drop rate & returning visitors we got for our website.
How many active users we have in our social media community, like on twitter & Facebook? No. of goal conversions etc.
How many leads we received from referral websites? How many conversions happened through referral websites? Feedback, revenue growth, new forms, no of qualified customers etc. we can use Goal Funnel to track social media conversion.
How many new visitors we received for our blog or for other media channels? New subscriber for our media channels like blog and videos. How many visitors sharing their views on our media channels? Like comments and discussions etc.