Estimating your ROI on Social Media
This month I just want to focus on ROI and how to work them out on your Twitter and Facebook efforts.
I appreciate the difficulties in this area and it is frustrating, you offer a vast array of information and often it seems like few people take notice and even fewer buy anything, just why bother. Well you won’t know unless you can work out the ROI.
First, quick aside – the most successful companies engage with their customers they do not sell to them. The real target is to persuade customers to come to you.
Three Rules for ROI:
- Define your goals – you can just say – ‘dollars’ – you need to offer something to social media users that they can share and in the longer term buy into.
- Define your Social Media return based on your goals. – this is the tough one – how do you know that a goal was reached because of social media, was it a newsletter, an advert or from some other source.
- Define how you attribute actual ‘dollars’ to your social media return.
Let’s say our goal is actual sales (more dollars) – we need to pick out the real sales that might have been generated through social media. There seem to me two ways to do this:
- Using specific campaigns and promotional codes for social media, maybe having a landing page specific to social media, that sort of thing
- Law of averages – let’s say you use social media to encourage people to download your brochure, or fill out a booking form. You know that 2% of people that see your brochure buy something. You might also know that 50 people asked for the brochure through social media – therefore you might safely say 1 sales was placed due to social media.
Equally you know that 20% of all website visitors buy something, and social media suppliers 10% of all your traffic – you can then attribute 2% of all web sales to social media – actually you can measure this far more accurately if you choose.