A good number of fans who also click the “Like” button every now and then. Everything appears to be going well. In marketing, however, relationship success is not determined by a good gut feeling, but by measured values and to a certain extent by hard facts pertaining to success. Various KPIs (Key Performance Indicators) and Return on Investment (ROI) calculations allow for statements to be made about the success of social media marketing. These metrics and the associated measurement tools work for a wide variety of platforms – from Facebook and YouTube to LinkedIn.
Nothing to measure without a strategy
Those who don’t know with whom they actually have social media relationships are likely to be fishing in murky waters. It is therefore important for companies to have a clear idea of their target group, while also clearly defining their campaign objectives and channels. This logic applies to B2B just as it does to B2C business models. The fundamental questions everyone should ask themselves are: How old is the target group? Where do the people live? What gender are they? What interests, requirements or problems do they have?
Anyone who invests time, money and personnel in setting up and maintaining a social media account naturally wants to know whether they are achieving their goals. On Facebook, the platform’s own feature “Facebook Insights” provides statistics on user interaction with the content, as well as other user statistics (gender, place of residence, age, etc.). For example, the page administrator can see the reach of their post here, i.e. the total number of individual persons who have seen the page and the posts. The Interaction item shows the number of all individual persons who have interacted with a page, broken down by interaction type. Demography, interests and tastes of the target group can be evaluated and fine-tuned using this basic tool.
As one of the most important KPIs for social media, the Engagement Rate provides information on how well the respective content is received by the user. It includes how the user interacted with the site, for example through comments, posts or emojis. The rate shows the proportion of people who have interacted with the site or campaign, as opposed to those who have not interacted at all. When it comes to social media, companies can and should also set themselves concrete campaign targets with corresponding key performance indicators. They are often defined as specific actions. This can include downloading a whitepaper, participating in a raffle or registering for an event. The Conversion Rate represents the proportion of site visitors who have carried out a particular action. There are numerous different tools for social media analysis and monitoring on the market, which we have already presented in an earlier article.
An attempt: determining ROI using hard facts
The metrics identified allow for certain measurement of success in relation to the previously defined goals. Among other things, statements can be made about how actively the community reacts to and interacts with a company’s online activities. This results in metrics such as the number of fans/followers, retweets, page visitors, comments on blogs, etc., but these metrics do not yet provide any indication of the actual economic success of social media activities. However, this undertaking poses an enormous challenge because many of the defined goals, such as increasing the number of followers or a higher level of interaction on the channels, do not directly equal measurable, monetary sales success. However, there are several approaches that can be used to perform a social media return on investment calculation and further substantiate the findings of the KPI evaluation. For a quick overview there are even ROI calculators.
Social media managers can take four steps to determine the ROI with the goal of customer acquisition/sales:
Step 1: Define goals:
Every campaign needs clear goals. Possible goals could be increased product sales or lead generation. Once the goals have been defined, they must be linked to the appropriate KPIs; for example, clicks on a landing page. These goals should be adapted to the company and its products, but above all to the target group. Goals can include the following:
- Win leads
- Link clicks on landing page
- Generate online purchases…
Step 2: Measure goals and assign concrete values:
Tools such as Google Analytics are needed to measure goal achievement in order to determine the corresponding key figures. This includes visitor numbers, reach, leads/customers and conversion rate. Subsequent calculation of the return on investment requires values that can be used to allocate the revenues to the social media measures. These include the lifetime value of a customer or subscriber, the price of products advertised via social media, or the average shopping basket value of a visitor arriving via social media.
Step 3: Calculate total costs:
In addition to the social media KPIs, financial expenditures are decisive for ROI calculation. Companies should therefore record in detail the costs for a campaign (advertisements, editorial work, sales, etc.), including ancillary costs and workload – preferably broken down for each channel to see differences.
Step 4: Calculate and optimize ROI:
The ROI can now be calculated with the revenue from social media and the costs incurred.
ROI in percent = (social media revenue – total spending) x 100 / total spending
If the calculated key figure is greater than 100 percent using this calculation, the result is positive. The higher, the better. Because then much more is being earned than spent. Companies can see which social media campaigns really make money and which ones only generate likes and comments. This makes it possible to optimise social media strategies and possibly set new priorities.
Success measurement shows optimization potential
If a brand wants to be successful today, it can hardly avoid a presence on social media. However, success will not come by itself. A strategic approach is required for this. Whether this is successful can be determined using various key figures as well as the reflected measurement and tracking of the social media ROI. Companies that have valid social media data at their disposal can use this information to invest more time and resources in functioning measures and optimize tactics that are not paying off.