Measuring your social media ROI is one of today’s most controversial marketing subjects. Frankly everyone seems to be using a different system with different metrics, trying to quantify for management what reach, and profits, their social media efforts actually produce. You may have heard terms like ‘ROI on engagement’, ‘ROI on influence’, or ‘ROI of conversation’ thrown around. Forget about how many fans, followers, likes, or retweets you have. Measuring the performance of your social media efforts is just like measuring the ROI of any marketing effort. In its most simplified form you measure performance by analyzing how much you spend on content in relation to the actual leads and conversions it produces at your website. Cost of Content / Website Conversions = Cost Per Lead In today’s information obsessed environment you must provide value driven content that engages people. To measure the effectiveness of your content you should consider your campaign’s reach, engagement, and the frequency of that engagement. This will help you determine how your content is performing. It is important to understand that generally social media content does not produce quantifiable sales, instead it usually produces what is called a soft lead — such as an exchange of the user’s email address for some kind of information the user is looking for. The actual conversion will come later from some other type of marketing, for instance email marketing, at this time the user becomes a hard lead (a qualified prospect, a user in the sales funnel, or a user who is already a customer). So your goal is to use soft leads generated by your social media efforts to drive traffic to your website and convert them there. This is why people have trouble measuring the ROI of their social media efforts — because social media doesn’t produce direct sales, instead it is just an additional part of the sales funnel. You should also remember that by the time a consumer makes a purchase, or completes the buying cycle, they have probably already come in contact with multiple aspects of your marketing efforts. Marketing is no longer a linear funnel that where we start at one end and come out the other. So what should you measure? Cost Per Lead. (Or cost per acquisition.) How much did you spend to get paying customers? Many people want to measure social media in the social channel, but the value is more likely to happen through the website. The advantage of measuring cost per lead is that it is a metric that most managers and executives understand. It is one of the three benchmarks of acceptable cost — cost per lead, cost per engagement, and cost per impression. In order to measure your social media efforts, you have to track your social media activity. How do you know if a particular piece of content is working? One of the best ways to do this is with Google Analytics. Analytics accounts include Google’s custom URL builder and with this tool you can set custom URL parameters to track each visitor, including the campaign and the source. You can track it right down to the status update that produced the visit. Even in the socialsphere remember to be a real human and provide real value; this will result in the highest number of conversions or sales. If you are just starting to measure social media for the first time, keep in mind that at the beginning it is likely that your ROI will be negative. Understand that this is the result of not being tracked and therefore not being optimized. Start tracking and optimizing your content and you should see more positive results quickly. For more detailed information on measuring ROI of your social media efforts read this article by . Get started with Google Analytics and Google’s Custom URL Builder.
Take a look here on how to help manage your social web efforts.