How do you measure ROI in social media?

All to often people or companies start using social media but don’t know how to measure the return on investment or calculate a payoff from using social media. Here’s a few easy ideas to start calculating ROIs for you to consider.

Calculating ROI for your CFO

Typically a ROI calculation is your total revenue or benefit divided by the costs. But if it cost you zilch to setup the twitter account .. then you can’t automatically assume a positive ROI.

Your CFO and you even know that sales or gross net adds are more important and Likes on Facebook are worth nothing. Just remember ROI is there to help you get the go ahead for the project and all that effort on social media.

It’s kinda obvious to point out that you wouldn’t want to spend 100k on social media if you can’t verbally or visually explain the benefit. You need to identify costs that can help you find your benefit.

Start by calculating some costs - Your time is a cost, costs like media monitoring or using paid for social media tools are also costs. So it maybe easier to get some basic cost assumptions down on paper. If the social media campaign involves a competition or give away of prizes you’ll want your social media campaign to include an opt in for ‘marketing’ form to let them know about exciting future offers.

You should continue this exercise and then add in a portion or a variable percentage of costs attributable to social media activities such as running ads on Facebook or costs of marketing campaigns which feature direct links to your brands Facebook or Twitter URL.

In fact, your social media campaigns should always result in traffic, leads or sales.

Making revenue or benefit models for social media

Discount Coupons from the newspaper with redemption codes are now popular again and the mobile coupon is a good example of how the coupon is making a cross over the digital divide.

If you can’t track your social media activity - Maybe you need to pause to identify a coupon and redemption code for your fans and followers.

Key benefits or measures from social media you should consider include

• Activity on your website
• Sales of your products
• Foot traffic in your shops
• Number of mentions online in blogs, news or other online sites – track using PR people
• Mentions, Retweets or other Social Media activity - track using Social Media tools

And some softer measures would have to include Increase in brand awareness Increase in positive sentiment

Need some extra help with your next social media marketing campaign ? or got your own ideas? [ id=”31″ type=”page”]please let me know[/]

Meet the author

Damien Saunders
An experienced management consultant and business leader interested in digital transformation, product centred design and scaled agile. If I'm not writing about living with UCTD (an autoimmune disease), I'm probably listening to music, reading a book or learning more about wine.