A good question – no doubt, but one with a fairly lengthy answer. To be concise, the way to measure social media ROI is by setting clearly defined goals and tracking relevant metrics. However, to calculate the full benefit of social media marketing to your business, you should be more concerned with measuring return on value (ROV).
Of the latest social media goals, these were identified by Hootsuite as the top goals by engaged organizations:
1) Increased acquisition of new customers
2) Increased brand awareness
3) Drive conversions (leads, purchases, product inquiries),
4) Increased customer retention,
5) Improve customer experience,
6) Improve brand’s competitive advantage,
7) Improve customer insights,
8) Brand protection/risk mitigation
9) Improve employee experience
While your business’s specific goals may differ, all goals (including those mentioned) should be SMART, which stands for Specific, Measureable, Attainable, Relevant, and Timely. For example: “We will minimize our first response time by 10 minutes by the end of the year” is a great goal to improve your customer service measurably.
That being said, social media marketing is always more about the sum value of the return. Using our previous example, if we increased positive customer service metrics using social media, that happy customer may refer more sales. Therefore, to effectively measure the improvement social media has brought to your bottom line, you need to place a monetary value on a referring customer. As the increase in positive customer service interactions is related to the reduced engagement time due to social media implementation, you can see that the business’s gained value is more than what is initially measured.
This kind of ROV is prolific throughout social media. It is part of why 60% of businesses are planning to increase their social media budget, according to Hootsuite’s 2021 social media trends report. It is also why improving or outsourcing your social media efforts is a “big-brain” move for business owners who wish to stay relevant.
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