If you’ve ever worked in sales or marketing, you’ll be used to nodding along to bull@#?! acronyms. Some of them, like these two (up there in the title), come up far too often to ignore so let’s just clear up the definitions straight away.
KPI = Key Performance Indicator: A measurable value that demonstrates how effectively your company is achieving key business objectives.
ROI = Return on Investment: The money your efforts are making…in cold unforgiving numbers.
ROI = Net Profit / Total Investment * 100.
Simple, yes? Well, perhaps not. There are a huge amount of variables to measure in social media, as you probably already know. Some of them you’ll no doubt have seen (i.e. follower growth, best tweet of the month, impressions etc), which can all be valuable data over a long period and will help in seeing the grander picture of how you're performing. But when it comes to measuring actual ROI, how genuinely useful is this information?
Make no bones about it, measuring social media KPIs for ROI is difficult. For one thing, £s don’t hang off likes, mentions or shares. And another thing, boy there’s helluva waffle out there on the internet! So, let us wade through the mountains of waffle for you and save you the time and sanity. Or at least, distract you from doing any real work. Either one.
Set your goals and pick your tools.
The aim is to set measurable goals that return data which you can assign a numerical value to. So, when setting your SMART* goals, stay rigorous and only create goals relevant to your marketing strategy and business objectives.
*Specific Measurable Attainable Relevant Timely
Use Google Analytics (GA), Hubspot Analytics (HA) or the native analytics (NA) to set up your goals and collect the relevant data.
To easily measure specific campaigns, we recommend URL tagging, using Professor Traffic, in conjunction with Google Analytics to make your life that bit easier.
Case Study - Bananas for Sale
Imagine you’re in a hypothetical reality where, instead of Noisy Little Monkey being Bristol’s best inbound marketing agency (“What, no? This is just too far-fetched!”), NLM are the banana industry’s newest kids on the block and they’re looking for some serious banana sales through social media.
Company Objective: Sell more bananas.
SMART Goal: Increase banana sales by 100% by the end of February 2017.
To assign a social media KPI to their SMART goal, Noisy Little Monkey create a Facebook Ad with an attention-grabbing image of some incredibly tantalising bananas and a slogan that reads “Ripe is right!” (catchy, we know) which links through to their landing page. The KPI to measure in this instance would be “Link Clicks.”
Social KPI: Link Clicks. Making sense so far? Good. Okay.
Using the awesome chrome extension Professor Traffic, they're able to tag the URL of the landing page to identify exactly where the traffic is coming from and, more importantly, how many sales each click is converting.
For simplicity’s sake, let’s say that the total cost for the “Banana Ad”, including staff hours, is £10. The Ad receives 1000 clicks; of which they make a net profit of £100 on banana sales. The ROI from this KPI would be as follows:
ROI = (Banana net profit/Total cost) *100
ROI = (100/10) *100
ROI = 1000%
You weren't expecting a Maths lesson here, were you? Stick with us. This not only tells NLM that Facebook Ads is a profitable investment and they should maximise this as much as possible, it even tells them, theoretically, how valuable each click from Facebook is worth:
1000 clicks = £100
1 click = £0.1 or 10p
Granted, this is a very simplified version of how to convert your social KPIs into a numerical ROI and it does get a lot trickier when dealing with multiple KPIs for different campaigns. But the theory will always remain unchanged:
- Know your company objectives
- Create SMART goals around your objectives
- Assign social media KPIs which relate to measuring your SMART goal
- Measure using Google Analytics and Professor Traffic (the dream team!)
- Analyse and adjust accordingly
Yes, there is, thank you for asking. Measuring ROI for social media isn’t only about showing how good you are at your job. In fact, it is usually more helpful in highlighting areas that need improvement, or giving you concrete data that your marketing budget is being used as effectively as possible. Helpful when speaking to the boss!
The key is to create a variety of social media campaigns to test what is successful and what needs binning. From there, you can refine your customer personas and create a more personalised and, in theory, more successful social strategy. Yay!
For more help with your social meeds, download our free eBook right now! NOW. DO IT NOW. It's free!