Measuring Social Media Marketing ROI

Social media has tremendous potential for your small business marketing strategy. It also has plenty of potential as a time and money sink. Getting the most from your social media marketing efforts means producing measurable results.

Yet, social media marketing results can be nebulous, at best. Having 1,000 Twitter followers doesn’t automatically equate to having 1,000 customers. You need to be able to look at the right numbers to know whether you’re actually getting anything for your efforts.

Here are some metrics you can use to measure your social media marketing ROI:

Sales

Ultimately, the goal of your social media marketing campaign is to increase your sales. If you’re not increasing sales, at least indirectly, you might as well shut it down. It might be that you’re promoting branding, for example, which can be hard in and of itself to measure; but even branding activities contribute to sales in a measurable way.

There are a number of tools you can put to use in this task. Google Analytics, for example, can tell you how many of your website referrals are coming in from your social media presence. If you have an online storefront, you can even measure how much of that social media traffic is converting.

That said, your sales goals might be less direct. You might be using social media to drive customers into your physical storefront. In that instance, you’re going to have to find other ways (such as customer surveys or social media-exclusive coupons) to figure out whether your social media efforts are having a direct impact on sales.

Generation of leads

Social media marketing can generate leads in a number of ways. You might use a custom Facebook app on your business’ page, for example. You might combine this type of activity with Facebook Insights and Google Analytics to determine how effective these leads are.

You might also use social media to promote a lead generation tool on your own website. For example, tweeting the signup form for your business’ monthly newsletter can pay off in the generation of leads.

Extending your reach

By their very nature, small businesses tend to have somewhat limited reach. You usually can’t afford to advertise on national media outlets, and you’re not going to be doing a Superbowl commercial anytime soon. However, social media actually presents an opportunity to extend your reach outside some of those natural limits. And, it does so at an incremental price.

Depending on the nature of your business and your target market, social media might mean reaching customers that can’t be reached in more traditional ways. For example, a younger target market is less likely to read newspapers or watch local network television, and so Internet marketing in general (and social media marketing in particular) are better ways to reach those customers.

Yet, reach is also hard to measure. It’s hard to say for any given customer whether they might have found you via traditional advertising and marketing channels. Customer feedback is key in measuring this element of social media ROI.

Cheap market research and product development

If your business uses tools such as focus groups or product testing procedures, social media presents a potential cost savings to you. You can connect directly with people in your target market, and you can do it in a cheaper and faster way than you could through a traditional product development and testing channel. This, then, increases the overall ROI of your social media presence by decreasing your expenses.

Direct, public customer service and customer retention

Consumers are turning to social media in droves to complain about products or services that they don’t like. Discontent spreads by word of mouth, and social media gives consumers a megaphone. Unlike with traditional word of mouth, social media actually gives you the opportunity to step in and fix a potential problem.

For example, you can use Twitter searches to find out when your product is being mentioned. If someone’s having trouble with a product, you can offer to help or replace the product via Twitter. In doing so, you’re not only retaining that customer, you’re publicly demonstrating your commitment to customer service, which can help bring in new customers.

Social media channels provide you with exciting marketing opportunities. Learn to recognize those opportunities that have a true return on your investment, and focus your efforts into those. Learn to read and quantify your results – real results – instead of merely counting social media followers.

Author bio: Dominique Molina is President of the CertifiedTaxCoach.org, a professional membership organization that provides tax-specific resources such as engagement letter and accounting templates. The company offers the most comprehensive tax training in the industry.

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