January 26th, 2012  |  by matmoninternet | in: Online Marketing, Resource Blog, Social Media Marketing

Social media is a great tool to communicate with your customers, to generate leads, sales, and to create customer loyalty. In addition, most of social media is free, easy to use, and available to all. Because of all of these reasons, some businesses do not feel the need to measure its effectiveness: it's free and it's beneficial, so why bother?

However, finding information to post, preparing the post, replying to customers are all essential steps to creating an online presence. So whether you do your own social media or hire someone to do it, you need to know if it's increasing your revenue or not.

In a survey by Chief Marketer titled "2011 Social Marketing Survey", we learn that 52% of marketing of professional survey think it is hard to measure ROI for social media, and 42% say it is difficult to track and see results. Nevertheless, all still continue with their social media campaigns.

Chief Marketer also asked – for those who do measure ROI – how they measure it. The results show us that 60% of marketers use the number of fans or followers. We will see at the end of the article why this is not a good idea.

To help the more than 52% who are having troubles calculating ROI, here are a few tips on measuring your campaign's effectiveness.

Content being shared

How much your fans share and interact with your contents is one of the easiest way to calculate your ROI. No matter what business you are in, you can share links, posts, news or various information that can be monitored. The more content is shared, the more customers interact with your brand, see your brand and will be more likely to buy your brand rather than your competitor's.

There are two main ways you can go about to doing this:

1. Have your web developer set up an analytics account for your website. Your analytics account will tell you where visitors on your website come from (Google, Facebook, Twitter, directly from your address) and you will see how many visitors come to your site. You can cross reference the dates on your analytics account to the date of your social media postings, and analyze what pages they visit, how long they stay and conclude which type of posting works best for you.

   Another, more in-depth technique you can use is URL tagging. This is a little more complicated and time consuming so it's best suited if you have a web marketing team. By "tagging" the links that you posts on your social sites, you will be able to sort your analytics by type of post, content or campaign, and can even isolate individual posts. For example, if you launch a Christmas campaign, you will be able to differentiate it from your year-round campaign and measure its effectiveness, or compare different ads. Google Analytics is free and available to all.

   
   
2. You can use a social media management tool such as HootSuite, or TweetDeck that will automatically record your tweets, posts and links on different sites and provide you with statistics.

Measuring leads

Social media can be a great tool for lead generation… if you measure them. A lead can be a customer filling out a contact form, requesting a demo, visiting your online store, or just accessing your contact information. The best way to measure those leads is once again with a tool like Google Analytics and creating goals; if you have a marketing team, they will be the one responsible for goals. You can refer to our post on measuring your website's ROI to know more about setting up goals.

To isolate the leads coming from social media, you can either use URL tagging, or you can also create custom segments comprised off all the social media sites you use. Both of these methods will allow you to see the leads generated only by your social media efforts. Tagging takes more time but it also more precise if you want to see results according to different campaigns. Don't forget to give your lead a dollar value to know if the time and labor you spend on social media is offset by the leads you are receiving.

Measuring sales

Measuring sales works the same way as measuring leads. For some types of business where sales volume is relatively low, measuring lead proves more accurate. However if you have a high sales volume, measuring sales made through your social media campaigns is the ultimate way to know if your efforts are really paying out.

The number of fan/followers/friends

The numbers of followers/fans/friends that you have is not an accurate way of calculating ROI. Some fans can be passive and completely overlook your marketing efforts, while others will be very responsive. For instructions on how to interpret your numbers of fans, read this article:What are Facebook Fans Worth?