Everyone wants to know, “What’s the ROI of social media?”, but to answer that question you first have to decide what’s most important to your brand.
To help you set your priorities, I’ve come up with seven different models for judging social media ROI. There’s generally no one best option; most of my clients opt for a mix of several measures:
1. Sales Model
Revenues directly associated with social media investments are tracked. This data can be used to create reports outlining sales of specific items, conversion rates, average cost-per-order and more.
2. Brand Awareness Model
The focus is placed on how many people see or could potentially see a social media activity via engagement and reach statistics.
3. Customer Loyalty Model
This approach aims to increase retention rates, creating lifelong customers for your brand. Metrics could range from the number of monthly subscriptions, repeat buyers, and engagement with loyalty programs.
4. Customer Advocacy Model
With this model, we measure based upon the number of shares, mentions, positive reactions, user-generated content, and brand advocacy, comparing results to those of key competitors for a more holistic overview of performance.
5. Brand Perception Model
How do people perceive your brand? Can negative sentiments be shifted in a positive direction via social media communications? This is the brand perception model, typically defined by tracking comments on posts and watching for a shift in sentiment.
6. Earned/Organic Model
Earned media is creating content that provides a business outcome without having to pay for amplification (hence, earning the media). Success with this approach is usually defined by techniques such as influencer outreach—sharing content with the hope that influencers will post about it—and social listening, which includes actively listening to and joining conversations on social media to gain organic fan acquisition without paying for it.
7. Customer Service Model
Typically involves comparing the cost of operating a traditional customer service (CS) department with performing customer service functions digitally, as well as the costs for transferring CS in part or in full to digital. Functions include managing returns and exchanges, dealing with damaged goods and answering customer questions.
In most cases, none of the above serve as a one-size-fits-all solution. For example, you may devote 60% of your budget to Sales and 40% to Brand Awareness.
Additionally, I’d suggest that you compare your effectiveness across these social media ROI models versus your effectiveness for the same metrics via other marketing platforms.