You may have seen my colleague Erin's post about Link...er...relationship building
from a talk she did last week at SMX Toronto. I also had the pleasure of speaking at the event, but on the topic of social media ROI. It's something many marketers struggle with, so I figured I'd share a few of the highlights of my presentation here.
First off, not to burst your bubble, but there is no magic bullet. There isn't a formula like this to determine if what you're doing is working:
Wouldn't that be nice? While it's easy to calculate what you're putting in to it (your time, training, overhead, etc), it's often hard to put a dollar value on what you're getting out. There are many metrics that are nice to look at, like the number of fans, followers, and connections. However, while they may help your ego, there is no correlation with these numbers and actual dollars.
The next step is to look at those things that are more important, like the engagement level of your network. For example, 10 fans who actively comment on and share your social media posts with their networks are more valuable than 100 fans who aren't involved. When looking at your Facebook analytics, don't fixate on the reach of a given post as much as the virality. That's the indication of how much it's being shared rather than how many times is is scrolled past in someone's timeline.
Google Analytics now provides some more social tracking and reporting, including the social source graph. This shows which networks visitors to your site are coming from, and what they do when they get there. While this again doesn't show true ROI, it can show you what campaigns aren't working. For example, here is a capture of our social source graph. You can see a post we did that we advertised on StumbleUpon. The traffic spike was great, but you can see the vast majority of the visitors left our site right after reading it (indicated in red). A few people stayed, which would've been great if the article was picked up on StumbleUpon organically. However, while we were originally encouraged by the traffic, we now can see that it wasn't quality traffic.
To get one step closer to ROI, you can try Oliver Blanchard's FRY method. This looks at your customers' buying frequency (F), your reach in terms of quantity of customers (R), and how frequently customers buy (F). Charting those numbers on top of the other key performance indicators like social engagement can get you really, really close to ROI. However there is still the issue of correlation not equaling causation. Frustrating, I know.
All that said, there are two rock solid ways to calculate real live social media ROI (besides marketing yourself only through social media). The first is to move the transaction to the social network. Take a look at the clothing brand Express on Facebook. Through a custom app, they've moved the shopping experience inside Facebook. Sure, you can still buy on their site, but by having this second storefront, they are able to truly judge what sales came from where. This can go beyond sales to companies like mine that look at lead forms as a conversion. Get the form in, earn the business, and you've got bona fide ROI.
The second way is through another nifty Google Analytics tool, the Social Value report. This report uses the conversion tracking you've setup already (can be a shopping cart page, a lead form, etc), and tells you how people got there. It even breaks down those conversions by people who came directly from a social media site versus those who visited you socially, and then bounced around for awhile before closing the deal. This is great information to watch!
What are some other metrics you like to keep an eye on in the social space?