Social media marketing is no longer something new and untested; however, many marketers are still relying on anecdotal evidence to demonstrate the value of their activity.
Recent surveys still show that almost half of marketers haven’t been able to demonstrate the impact of social media on their business, despite having around a decade to get to grips with it.
So, as marketers and business owners, how do we know that out social media efforts aren’t just a waste of money?
Before you can even attempt to answer the question, you need to understand what the motivation behind your social media efforts was in the first place. If it was just because everyone else was doing it, or because someone said you should be doing it, then you’re probably going to run into problems straight away.
Social media marketing, just like every type of marketing, needs to be routed firmly in your business strategy. It should answer a problem, or help you achieve a business outcome that you believe has real value to your organisation.
That outcome may appear to be something intangible, such as improving the customer experience or engaging a wider audience; however, in almost all cases it will have a demonstrable value to your business, one that you can measure in pounds, shillings and pence.
But it is not always easy to draw a direct correlation between your activity on social media, and last quarter’s sales revenues. That is where key performance indicators (KPIs) can come in handy. They don’t provide the full, final answer, but they do help us assess how an activity might be playing out in the short-term.
The specific indicators you select in your business should relate directly to your desired business outcome. Wherever possible they should relate back to a business value.
For example, if your goal was to raise awareness you might look at your figures for reach (the number of people who have seen your message), impressions (the number of times your message has been displayed and frequency (the number of times your message has been seen by each member of your audience).
But it’s important to always have the end goal in mind, awareness alone doesn’t pay the bills. It is probably a means to an end for you – a step along a journey towards that customer visiting your store, calling you up, dropping you an email – and making a purchase.
We have been involved in auditing the results of many companies, large and small. In our research we have often found that they spend hours a week writing blogs no one reads, tweets that don’t get seen and posts that go unloved. Worse still we regularly find that their social media efforts have had little or no result on their bottom line.
So as a marketer or business owner, how do you go about measuring your results and getting to the bottom of the question, are my social media efforts a waste of money?
1) Begin with the end in mind
Sit down with your team and establish what ‘business outcomes’ you were looking to achieve with your social media approach. These should be tangible, business benefits, that can be measured – things like growth in the number of customers, increased average order values, charitable donations or sales turnover.
2) Identify the Journey
Working back from your end goal establish each of the steps along the path. Define what indicators provide an insight into whether you are achieving the goal through your social media efforts. Even if you’re not sure what social metric might relate to that indicator – note it down for further research.
3) Develop a Test Framework
Assessing your results requires defining a hypothesis and testing your results against it. Identify without looking at the data what you believe should have occurred, and over what timeframe.
For example, “we believe our Twitter account has raised awareness of our business, leading more people to visit our company website in the past 12 months.”
Using that framework, identify the data you would need to extract, and the periods of time you would need to look at to prove or dismiss your hypothesis.
For the example scenario above, you might want to download four quarters of data from Twitter Analytics, using the impressions as a measurement of potential awareness, and comparing that figure to the number of link clicks to your website. You might want to cross-reference the Twitter figure with data recorded within Google Analytics to see if you can identify that traffic entering the site – and if possible, the conversion rate from a visit to a sale or enquiry.
4) Identify Costs and Returns
The only real way to identify if your social media effort has been a success or a failure is to identify the ‘return on investment’, the result versus the cost of achieving the result.
There are essentially two figures required to calculate an ROI; the cost (investment) and the value of the outcome (return). Where you don’t have an exact value for a result, as is the case for the majority of KPIs, you might need to use a formula to approximate.
For example, if you know that you convert 5% of website visits to a purchase, and your average value order is £10, you can begin to approximate the value of each link click.
(The formula used would be [(Number of Link Clicks x Conversion Rate) x Average Order Value = Return], using an example of 100 link clicks that would be calculated as follows [(100 link clicks x 0.05 conversion rate) x £10.00 average order value = £50.00 approx. return].
The trickier element often comes when working out your costs, many social media approaches rely on someone’s time, rather than a financial investment – but time has a value and you’ll need to establish what that value is before you can understand the ROI.
5) Learn from your results
The results of your research are not an end in themselves. You need to take this information and attempt to understand how you might improve on that result. You need to cut some of the waste, and build on the successes.
Once you have a new plan, identify the renewed hypothesis, develop a framework to test the result, and begin working on it.
Of course, it’s not always easy to carry out this process internally. We offer a detailed audit and recommendations process for organisations looking to assess the impact of their social media efforts.
If you’d like some help understanding the value of your social media activity please complete the contact form or get in touch with Aren on 07598 242212 to arrange a free initial consultation.
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