Social media marketing can become a money pit for some companies. Your marketing team might spend considerable resources both in terms of time and money, succeeding in garnering a huge number of social media followers or fans. Yet, those followers or fans don’t always translate to customers. In many cases, the number of fans and followers your company has becomes irrelevant to your bottom line.
You need tools to be able to determine your ROI in the social media marketing space. Here are some specific metrics you need to consider when analyzing your strategy:
At the end of the day, what you’re looking for is an increase in sales. No more, no less than that. That being said, there are a number of ways that social media marketing can boost your sales (and that you can measure that boost).
For example, if you’re providing direct product links from your Facebook or Twitter account, you can use Google Analytics or other tracking tools to tell you where your sales are coming from. It will tell you how often links clicked from your social media sites actually convert.
Unfortunately, the impact of social media on sales isn’t always quite so direct. You might be using social media simply to increase your branding, or to drive customers into physical retail locations. In those instances, the impact of social media on sales is harder to measure.
2. Generation of leads.
There are at least a couple of different ways in which you can use social media marketing to generate leads.
The direct method uses a custom element in the social media site (such as a Facebook app) to gather user information and use them as leads. Combined with Facebook Insights (the built-in Facebook analytical tool) you can identify just how effective your lead-generation tool is.
The indirect method of lead generation sends your social media followers away from the social media site – across the Internet to your own domain – where you then gather customer information.
Here again, Google Analytics can play a critical role in identifying what percentage of your new leads were generated by your social media presence.
“Having 100,000 Twitter followers doesn’t guarantee you’ll have a single sale”
While the sheer number of fans or followers on your social media profile isn’t the most important or most reliable metric to use, it is one to look at in context. Having 100,000 Twitter followers doesn’t guarantee you’ll have a single sale. It really comes down to how your social media fans or followers are interacting with you.
At some point, you’ll be able to develop a reliable ratio of customers to followers. As long as you’re using the same kinds of methods to generate followers, your customer base should grow as the number of followers you have grows.
Really, when discussing reach, you’re looking at both of those numbers: overall followers, and the ratio of followers that are also customers.
4. Customer service outlet.
This is a much more qualitative measure of your social media marketing efforts that a quantitative one, but it’s still useful to look at. Today, more and more consumers are relying on social media to complain or criticize a given brand. By responding quickly on your profile to such criticisms or complaints, you not only have the opportunity to retain a single customer, you can also recruit many others who watch the interaction.
5. Unconventional uses that save costs in other areas.
If your business uses focus groups or product testing groups, social media can be a wonderful place to move some of these efforts. Social media present the opportunity to connect with people that are interested in your company in a much less expensive way than most methods available to a product development team. This doesn’t add to your profits, but it saves significant expenses elsewhere.
Not only that, there are a number of tools you can use to analyze what’s being said about your brand in the social media space. The same goes for your competitors. That kind of market research might otherwise cost your company significant time and resources; these tools can gather the data in a matter of minutes, and give you a fair picture of what people are saying about you.
Social media has its place in marketing, but your efforts need to be focused. Hone in on those uses of social media that contribute to your bottom line, and your overall social media marketing ROI will increase.
Image credit: http://www.flickr.com/photos/webtreatsetc/
Benji Hyam is a Social Media Coordinator at Vistage International, an executive coaching organization that helps CEO members build better companies through unique business coaching and executive development opportunities.