Return on Investment (ROI) is one of the many performance measurements that evaluate the profitability or efficiency of an investment compared to other costs. Since measuring the success of your marketing campaigns is essential to scaling your business, you need to balance your cost output shouldn’t be higher than what you earn. Here’s how to make that happen.
Manage All Your Social Channels from a Single Platform
Around 72% of businesses don’t know how to calculate ROI or have a vague idea of how to measure it to improve their campaigns. It isn’t exactly their fault, either. Before tools like Falcon's social media marketing software, ROI was difficult to quantify. However, sophisticated marketing software can accurately calculate your investments found from soft leads, like from likes and shares, so your business can run more effective campaigns on all social platforms.
5 Ways to Increase Your ROI Percentage on Social Platforms
1. Define your Social Media Goals
The end goal for most businesses, regardless of marketing or platform, is to sell more. To sell more, you have to become more visible and approachable to consumers. Start investing in one or more social media metrics to improve your reach, like lead generation, brand awareness, customer loyalty, and trust. When you increase these metrics, you’ll inevitably earn more.
2. Create a Timeframe for Your Goals
Your goals need to be specific, attainable, and measurable to be successful. Through SMART goal-setting, you can accurately determine which steps will get you to new opportunities. For example, if you wanted to increase customer loyalty, you could say: “My business will respond to all comments/shares/reviews on Instagram within 20 minutes by the end of the month.”
3. Track the Right Metrics and Leave the Rest
Some metrics are more important to your goals than others, but most trackable metrics will improve your reach. However, it’s better to zone in on specifics rather than painting with a broad brush. Let’s use the customer loyalty example again. If your goal is to increase loyalty, you’ll want to focus on audience engagement, lead generation, and sign-up conversions.
If you want to track other metrics, like reach, site traffic, vanity metrics (comments, likes, shares), and revenue generated, that’s perfectly acceptable; it just may not be immediately relevant to you. You’ll need to conduct research to see how your audience engages with your content to track ROI effectively. Be sure to view these reports daily, weekly, monthly, and yearly.
4. Calculate Time Spent on Social Media vs. Labor Cost
The longer you spend on social media marketing, the less time you have on other aspects of your business. If you have employees, you should calculate their wages against your return on investment. For example, if your marketers make $40 an hour and you earn $80 an hour per marketer, your ROI would be $40 or 100%. You also have to consider the following calculations.
- Cost of platforms and tools: Subtract monthly subscriptions, utilities, computers, etc.
- Content creation: Subtract freelance costs, time costs, marketing costs, etc.
- Ad spending: Subtract ad spending on all platforms, pay-per-click ads, and web ads.
- Consultants: Experts: Subtract money spent on industry professionals.
- Time spent: Subtract total time spent on social media sans training.
To increase your ROI percentage, you need to account for social media’s total cost.
5. Read, Adapt and Grow
After you’ve determined your ROI, you can make improvements. Businesses can improve their ROI by reducing labor costs by using more tools, doing some of the work themselves, or hiring an agency. On the other hand, companies can up their ROI by increasing social media output, improving their content, and selling to their customers more effectively. You don’t necessarily have to make tough decisions to get a better ROI from social media!