This post was originally published in MarTech Cube.
Proving ROI is no easy task. Just ask marketers, who are asked every day to prove how their efforts impact the bottom line. Marketing metrics tend to track traffic and leads, not revenue. An increase in those metrics will eventually lead to an increase in revenue, but it’s helpful to know how individual marketing tactics contribute to this end goal.
Social media seems to come under scrutiny more than other marketing tactics. Perhaps because it is newer (compared to other traditional marketing tactics) and misunderstood, or because it has so many trackable metrics that businesses don’t know which ones to monitor.
No matter the reason, everyone is trying to figure out how to prove the ROI of social media efforts. Below, social media marketers from SOCi have outlined three areas to examine when determining social ROI.
Figure out how to measure social media
The key to measuring social ROI is understanding what social media can and cannot do for your business. Social media works best at driving soft leads; that is, people who are familiar with your business but may not be quite ready to make a purchase or convert.
Social media exists somewhere in the middle of the sales funnel, and should be evaluated accordingly. Earning a new follower means that your business now has a potential new customer, but there’s still work to be done to get the consumer to convert. Therefore, when measuring the ROI of social, consider the number of soft leads social is driving, and how those soft leads will result in revenue.
Social media does play a massive role in consumer purchase decisions. Forbes found that a whopping 78 percent of consumer purchases are influenced by a company’s social media posts. But which platforms are worth focusing on? It really depends on the industry and the consumers you serve. However, when looking at all consumer behavior on social platforms, it reveals that more than one-third of users said they had bought something directly from an Instagram ad. As for Facebook, research shows that more than 50 percent of retail purchases are influenced by the social network. And 80 percent of Twitter users say the platform has a bigger impact on their purchase decisions than TV does.
Reviews on social media platforms and their effect on revenue
When measuring social ROI, also consider how the lines have blurred between social media and review platforms. Facebook lets consumers post reviews — now called Recommendations. Google is the number one review site, but it also allows businesses to post engaging content through Google Posts.
There is a connection between reviews and revenue; a Harvard University study found that a one-star increase in a restaurant’s Yelp rating led to a 9 percent increase in revenue. A Cornell research report found that a 1-star increase in ratings (i.e, from 3 stars to 4 stars) led to a 39 percent increase in revenue for hotels on TripAdvisor. And from a report from Uberall, a star rating increase of just 0.1 could increase the conversion rates of a business location by 25 percent. In 2019, social media is reputation management, and to calculate it’s ROI, marketers must understand that connection.
The unquantifiable effects of social media
While most marketers prefer to point to hard data when defending the ROI of social media, there is some value in social that simply cannot be quantified. Brand familiarity, word of mouth, and top-of-mind awareness — these are all key drivers for consumer purchase decisions that social media can affect.
One way to analyze the indirect nature of social media’s effect on revenue is to examine the different ways consumers use social media. It’s a general information tool — research shows that one in three consumers say they go to social media to learn more about a product or business. Companies must keep social media pages up-to-date and accurate in order to capture the 33 percent of consumers who use social to find businesses.
Marketers understand the effect that social media has on overall brand awareness and visibility, but it can be difficult to express that revenue impact directly. The bottom line is this; customers use social media to make a purchase decision; if your business isn’t using social media to engage those customers, know that your competitors are.