While social media is less expensive than other forms of marketing and can help expand your customer base, it takes a good chunk of your time and costs money as well. How do you decide if the effort is worth it?
To get a concrete idea of your return on investment, you need to figure out how much money you have invested in social media efforts. Estimate the amount of time you put into it and assign a dollar value based on your hourly pay rate.
How much revenue do you hope to make from social media marketing? Come up with a ballpark figure, but when you set goals for your online marketing, come up with non-revenue parameters.
For example, narrow it down to new followers, new likes, clicks on a link to your website, or filling out your online form. Keep track of your goals through tools that are available on social media sites or in your website’s Google Analytics.
Match Your Goals to Revenue
Finally, assign a dollar value to your goals, using the lifetime value of a customer or average amount of sales that occur based on your social media efforts. For example, you could assign a value of 50 cents to every Facebook like.
Once you’ve gathered all of your data, you’re ready to do your calculations. You can use an ROI calculator or do it yourself. You’ll subtract the amount of your investment from your revenue, and then divide the difference by your investment. ROI is expressed as a percentage.
Let’s say you attribute $100 in revenue to social media marketing efforts that cost $80. $100 – $80 = $20. Divide 20 by 80 and the result is 25 percent. Expressed another way, for every dollar spent on social media marketing in this example, the business made $1.25.
What About Blogging?
Whether you blog, or you assign the task to a creative member of your staff, it will cost you money. You may not be paying extra for that blog, but it takes time and labor that could be allocated elsewhere. You want to know if it’s worthwhile.
To calculate your return on investment, you need to add up the costs, look at staff hours, salary, overhead expenses, and design costs for your blog. To assess the amount you get in return for blogging, you can focus on how many people are filling out an online form or count the number of leads generated by the blog.
Finally, you’ll want to assign a dollar amount to each consumer response. Remember that any digital efforts will take time and commitment before you see the rewards.