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How to calculate Social Media ROI?

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Are you wondering about how can you calculate the return on your social media activities? Today in the post, we will look into some simple methods through which you can estimate your social media ROI.

Before beginning, lets simply understand that why do we need the social media return and what is the need to estimate it? Let me share, ROI is basically used to compare the efficiency of marketing campaigns. You can use these stats to negotiate budgets with your management (in-house) team and also to negotiate budgets with your management in case of an agency. Overall, these numbers are used to analyze and further optimize your future campaigns.

Moreover, social media ROI is also required to manage your social media financial accountability. As and when your social media initiatives become mainstream, executives are holding them to the same accountability as other business initiatives, demanding financial returns and ROI on social media investments.

How to estimate the social media return?

As we learn about this approach, it is important to remember that you can only estimate the social media return and ROI, but calculating the exact numbers is not possible.

In order to estimate your social media returns, you need to start with a 3 step process, which includes:

  • Defining your social media goal
  • Defining your social media return based on your goal and
  • Finally, defining how will you tie hard dollars to the social media return

For a better understanding, we use three examples: return on consumer insights, return on sales and return on consumer support.

Social Media ROI on consumer insights

Using the three step process, we will first define our social media goal, which would be to generate a good number of high quality consumer insights from the social media campaign. Next step is to define the social media return based on consumer insights. And the final step is to tie hard dollars to the return by comparing the cost of generating same quantity and quality consumer insights using a focus group.

Since we know the cost of focus group and acceptable consumer insights per focus group, we can estimate the cost per consumer insight. Analyzing a month on the basis of what users are discussing with each other and with you on social media, you can count all the consumer insights that you determine to be of equal or higher quality. Now based on this count and the per-insight cost, you can determine the value of your social media presence.

Similar methods can be used to track social media ROI on sales and customer support calls.

Concluding, your social media return and ROI depends upon the goals of your social media campaign.

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