As more and more businesses – big and small – start to embrace social media, it becomes equally important for businesses to track their return on investment (ROI) from different social media tools and campaigns. It’s important to measure the positive and negative impact that any strategy has on your business and this is just as true with social media as it is with anything else.
When measuring the ROI from your social media tools, keep these things in mind:
Establish a current performance baseline and define clear goals.
When looking at how to measure social media ROI, you need to first define your goals and establish a baseline for your current levels. If your goal is to increase customer conversions or social media mentions, you need to have a baseline level of what those conversions or mentions are before starting a new campaign.
Metrics are meaningless without context or direct behavior correlation.
It’s easy to assume that ROI is just metrics. That’s not true. Metrics make up how you calculate ROI, but they aren’t the same thing. In order to calculate ROI, you need more than just the number of people following you on twitter. However, the number of referrals your web page gets from Twitter and the number of those visits that turn into conversions is useful information.
Tools and services are wonderful but they won’t do all the work.
There are lots of different tools and services you can use to help track different measurements that go into computing ROI, but ultimately, you are still going to need to do the heavy lifting yourself.
To make it easier, try to make your information trackable whenever possible. This means using shortened URLs that come with analytics add-ons and offering coupon codes or other promotions based on where a customer finds out about your business (so your Facebook code would be different from your Twitter code).
Tools are still an important part of the process, so here are some to check out:
Google Analytics – Google offers a lot of tools for tracking traffic and activity on your different sites. The ability to see where users are coming from, how often they stay and where they go can be very helpful when calculating ROI.
HootSuite – HootSuite offers tracking and management tools for Twitter, Facebook and LinkedIn. One of the nicest features is the ability to pre-set posts and to also track the activity on each link you send through the client.
Vitrue SRM – Vitrue has a fantastic tool aimed at larger businesses called Virtrue SRM (Social Relationship Manager). It’s basically a CMS for controlling all of your different social media activity. Scheduling posts, tracking links, comparing performance information of different types of posts or different designs, link and video analytics – this does it all.
Social media might be a different way of marketing or connecting with customers, but the ways that you can tell if it is successful or unsuccessful are the same as anything else. Social media isn’t a magic bullet, and having a Facebook Page won’t make your business instantly more profitable. By defining goals, setting a baseline, and tracking and correlating actions to results, you can figure out what works, what doesn’t, and ultimately figure out what solutions are worth investing in, and what options need to be altered or set aside.
If you want to read more about social media ROI, you can read this in-depth post I wrote on the subject for Mashable.