Social media ROI begins with a goal and a strategy to reach it. Using key performance indicators (KPIs) for the goal, you can measure success based on a certain value for that KPI. All of this is just part of the sales funnel, and what happens at the bottom of the funnel is dependent upon how the other parts of the funnel are managed.
Social media ROI and metrics for the sales funnel
Let’s take a brief look at the sales funnel and the most common digital marketing metrics:
Phase of Funnel
|Awareness||Branding, Advertising, Contests||Impressions, Reach, Frequency|
|Interest||Advertising, Content Marketing, Facebook Page||Clicks, Clickthrough Rate, Likes, Comments, Shares, Conversion Rate (Lead Gen)|
|Desire||Content Marketing, Advertising Retargeting, Facebook Page, Marketing Automation, Email Marketing||Lead Score, Remarketing Clickthrough Rate, Return Visits, Pages Viewed, Time on Site|
|Action||Conversion Optimization, Offer Testing & Price Optimization, Facebook Page, Email Marketing||Sales, Revenue, Conversion Rate, Cost Per Customer, ROI, ROAS|
|Loyalty||Loyalty program, Facebook Page, LinkedIn Group||Customer Lifetime Value, True ROI|
While your funnel and its strategies and metrics may differ from this table, the most important thing is that you have one KPI and at least one strategy per phase of the funnel. Prioritize your metrics and call the most important metric your KPI. Set target values for these KPIs, and improve the effectiveness of each strategy.
In campaigns I create or consult, I want to see increases in the metric in each phase. Often you don’t know what a good value is for a metric until you start. Let your first campaigns set your benchmarks. You can also look at the performance of other companies in your niche with tools like InfiniGraph to set interaction benchmarks. Then continually strive to improve all of your metrics.
On Facebook, due to EdgeRank, visibility to your fans can be dramatically reduced when your posts aren’t engaging. Therefore, you can’t only focus on sales and leads from Facebook. Without social media engagement, you lose visibility and your leads and sales plummet. This is why it makes no sense to argue whether likes or sales are more important. Both are.
Similarly, awareness and reach are not less important than leads and sales, because no one can give you their email address or buy from you if they don’t know you exist. The bottom of the funnel depends on the top of the funnel. And social media can lower costs elsewhere. Ford CMO Jim Farley said, “By starting earlier and using social media to spread the word about the new product, we’re really reducing the amount of traditional advertising we have to spend.”
Social media ROI takeaways
- Pay attention to all phases of the sales funnel.
- Focus on metrics in all phases of the sales funnel. It’s easy to be entranced by likes. But do they turn into leads and sales? Demand it.
- Note if you have trouble tracking a specific phase, think of ways to measure it.
- Use these metrics to keep improving your sales and loyalty results.