Most beginners think social media measurement is about counting the number of eyeballs. But what really matters is the actions those people take as a result of your social media efforts.
This can also be known as a conversion. A conversion means taking action, whether it’s clicking a link, filling out a form or making purchases on your website. It all depends on your organization’s goals. For more information on conversions, check out this post by Avinash Kaushik.
In the CRM world, there are three main kinds of attribution: first action, last action and multiple action.
First action attribution is the one most likely to show social media as driving conversions.This gives credit to the activity that first made the prospect aware of your company. Last action attribution identifies the last thing a prospect encountered as the driver to contact your company for more information. Multiple action tries to blend both. You need to decide which makes more sense for your company.
This approach tracks your overall sales and website referrals and then compares them to your online activity. If your fans/followers, blog subscribers, and social shares have all increased along with sales, you can indicate a positive correlation between social media initiatives and sales. If social media activity goes up but the sales stay flat or go down, something isn’t working, or the social media piece of the sales puzzle might not be effective.
A correlation can also be in ratios. So, for example, a $50,000 investment in social media (time, money, or both) correlates with a $250,000 increase in sales over the same time period. Note that this is not precise because this is measuring an investment in a single channel against total sales. But you can look at the proportion in sales or lead traffic increase over the time period in which you track your social media activities, and extract a relationship between the two.
Now that we’ve clarified the nuances of attribution and correlation, let’s look at a few of the things you might measure.
Value of a Facebook Like (Fans)
Let’s track the value of a Facebook like (fans) in monetary terms. To start, track the revenue generated via leads and traffic originating from your Facebook efforts. If your Facebook page does not drive leads or sales, it may be too difficult to determine the value of each Facebook like.
To determine the value, use this equation:
Pulling the number of likes is easy, but how do you determine the total revenue in 30 days from Facebook traffic? Here’s how:
- Build landing pages within your website that are only accessible via Facebook.
- Use your analytics software to track referral traffic from Facebook.
- Look at the percentage of conversions to leads from Facebook traffic (i.e., they filled out your contact form or emailed you for more information), and then through your sales/CRM database, track which ones become customers. Or, if you have e-commerce on your site, track the completed transactions that originate from Facebook.
Note, this is attempting to say that the value of a Facebook like (fan) is directly tied to the revenue produced by that social network. It doesn’t take into account outside factors such as past correspondence or offline influence. Consider cross-referencing your Facebook likes with your sales database for the bigger picture.
The real value of conversion rates comes when you look at the aggregate of all of your social media initiatives. Conversion, in this case, means anything you would qualify as a successful interaction according to your goals, be it an email newsletter sign up, a blog subscription, a contact form submission, a content download, a contest entry, or, of course, a purchase. Another way to look at this metric is to identify conversions of leads to sales that have a social network affiliation but didn’t necessarily originate there.
When a lead comes in through any channel, cross-reference it with your email subscribers for your blog, Twitter list, or Facebook likes. Indicate the associations in your database.
- Look at the conversion percentage of those that have social network associations versus those that do not.
- Bonus: Do leads associated with your social networks convert to sales more quickly or more slowly than those that aren’t? That would be the time from the date the lead is opened in your database to the date of the sale.
The key here is to provide a unique way for people to buy from you that is exclusive to your social media channels. That can be:
- A promotional code you distribute only inside your online community.
- A specific and unique landing page you create only for your Twitter followers.
- A coupon available only to your Facebook fans (and that they can share with their friends).
Then, track the sales that are generated through those initiatives. This is the one place you can calculate true ROI. To calculate ROI, you have to:
- Account for the time, resources and expenses you put into a specific social media effort.
- Account for the direct sales that come from that effort, by tracking them as specifically as possible.