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How to calculate ROI in social networks?

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How to calculate ROI in social networks?

There is not much to think about, the best way to know if your social media efforts are paying off is to calculate the Return on Investment (ROI). But, we know that sometimes the process to calculate it can be a bit confusing. That is why here we are going to explain in the simplest way possible how to calculate the ROI in social networks and everything you must take into account. Take noteThe Return on Investment is the percentage of profit that a company obtains from the investment in its cell phone database free campaign. This investment can be of time, money or resources but, generally it is measured with money invested. That is, the ROI allows you to know if your marketing campaign is being successful or not, and how much money you have generated specifically with each action, always based on the investment made.Why is it important to measure ROI on social media?
Measuring ROI on social media should not be an option, it is necessary for any business with a social media marketing strategy . Here’s why:

You will know the effectiveness of your social media strategies, and which one gives you the best results, so you can focus your efforts on the social network with the best ROI for your business.
You will know how much value your social media strategies bring to your business.
You will identify the strategies that are not working to make the necessary improvements and not waste time on actions that do not work.
You will identify the strategies that do work and therefore generate higher ROI. This way you will know which strategies to allocate more effort and budget to.
You will be able to better manage your resources and optimize your budget.
You will be more efficient in achieving the objectives of your business in social networks.
How is ROI calculated on social media?
It is not as complicated as it seems, here we explain how to calculate ROI in social networks in 5 simple steps:Step # 1: Define your goals
Before thinking about measuring ROI on social media, you should know what you want to achieve with your strategies. Otherwise how could you measure it?
Therefore, define the objectives you want to achieve with your campaign on social networks, and make sure that your objectives are SMART: specific, measurable, achieved, realistic and with a set time.

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For example: You work in  gulf email list  a clothing brand and they are going to develop a social media campaign to sell the products of the new Autumn-winter season through their ecommerce. In this case, one of the objectives that have been set is: to sell 60% of the stock during the first half of the campaign.Based on this and other objectives, you will be able to measure your ROI. Since, you will have to evaluate different KPIs according to the objective you want to achieve. But, let’s not get ahead of ourselves, in the next step we will explain more about KPIs. For now, define your goals. Step # 2: Track your KPIs
KPIs are the indicators or metrics that measure the effectiveness of your strategies, and allow you to know whether or not you are achieving your objectives. There are many KPIs but, you are definitely not going to measure all of them, you should focus on the KPIs that are consistent with your objectives.
Continuing with the previous example, the KPIs that you should measure for this objective are: click-through rate, conversion rate, and average ticket percentage.
There is a KPI for each objective you want to achieve, you just have to identify them and focus on them.
These are some of the most used KPIs to measure the return on investment in social networks:

Scope: It measures the number of people who have seen your publication, it allows you to know the growth of your brand.
Impressions: It is the number of times that your publication is shown in the news section of the social network, it allows you to know how many people you are reaching with your publication.
Traffic: It is used to know the number of visits you get to your web page derived from your social networks.
Engagement: It shows you the level of interaction of users with your content, whether through comments, likes, mentions, shares or other type of interaction.
Conversion rate: It allows you to know how many conversions you have obtained with your social media strategy, both from visits to leads and from leads to customers, among others.
Pay close attention to this step because it will be decisive for measuring your ROI.
Step # 3: Choose a tool to measure your ROIThere are many tools that will allow you to analyze the statistics of your social networks and therefore, measure your ROI.Both Facebook and Instagram, Twitter, Google and other platforms have their own Analytics. But, there are also others like HootSuite and Buzzsumo that allow you to monitor your results on social networks. Choose the one you feel most comfortable with.Step # 4: Calculate your total investment
The expense of carrying out a marketing campaign on social networks goes beyond the investment in advertising, which can sometimes be zero. Therefore, when calculating your total investment amount, you must take into account all the costs that your campaign implies , such as: the hourly payment to a community manager or the cost of your time, in case it is you who manages your networks: the tools you use for your social media content, if they are paid tools: and of course, the spending on advertising.Make sure you add up all the expenses to know your total investment and make a good calculation of your ROI. Step # 5: Calculate ROI with this formula
It is time to calculate the ROI of your actions in social networks. For that, you must divide the net profit (profit minus investment) that you have obtained between the costs of the action that you are going to measure and multiply it by 100.

 

The result is 200, which means that for promoting your new clothing collection you obtained an ROI of 200%. This is an excellent result because it means that your campaign was profitable. If the result is negative, it means that your campaign was not profitable and it is time to propose improvements or changes in your actions.How to communicate a report of the return of investment in Social Networks?
Now that you know how to calculate the ROI of your social networks, it is time to communicate the results report to your team. Here are some tips to do it effectively:Using an analysis template will allow you to easily track your KPIs, since you will not have to create a report for each campaign you run. All you have to do is head over to your template, change some data, and you have your report ready. Use simple language
Not everyone on your team may understand technical words about social media data. Therefore, remember to use simple words when explaining your report, so that everyone will understand the information easily. Focus on the most important business goals
The purpose of presenting your report is to make it known whether or not your business objectives are being achieved with social networks, so make sure you stay focused on the objectives at all times.
If the goal of the company is to increase sales by 30%, it is no use talking about the number of new followers on your Instagram account, focus on how social networks have contributed to the increase in sales.Communicate limitations
It’s good to focus on what you can measure, but it’s also important to know what you can’t measure. Therefore, be clear with your team about what you can and cannot measure with ROI. Remember to also be specific with the time period on which the ROI results are based, thus avoiding confusion and false expectations. Now that you know how to calculate the ROI of your business in a simple way, it is time to get down to work. And remember that keeping the focus on the objectives and the KPIs will allow you to measure the ROI of your social networks effectively.

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