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We subtract the cost from the revenue and then divide by the cost. At its simplest, a social media ROI calculation could be completed using Google Analytics and sales data. For example, 1,000 clicks from 10 social media campaign posts on Twitter, of those 1,000 clicks, 500 converted to a lead by filling in a form on a landing page. Of those 500 leads, 100 ended up making a purchase. This means that our traffic to lead conversion ratio is 50%.
There's a great quote by Jon Wanamaker "Half the money I spend on advertising is wasted; The trouble is I don't know which half."This is so true. Despite all the metrics available, it's particularly tough to know how much money you make from something like social media because it focuses so heavily on brand reputation and connections. The AIDA Model identifies stages an individual goes through during the buying process for a product or service, and we target each of these stages in marketing and with social media. Awareness, often it's difficult to isolate the activity that first generates awareness of your product or service.
Perhaps, harder still to identify the trigger point for real interest, when the prospect wants to find out more about your business. And then, converting that interest to a desire to purchase and to take action. There are many trigger points and multiple touch points for the prospect before purchase. Research says you need seven or more for every sale. So, to which marketing activity do you attribute success?
Financial & non-financial benefits of social mediaThere are many benefits to social media marketing, some non-financial. Firstly, social media is excellent for generating and maintaining brand awareness. This can be achieved organically and through paid use of social media. Customer insight is the social media benefit I find most fascinating. The platforms provide an amazing insight into what our audience are thinking, feeling, and doing, and we can really harness this for the benefit of growing our business. Market intelligence takes customer insight a step further. Social media allows us to observe what's going on inside our industry and amongst our competitors.
The most measurable benefit is lead generation, customer acquisition, and retention. Of course, we may not always be able to totally attribute social media to this, but it's a huge benefit. And we if know what journey our customers take on their path to purchase, we can track our performance and use of social media. Finally, unlike any other marketing channel, social media provides real-time conversation.