Return on Investment (ROI) is one of the most important metrics to track for any start-up. It tells you how effective your marketing strategy is and what parts of it may need tweaking or changing along the way. As a brand, you need this information to promote yourself in the best way possible.
However, tracking ROI is not necessarily a simple process. It requires research, skill, and experience with analytics tools—as well as the time and resources it takes to manage those elements successfully.
Luckily for start-ups with minimal time and limited resources, measuring key performance indicators (KPIs) has never been easier or more accessible. To give you greater insight into the topic, we’re going over the best ways to measure the effects of ROI in relation to social media marketing strategies. Plus, we reveal which other KPIs you should consistently track.
What Is ROI, And How Do I Effectively Measure It?
One of the chief KPIs of the digital marketing sector, ROI, is essential in helping you to measure the effectiveness of active strategies and whether the return on investments is proportionate to the investments themselves.
A simple calculation you can use for determining your ROI is to divide the profit of an investment by the true cost of an investment. This formula is one that you can use universally.
For instance, if your marketing team spent $1,000 a month on PPC campaigns, SEO, and resources towards social media marketing campaigns, you would need a system for determining whether real profit is generated from those efforts that justify the costs.
This is the service that ROI tracking provides.
So, how do you measure this important KPI? Here are five tips for accurately measuring the ROI yielded by your social media marketing efforts.
1. Establish clear goals for each channel
Before you can start measuring the progress of your start-up’s marketing strategies, you need to set up clear milestones and indicators that show you where your goals truly lie. What’s more, you need different goals for different channels because they all have their own measurements of success.
For Instagram, you might want to set goals relating largely to visual content, such as stories or reels. On LinkedIn, you’d want to focus on ROI pertaining to blog visibility and so on.
2. Use data tracking tools
One of the best—if not the best way—to accurately measure ROI is to use data tracking and analysis tools. These infinitely useful tools are designed to gather, express, and track data continually so that you and your team can focus on other tasks. Some of the best data analysis tools today include:
- Google Analytics – Accessible, affordable, and familiar, Google Analytics is an established data tracking tool that anyone can use.
- Hootsuite – Although Hootsuite is mainly known for its social media content scheduling abilities, it also offers a variety of top-notch data analysis tools. However, you may need more experience with data analysis to use it.
- Sprout Social – Sophisticated but simple, Sprout Social is another hugely popular social media marketing and data tracking tool.
- Free social media analytics – Popular channels like Instagram and Facebook already have built-in analytics tools you can use to track metrics like growth, ROI, and reach. They may be simple, but it’s a great and free alternative for smaller brands on tight budgets.
3. Adjust your budget
To track the effectiveness of your ROI accurately, you need very clear budget parameters to work within. Some months you’ll need to invest in marketing material, pay professional product photographers, and launch new campaigns, all at a greater cost. During other months, your costs will be lower as you have all the tools you need to run your campaigns effectively.
You need to account for this when you draw up your budget and ensure that you adjust your KPIs accordingly.
4. Evaluate progress continually
Don’t just stop measuring ROI after a month, quarter, or even a year. It should be an active, ongoing process. ROI is the kind of metric that can change on a weekly or even daily basis, so you want to continue tracking it as though it’s a living entity.
This will help keep your data more current and accurate, enabling you to make strategic decisions that are as informed as possible.
5. Set KPIs for easier milestone tracking
ROI falls into the category of several crucial KPIs every business should follow, especially in relation to social media marketing. Measuring a variety of KPIs can not only help you to learn more about the health of your start-up, but it can also help you to identify what factors influence ROI patterns.
But how do you know which ones to follow? Take a look at this list of essential social media KPIs every start-up should monitor to develop better marketing strategies.
- Overall reach – This KPI encapsulates the volume of online consumers that your content reaches on a regular basis. It’s important for gauging the efficiency of content marketing.
- Website traffic via social channels – Whether you have an ecommerce site or you’ve built a site showcasing your portfolio, you need to know how many people reach your site via social media channels. This KPI helps you understand where your visitors are coming from.
- Audience engagement – Without a high level of engagement, your social media presence is untapped. Keeping track of this KPI is important for grasping what kind of content your audience most responds to and what needs to change to drive engagement up.
- Follower growth rate – Your social media followings should always trend Monitoring this KPI shows whether or not you’re accomplishing this.
- Make sure your KPIs align with your brand mission – KPIs should constantly get reviewed and adjusted, but they should also reflect the overarching brand mission of your business. Set KPIs intentionally to match the long-term goals of your brand.
KPIs should not be an afterthought for your company. They should be front and center, driving your social media marketing strategies forward and providing you with useful insights for how to move forward.
Take Control Of Your Social Media Marketing
In 2022, 57% of content marketers claim they measure ROI. And the majority of those who don’t say they lack the budget or aren’t sure how to go about it. However, measuring ROI is getting increasingly easier and more affordable, enabling start-ups to gain control of their marketing strategy.
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