Crafting a successful social media ad campaign isn’t just about determining how much to spend.
The real question in every successful marketer’s mind is:
“What’s the return on investment for every hard-earned dollar I put into my campaign?”
In other words, it’s not enough to throw money at your social media ads and hope for the best.
To see true success, focus on maximizing your return on investment (ROI) and ensure that every dollar you spend is generating real returns for your business.
Having helped many businesses measure and improve their ROI (click here for their stories), I have put together the following guide so you can measure and improve your social media ROI and generate high-quality leads that convert.
Social media ROI calculator
If you need a quick way to measure social media ROI, you can use the following free social media ROI calculator:
To use this calculator, enter the total cost of your digital marketing campaign in the “Total Cost of Campaign” field and the total revenue generated from the campaign in the “Total Revenue Generated” field.
When they click the “Calculate ROI” button, the calculator will automatically calculate the ROI of their campaign and display it in the “ROI” field.
Calculating social media ROI can also be done manually with the following formulas:
- The total cost of a campaign, divided by the revenue generated, will give you your ROI.
- The total cost of the campaign, divided by the appointments generated, will give you your cost per appointment.
- The total cost of the campaign, divided by the leads generated, will give you your cost per lead.
Here are some additional tips on how to measure your social media marketing ROI in more detail.
Key points about social media ROI
To measure social media ROI, you must divide how much revenue you’ve generated by how much you’ve spent on social media.
You can break this down further by calculating the following social media KPIs:
- Leads generated
- Appointments generated
- Clients generated
- Sales Revenue generated
If you divide “leads generated”, “appointments generated”, etc by your ad spend, you can work out your social media marketing ROI.
Aiming for 2-3x or higher social media ROI when generating leads is a good idea.
Need help generating leads and improving your social media ROI?
Watch my free training video that explains the best strategy to get high quality leads, appointments and clients each month in a way that is predictable, profitable and scalable.
How do I measure my social media ROI?
1. Set clear objectives for social media campaigns
Let’s be real: measuring social media ROI without defining your objectives is like trying to navigate a maze blindfolded. It’s a recipe for confusion, frustration, and wasted resources.
That’s why it’s crucial to set clear objectives.
When you define your business goals and objectives, you give your social media campaign purpose and direction. You know where you’re headed and what you need to do to get there.
Let’s say your goal is to generate high-quality leads using social media marketing; these are some objectives worth noting:
Increase website traffic: Increasing website traffic through social media can lead to more lead-generation opportunities. By sharing valuable content and directing users to your website, you can increase the chances of converting them into leads.
Grow your social media following: Building a strong social media following of engaged and interested users can lead to more lead-generation opportunities. By regularly sharing valuable content and engaging with your audience, you can attract more followers who may be interested in your products or services.
Build brand awareness: Building brand awareness through social media can help attract more potential leads. By creating a consistent brand image and messaging across your social media channels, you can increase brand recognition and credibility, which can lead to more lead-generation opportunities.
Drive engagement: Increasing engagement on social media can help build relationships with your followers and ultimately lead to more lead-generation opportunities. Regularly posting and responding to comments and messages can build trust and credibility with your audience, leading to more conversions.
2. Carve out your KPIs to measure social media ROI
Now that you have a clear overview of your objectives, you can carve out your key performance indicators (KPIs), which play a huge role in determining your ROI.
Just as your car dashboard displays important metrics like speed, fuel level, and engine temperature, KPIs display essential metrics that indicate whether or not your social media campaign is running smoothly or not.
With the main focus being on lead generation, here are some KPIs that should be checked off:
The number of leads generated through social media: This is the most obvious one – set a goal for how many new leads you want to generate each month (click here for more).
Cost per lead (CPL): How much do you want to be paying per lead? Divide the total cost of your social media campaigns by the number of leads generated to calculate your CPL.
Conversion rate: By tracking your conversion rate, you can see how effective your social media campaigns are at driving conversions and identify areas for improvement. If you want to boost your conversions, click here to learn more.
Tip! There IS a way you can also generate leads for FREE by implementing social selling techniques.
3. Set up tracking and analytics with social media ROI tools
Now that you have set your KPIs for your social media ROI, the next step is to set up tracking and analytics. This can seem like a daunting task as your campaign will likely spread across multiple platforms.
The good news is there are several tools available for tracking social media metrics in one place, including the Google Analytics dashboard and social media management (SMM) tools.
With these tools, you can track key metrics such as the number of visitors to your website from social media, the amount of time they spend on your site, and the actions they take, such as filling out their details on your sales funnel.
Armed with this data, you can see firsthand what channels deliver you the most traffic and which may need more TLC.
4. Revise your data/approach with your social media marketing efforts
At this point, you’ve transformed from a social media ‘gambler’ to an ROI-focused strategist.
Now, it’s time to put your data to work and boost your bottom line with good old-fashioned analysis and optimization.
This involves regularly reviewing your social media metrics to evaluate your campaigns’ effectiveness and identify improvement areas.
By using your previously defined KPIs to measure the success of your social media campaign, you can make informed, data-driven decisions to optimize your social strategy further.
Here are some things to keep in mind when reviewing your ROI:
Analyze the performance of each social media platform by reviewing engagement rates, click-through rates, CPL, and conversions.
Look at the lifetime value of your leads generated.
Analyze your audience’s demographics to ensure that you are targeting the right people.
Review the quality of leads generated and start to examine for any patterns in the data.
Monitor changes in social media algorithms or trends to stay up-to-date, as some changes can affect your bottom line if gone unchecked.
How do I improve my social media ROI?
Improving your ROI boils down to nailing the art of effective lead generation.
As mentioned in my free masterclass, generating social media leads requires a multifaceted approach, but it does not need to be convoluted.
If you focus on these things, you WILL start to see a return on your investment:
The right platforms: Instead of spreading yourself too thin across multiple social media platforms, focus on the ones your target audience uses the most. This will allow you to invest your time and resources more efficiently.
High-quality content: Your content should be visually appealing, informative, and engaging. This will increase the chances of your target audience liking and sharing your posts, resulting in more exposure and potentially more leads.
Paid advertising: While organic reach can be effective, paid social media advertising can help you reach a larger audience and drive more conversions. Target your ads to the right audience and use eye-catching visuals and compelling copy.
Engagement: Respond to comments and messages promptly and actively engage with your audience by liking and sharing their content. This will help you build relationships and loyalty with your followers.
At every stage of your marketing and sales process, there are many things you can do to improve the conversion rate.
After you’ve gathered the “reach”, “leads”, “sales appointments” and “new clients” data for your own business, the next step is to improve your conversion rates.
How do I track my social media marketing ROI?
To track your social media marketing ROI I recommend a simple Google sheet which outlines the following:
- How much you spend
- People reached
- Amount of leads generated
- New appointments booked
- Clients closed
- Sales generated
If you want something more advanced, you can also use a comprehensive all-in-one funnel builder such as Kartra.
Let’s dive into each KPI in more detail:
Track your social media reach with Google Analytics
What do I mean by reach?
By “Reach” I mean how many unique people you are getting in front of.
You can track this data in Google Analytics or the analytics of the advertising channel you’re using.
Track your new leads
The second thing you need to track is your leads.
Ask yourself: how many new leads are you generating from the people you reach?
For example, if 1,000 people see your advertisement and you generate 10 leads, then that’s a 10% conversion rate from reach to leads.
Or, if 1,000 people go to a landing page on your website, how many of them fill in the form and send you their contact details? That will be the number of new leads you generate.
A lead is kind of like someone raising their hand and saying, “I’m interested in learning more about the solution you have to one of my problems”.
A great way to generate leads is by giving away free content (such as a video lead magnet) that provides a solution to your clients problems/frustrations. And that solution, of course, should be related to what you do in your business.
A new lead is usually the first step before winning a new customer.
Track your sales appointments
A sales appointment is when a prospective client books a meeting for a free consultation to learn more about working with you.
So, ask yourself, from the leads you generate, how many of those are converting into sales appointments?
For example, if from 10 leads you generate 3 “sales appointments”, that’s a 30% conversion rate.
Track your clients closed
Finally, after you generate a new sales appointment, you need to track how many clients you’re converting from those opportunities.
For example, if 3 people book a meeting with you, and 1 of those people converts into a client, that’s a 33% conversion rate.
How often should you track your social media ROI?
First, I recommend you track this data on a monthly basis.
Second, add the data for each month over at least 6-12 months and then look at your monthly average.
Although comparing your data month-on-month is good, many other variables are also at play here. So to get the most accurate results, especially if you’re a b2b, it’s best to look at the data over time.
This is because, in a b2b business, the sales cycle is much longer compared to b2c. It can take weeks, months or even years for a lead to convert into a sale.
A lead might convert into a new opportunity in 2 months and then become a sale in another three months. It depends on the person, the stage they are in and how urgently they need what you do.
In my own business, I’ve had leads that have converted in a few weeks and other leads that have converted in a few years. If you’re b2b, I’m sure the data is similar with yourself.
By looking at the data over some time, you can measure the results more accurately and see what areas (lead conversion, sales conversion, etc) you need to improve.
Measuring social media ROI for lead generation is a critical aspect of any marketing strategy – by setting clear objectives, determining KPIs, tracking and analyzing data, and continuously improving your approach, you can begin to optimize your campaign.
However, remember that achieving high-quality lead generation through social media takes time and patience. Don’t get discouraged if you don’t see immediate results – focus on your goals, keep refining your strategy, and eventually, your efforts will pay off.
Watch this video to learn more about how to use social media to generate high-quality leads.
Ashley Davis (or ‘Ash’ for short) is the CEO & Founder of Skyline Social. For over 15 years, he has been helping business owners with lead generation. Ash specializes in helping businesses get high-quality leads, appointments and clients each month in an automated, scalable and profitable way. You can watch his free Masterclass training to learn more.