What good are likes and retweets over social media if they don't add to your company's bottom line?
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If you think tracking your company's social media return on investment (ROI) is a waste of time, think again. When tracked and tweaked properly, social media can give your startup the marketing muscle it needs to keep up with -- and maybe even eclipse -- large competitors, says Nichole Kelly, chief executive of Social Media Explorer and author of How to Measure Social Media: A Step-By-Step Guide to Developing and Assessing Social Media ROI (Que Publishing, 2012).
As a prime example, Kelly points to Dollar Shave Club. The Venice, Calif.-based e-tailer successfully leveraged social media, and the steadfast tracking of what worked and what didn't, to steamroll into a tight market dominated by mammoth corporations like Bic and Gillette.
"Tracking social efforts allows companies to quickly measure what is and isn't working," Kelly says. "Busy entrepreneurs' time is precious and it is mission critical to know what to do more of and what to stop doing in near real-time. The only way to do that is to track the results."
Here are 10 key questions to ask when measuring your social media ROI:
1. What's the easiest way to measure social media success? Tracking the number of website conversions that come from your social media accounts using classic website analytics is the single most efficient way to gauge your social-media marketing ROI, according to Kelly.
To do this, she suggests small-business owners use Google Analytics, a popular free website metrics tool. When you share a link to content on any of your social channels that drive people to your business's website or online store, you can track how many people clicked on that link or shared it and much more via Google Analytics.
2. How can I track conversions? Before Google Analytics can start tracking data from your company's social media sources, you'll have to set up goals for various types of conversions. A conversion can be a sale, a lead, a subscription to your business's e-newsletter, a downloaded coupon or anything that requires a specific action, says Leslie Poston, senior social media strategist for Flightpath, a New York City-based creative digital marketing agency, and author of Social Media Metrics for Dummies (Wiley, 2012).
Social conversion data can be found in Google Analytics by going to Traffic Sources, then choosing Social and clicking on Conversions. Google provides detailed instructions to guide users through setting up social tracking goals.
3. What are some beginning goals I should set up? Before you start mining for metrics, Poston suggests you consistently post meaningful, brand-authentic content across all of your social channels, especially those that are the most significant drivers of traffic to your company's website or online store. Start by creating and posting more of the kind of content that you notice followers like, share and comment on the most.
The more you engage your followers, the more they'll share your content, which will hopefully lead to more conversions and possibly sales, though there are not guarantees when it comes to social media.
4. How can I leverage the social media metrics I capture to grow my business? There's no one-size-fits all magic bullet when it comes to translating Facebook likes and Twitter followers to paying customers, says Poston. Instead, she recommends small-business owners focus on increasing click-through and share rates for all of their social campaigns.
If you advertise on social channels, you'll also want to track your cost per social acquisition. "If your Facebook ad gets you 150,000 likes from people who never go to your website, engage with your brand or shop in your online store, it's time to evaluate your Facebook ad spend."
5. What are the best freemium analytics tools to tally social media impact? Poston's favorite free analytics tools are Google Analytics (free), MOZ Analytics (free for 30 days) and KISS Metrics (free for 14 days).
"Google Analytics is definitely the one you can do the most with for the least money," Poston says, "but it requires more work on your part to create reports and use smart tags and other tools to gain deeper knowledge."
6. What are the best all-in-one solutions for quickly measuring growth across multiple social channels?
Inside Social offers solutions that track your company's social efforts across multiple social channels all in one place, including exactly how your social shares lead to engagement, conversions, signups, purchases and more. The Seattle-based startup doesn't publicly list its pricing options, but offers a free demo.
SproutSocial, which Kelly's company uses, is a leader in offering cross-platform social media ROI to small and large businesses. Its services, which include customizable, presentation-ready PDF analytics reports and competitor analysis, range between $39 and $99 per month. All SproutSocial plans include a free 30-day trial.
7. What are the most important metrics to keep an eye on? The top metrics to track are the number of followers you attract and keep, along with cost per lead and cost per acquisition, Kelly says. "Just remember that it's a numbers game and, with social media, size does matter if you want to drive sales." For example, if your analytics reveal that one to two percent of your audience buys your products or services when you occasionally post a sales offer, then "you'll need a following that will produce enough sales to matter." In other words, if you have a following of 1,000 fans on a social media platform, then that would likely produce only one sale. Paying close attention to your follower growth over time can help you better predict future sales.
8. I'm too busy to deal with tracking social media ROI. Should I just hire someone to do it for me? With free analytics tracking tools like Google Analytics and URL Builder making it relatively easy, fast and efficient to measure social media ROI on your own, there really isn't a need to outsource the task, Kelly says. "But if you really want to, you need to do it quickly. Time is money."
If you have the budget for it, hiring a social-media marketing firm or independent consultant can help you measure -- and increase -- the overall impact your social campaigns have on your revenue.
9. How often should I check my social-media metrics? Poston suggests you keep tabs on your analytics once a week or so. Regularly checking them will help you gain an understanding of what types of content drive the most website visits, and most importantly, which content drives the most new conversions.
10. What are some common mistakes to avoid? Obsessing over how many followers and likes you get, and how high your Klout score is, are all time- and effort-wasting mistakes businesses make, Poston says.
"It's easy to focus on these because they make us feel good. Dig deeper, though, and focus on the metrics that help your wallet, not your ego."
Kim Lachance Shandrow is a Los Angeles-based tech journalist who specializes in writing about iPhone, BlackBerry, and Android phones, as well as social media marketing, startups, streaming TV, apps and green technology.