Are you one of those professionals who is being continuously asked by many clients or even his boss to calculate the social media ROI?

The use of the term social media ROI has been climbing up to become part of the concepts that every social media professional knows (or should know). It is not rare when reading about digital marketing to find mention of the term.

But calculating it just because we are being asked it is quite sad. Do you have any real and powerful reason to calculate it, beyond the solely reason of following a fad? Well, to be honest, I think you should be doing it; here are three reasons to help you convince yourself, your clients or your boss about the importance of the social media marketing.

Learn to manage your resources

One of the rules of management is that you can not manage what you do not measure. Many people will tell you that measuring only the ‘soft indicators’ (fans, likes, followers…) you should have enough. That’s wrong; you must learn how to measure conversions that occur from these ‘soft indicators’ (those measured in currency I call them ‘hard indicators’). Whenever you were able to do it, you will know your true ROI.

Since this concept is what tells you how much net profit you get from the use of your resources (time and money, primarily), you can learn to manage it; for instance:

  • Abandon campaigns that have no return.
  • Serve as an incentive to analyse why they are failing.
  • You can enhance campaigns that get higher returns.

Show the profitability to your boss or client

Maybe your boss or your client have been seduced by the fashion frenzy of wanting to know the ROI of their social media campaigns. Try to find out if this is the case, and then investigate whether they are also measuring the ROI of other (traditional) media campaigns (radio spots, newspaper ads, yellow pages, etc..), and even if they know the profitability of the latest summer campaign discounts. If they do, it means that your boss or your client manages (or wants to manage) his resources, as I indicated in the first paragraph.

If he is also sharing ROI information from other channels and campaigns, great! You will have information to know if you are in the right track in the use of social media (your job is generating returns higher or lower than your boss or clients are expecting?). Moreover, if you had this information before the season, you could even perform a preliminary analysis estimating financial goals matching the other channels in terms of profitability.

If it turns out that your boss or client has no idea of what social media ROI is, explain what ROI is and how it can be calculated. Explain to him that not only can be calculated for Social Media, and tell if you obtain the ROI of all marketing channels and projects, then he would learn to better manage their resources (yes, the first point).

Demonstrate the value of social media

In an environment in which there are more and more trouble for getting financing, in the companies there are internal battles for the distribution of budgets between departments. You should use all available weapons.

The “YOU need to be in social Media” is no longer valid as the value proposition. With this sentence you may get some short term client or convince your boss to let you open a new social media marketing campaign… but in the long run you will see that the ploy will drain; figures must convince, although not any number; guess which one: ROI!

Indeed, profitability is a standard indicator that any director, manager, chief financial officer, marketing or business will understand.

Why should you assign funds to carry out a campaign in social media when they can be used to offer trade discounts?, or will investing in a brand new machine bring more value to the company than if you increase your budget for social media campaigns? Yes, the only way you will be able to compare these three actions will be analysing your results in the form of ROI.

Finally, you will have noticed that this trinity of ROI is actually one single reason, focused on the value of social media .

Our battle is for everyone to be able to speak the same language, because now marketers talk about fans, while business and financial professional talk about money. Honestly, I see more viable than all learn to speak in terms of money (who does not like money?). The translation process is not simple, and requires a lot of work… but it is the way you have to follow.