Social media marketing and advertising have taken the business world by storm. If you have yet to capitalize on this trend, you’re behind the times—as of 2018, 77% of small businesses in the US were using social media for sales and marketing.
Done correctly, social media marketing is one of the best ways to draw attention to your brand and connect with your customers on a personal level. But done incorrectly, it can easily result in a break-even or negative ROI.
If turning a profit from your Facebook or Instagram efforts has been a struggle, you’re in the right place. Keep reading for all the strategies you need to get the best ROI on your social media marketing.
How to (Correctly) Calculate the Rate of Return on Investment
Let’s start out by making sure you know how to correctly calculate your social media’s ROI. ROI is, in essence, the ratio of your expected benefits (return) to costs (investment). An estimated ROI should be calculated before starting a project, and an actual ROI should be calculated after it’s completed.
It’s important when calculating ROI to use cash flow to measure your returns, not profit or revenue statements. If you base your numbers on profit, which often ends up paying off other business expenses, your ROI may appear higher than it actually is. Once you’ve converted revenue figures to profit and profit to cash flow, you’re ready to start your calculations.
Begin by adding up all your initial investment costs including social media ad spend, time, and any outsourced projects. Then, estimate the cash flow that your investment will create as accurately as possible. Make sure to account for any variable expenses that may pop up along the way.
Next, you need to determine your hurdle rate. This is the minimum rate of return required by your business to make an investment worthwhile.
Finally, evaluate your investment to determine if the actual return will be higher than your hurdle rate. If yes, go ahead and move forward with your plan. If no, head back to the drawing board and rethink your strategy in a way that reduces costs.
Getting the Best ROI Out of Your Social Media
Now that the math is out of the way, let’s talk about how to maximize your social media ROI while minimizing the risk. Here are a few strategies to help you get the best return on your marketing campaigns.
1. Understand Your Target Audience
It might go without saying, but trying to boost your ROI without first understanding your customers is a hopeless endeavor. Not reaching their target audience is one of the biggest reasons that small businesses fail in social media advertising.
Take some time to gather data on your ideal customers. This could include their interests and pain points, what industry influencers they already follow, and what types of content they interact with. If you base your marketing on strategies that have already proven themselves effective, you have a larger chance of reaching your target audience right away.
2. Limit Your Channels
Part of understanding your target audience is learning about what social media channels they use. Each social media platform has a different set of rules, etiquette, and expectations. As such, the content that works for one platform won’t necessarily work on another.
To get the highest return on your investments, find out the top 3 channels that your ideal customers use. Then, focus your efforts on creating quality, targeted content that will perform well on those channels.
3. Post, Update and Promote Your Content Regularly
It would be awesome if you could post a bunch of content all at once, do one large promotion, and then sit back and let the internet send customers to you. While this method may get you a huge initial spike in traffic, it will quickly fade after a couple of weeks.
In order to maintain high levels of traffic, it’s important to post regularly on your social media feeds. Many marketers recommend following an 80/20 rule in which you spend 80% of your time promoting content and only 20% of your time creating it.
But even once you’ve created a fantastic blog post, video, or infographic, the information on it won’t stay relevant forever. If you want to get the most longevity out of your content, make sure to update and re-promote old pieces.
4. Find the Balance Between Effort and Returns
You should always strive to create great content. But putting endless hours into every post may not get you the ROI you’re looking for.
Social media marketing follows the law of diminishing returns: there comes a point where increased time and effort no longer gives you better results. To identify that point, first understand that your primary goal is just to outperform your competitors. Once your content is better than theirs, it may not be worth it to continue to pour time and money into improving it further.
The exception to this rule is “ultimate guide” or “pillar” content that’s meant to establish you as the absolute authority on a subject. This type of content sets you apart for the long term, but it should only make up a small portion of all the content you post.
5. Gather Metrics and Make Adjustments
Because social media is dynamic, your marketing strategy will have to continually evolve in order to maintain the best ROI. But without gathering data on what works and what doesn’t, you’ll have a difficult time fine-tuning your efforts.
That’s why analytics are a vital part of your social media strategy. Make sure you’re focusing on metrics that matter, though: while likes and shares feel good, they don’t always result in higher cash flow.
Instead, gather data on your reach, leads generated, sales conversions, and revenue generated from social media. The exact metrics you track will depend on how your business defines success.
Is Your Social Media ROI As High As It Could Be?
Getting the best ROI on your social media marketing doesn’t have to be complicated. While it may take some trial and error to figure out what works best for your business, employing these strategies will put you well on your way to higher returns.
If you’d like to learn more about developing your business’s social media presence, schedule a free social media ROI training with us. We’ll supply you with current, ROI-driven educational materials that can help you take your media presence to the next level. Click here to book your free training today.
