How to measure the ROI of social selling
No matter what industry you work in, being able to demonstrate a return on investment from your social selling activities is a must if you want budgets to be maintained.
On the one hand, it is important to prove that the money has been spent effectively. On the other, you need to be able to show whether your time and efforts have been worth it.
So to help you do just that, here are some key things to think about when endeavouring to measure ROI in a social selling context:
Where will I need to invest money in the first place?
Social selling is about using social media to help build and nurture relationships with your target audience in order to support sales activities over the long-term.
Kimberly Davis, founder of Sarsparilla Marketing and developer of The Complete Marketing Magnetism System, explains: “At the end of the day, social media is a conversation - and would you want to have a conversation with a pushy sales person? It doesn’t endear you to anyone so you have to think of social selling as a starting point not an end point on the journey.”
In other words, brands need to find ways to connect with their target audience by making themselves seem interesting rather than creepy or aggressive.
This means spending time and money devising a strategy based on proper market research and knowing what you want to get out of it. Part of the aim here is not only to establish who your audience really is, but also to discover what its members are interested in and how you can make yourself appear relevant to them within this context.
It also means it is important to invest in creating appropriate, quality brand content, whether that takes the form of videos, infographics or customer case studies – something that, according to Alana Griffiths, senior director at marketing services agency Harte Hanks, should comprise about 20% of all social selling-related postings.
The vast majority at about 70%, however, should be based around third party content such as magazine articles or industry reports in order to position the individual doing the posting as an expert. The remaining 10% of activity can then take the form of overt promotional material such as “check out this or that product on our website”.
A third key area of expenditure, meanwhile, involves identifying the most effective ways and means of getting all of this content to the right people. As Nick Leech, digital director of 123-reg, which sells internet domain names, says: “We probably spend about 25% to 30% of our investment on creating this stuff and the rest on getting it in front of the right people.”
How difficult is it to measure ROI in a social selling context?
When measuring any kind of ROI activity, the two core metrics employed are ‘what are you spending?’ and ‘what are you making as a return?’
Unfortunately in a social selling world, this return can be tricky to calculate in hard cash terms, not least because of the length of time it can take for opportunities to come to fruition.
This, in turn, makes it testing to work out what a true cost of sale is as such a calculation could include everything from how much was invested in training to how much time every sales person spends each day on social media activity. A further complication is that social selling is unlikely to ever be performed in isolation.
As Sarsparilla’s Davis explains: “There’s no one magic pill to making a sale. So social media can help, but it has to be used in conjunction with other sales and marketing tools. It’s similar to vitamin C, which isn’t activated unless it’s mixed with zinc – you need something to act as a catalyst.”
Another common challenge in a multi-channel world is trying to work out how, when and why someone was ultimately responsible for originating a lead or closing a sale. Although complex tools are available to try and track given prospects’ sales journeys, Davis points out that other less sophisticated approaches can also help if used in a specific marketing campaign.
“It could be as simple as asking the customer ‘where did you hear about us?’ or introducing promo codes - so FB1 for Facebook and T1 for Twitter, for example,” she says. “If you’re running a campaign, it makes it very easy to see what worked or what didn’t, and if anything came from social media.”
How can I best demonstrate ROI if I’m struggling to calculate sales revenues?
It is worth bearing in mind that returns do not always have to be financial. Instead it might be easier to simply employ a proxy.
This proxy could include prospects visiting your website and reading at least one piece of content, which means that you could add them to your remarketing list and start pushing advertising to them. Or it might involve someone signing up for your newsletter, the idea being that although they may not be ready to make a purchase just yet, they are at least willing to hear from your brand and start building a relationship with it.
Leech explains: “If you know the number of sales generated from your newsletters, you can calculate your customer acquisition cost and work out how much you need to pay to sign people up. In other words, you could gauge the effectiveness of your social media efforts on a cost per lead basis.”
Sub-key performance indicators (KPIs) here might also include how many people you reached, how many clicks you generated from cost-per-click placements and how many leads you gained. But such KPIs also need to reflect quality rather than just quantity too – so, for instance, how effective a given social conversation was or how high an individual sales or marketing individual’s social influence is.
Nonetheless, Leech warns: “It’s very difficult to track a sales journey from end-to-end so it’s easier to focus on micro-conversions as it gets people into the process of having more content marketed at them, before eventually, in theory, they buy.”
But he also acknowledges that there is a mix of “art and science” to all of this. “You can find data to support your activities or what you should do differently, but to think you can measure and understand everything isn’t realistic,” he says. “While everything you do should be underwritten by the data you’re collecting, you have to expect to make some best guesses too.”
This does not mean to say that such calculations cannot be used to justify social selling activities or even to argue for budget increases though. As Leech concludes: “If you can say ‘I generated this number of newsletter sign-ups’ and you know 10% will lead to a sale, it’s pretty reliable to say that ‘this activity is affordable and so we should double our spend on it’.”