On today's episode of "Digital Champions", I'm talking about what is the R.O.I. of social media?
Often I get this question when I'm speaking at events, people ask "what is the ROI of social media?"
Well, I have a few things that I want to go over about that specific topic.
The first thing is, do you put a number value on friends and relationships and contexts that you create?
No. And I know it sounds ridiculous, but this is to help to show you how to see social media. Understanding this question is an important aspect.
Social media is word of mouth and direct referrals. Social media allows you to utilize this power. Plus, you can't put a number on building relationships. It's not something that can be measured.
Now, that being said, there are other important things to understand about tracking your ROI and understanding where your business is coming from.
Utilizing Custom Links
For example, if you have a specific link in the bio of your Instagram account, then you can better track understanding that when someone clicks that link, you know, okay, that lead has now come from Instagram.
But, the thing is, does that help you? Are you able to actually calculate what the R.O.I.?
Do you understand that that person has now come from Instagram? Great, but has that converted into a customer?
And that leads to the third point is leads into customers.
How are we generating leads? Just because they came from social media and they looked at our website, that hasn't done anything for us. We don't know the R.O.I. because we haven't determined whether or not they're a lead yet.
So what are we doing to drive traffic to then generate those leads and get an email address?
That's the first step, if they contact us, we're asking them, how did they find out about us?
An important aspect to have in your operations is to understand where it's coming from. So there are ways to track our R.O.I., but it's not something that you should or should not do. It's a must to do social media.
Know Your Numbers
When we understand our numbers, then it's gonna better allocate how much time we spend toward those things, and understanding that when you're running social media ad campaigns, you can then determine your Cost Per Lead (CPL).
I have things set up on my website, utilizing Facebook Pixel, where I can actually track conversions, on people downloading my free content. I'm getting their email address and how much that costs.
However, that doesn't mean anything, if I'm not turning that lead into the customer. So understanding that we need to be able to then track how much that person then comes into our business.
So, if it costs us, $5 a lead to get us into to get them into us, then we're turning them into a customer.
Another thing to consider is the lifetime value of that customer?
It could cost us more to acquire them than for their first purchase, however, they could end up spending thousands upon thousands of dollars with us over an extended period of time.
Now the R.O.I. of social media becomes dramatically higher.
Do you see how this works?
Do you understand that the more that we can better track our social media and understand and utilizing these tactics, setting up things in place behind the scenes, this is gonna help us get our R.O.I.?
So don't ask how can we get R.O.I. on social media?
Ask, how can we better utilize social media to track the results so that we know that we want spend more money on social media because it's generating this amount of revenue or this amount of leads to our business, which then converts to a certain percentage.
So know your numbers, track your numbers, figure it out. And now you can determine how much time, how much money you wanna invest in social media.
If you liked this video, you are going love my free training, click the link below to learn more.