Facebook, and other social media channels, offer a wonderfully direct way to engage with your current and potential clients. Building an online presence is an integral part of today’s professional identity. But are you using your social media effectively? Establishing that means determining your social media ROI.
ROI, or return on investment, comes to use from the business world where ROI is used to calculate the financial return on a investment of time, resources or money.
Social media ROI is what you earn from all the time, effort, and resources you commit to your social media marketing – which is important to know in clear dollar amounts.
Since there are no dollar signs associated with Facebook likes and comments and the networks are free to join, how do determine the cost and return?
We need to put a value on:
- Your investment in social media
- Your social media goals
How to Determine Your Return
From the beginning, it’s vital to establish what you want to achieve with your social media. For most real estate professionals, the goal is leads. Your social media is an engine that drives new leads to your virtual door. But, how much are those leads worth to you and how do you want to identify them? Your goals could be email sign ups, property inquiries, clicks on property listings, or downloads of a resource you offer. Next, how will you track your progress? The number of leads generated per week or month? Then comes the part where you’ll need to do some math: how much is each lead worth to you?
One way to determine the dollar value of each lead is to look at how much it would cost you to generate a lead through paid means – a lead generation service, a site that funnels leads to you for a feed, etc.
How to determine your investment
While there are gurus out there who claim that social media is a way to grow your business for free, they are missing a piece of the puzzle. Just because you don’t pay a fee to sign up doesn’t mean that there is no cost to the marketing you’ll do. There are three key expenses to consider:
- Time – Even if you are working on your social media yourself, there is a financial value to the time you are investing. Multiply labor-cost per hour by the number of hours you’ve committed over the time frame you are measuring. (Note: if you could earn more money by engaging directly with clients during this time than it would cost to outsource, it might be time to consider a virtual assistant or social media manager)
- Social media tools – If you are using social media software to schedule, create images or generate content, include that cost as well.
- Advertising spend – The money you spend on social media advertising—boosting Facebook posts, Facebook ads, etc
Add these costs together to determine the “investment” part of the ROI equation.
Now that you have the components, let look at how to get to a number. At its most basic, you’re calculating:
ROI = (return – investment) / investment
By determining this number each month, you can assess the effectiveness of your social media marketing and make smarter decisions about how to move forward with your online presence!