Several organizations have asked how can they measure the return on investment (ROI) for their social media investment. Really, I think they want to know what their organization is getting back from all the time, effort, and resources that they have committed to social media. And that means, that nonprofits should calculate their ROI using dollar amounts.
There are three main reasons why nonprofits should be measuring the ROI of their social media efforts:
- To see where social media efforts can be improved
- To decide which social media channels are bringing in the most revenue
- To see how specific changes impact social media goals
Before your nonprofit starts to use social media, define your goals. Some examples of goals:
- Increase new followers
- Number of clicks on a link in an update
- Number of opt-ins for email lists
- Number of inquiries
- Number of purchases (events or products)
- Number of downloads for a whitepaper or ebook
Once you have defined your goals, you need to assign monetary values for each type of engagement. For example:
- Facebook Page Like: $0.50 per like
- Facebook Post Like: $0.25 per like
- Facebook Reach: $0.50 per 100 impressions
- Clicked on a Link: $0.50 per click
- Value per download for a whitepaper or ebook: $15
- Average lifetime value per customer (who purchased something): $175
Now that you know your goals and you have assigned monetary values for each type of engagement, you need to track how you are performing. I recommend analyzing the data on a weekly basis, rather than daily or monthly. You can use Hootesuite or Buffer to help you with posting and analyzing how each post performs, although some platforms, such as Facebook offers you such insights.
Every month, measure the total benefits by each social media channel you are using. Identify the posts that have the most engagements and which ones have the least. Compare month to month, before making changes to your social media plan.
Each month, keep track of your organization’s monetary investment in social media. This includes account fees, labor hours, and labor costs per hour for each channel. It is important to calculate how much time is spent on social media so that your organization can truly calculate ROI.
Finally, you can calculate the ROI. The formula to use is the Monetary Value from Engagement divided by Organization’s Investment. When calculating ROI for social media, I recommend calculating after three months (making sure you have consistently been engaging on social media). In the beginning, your ROI will be low, but do not discontinue social media until a full year has passed, and to be honest, I would not discontinue until you have three years worth of data. Social media is just another form of marketing and it takes time for such strategies to take root.