How can you tell if your social media is working?

by Marielle Reussink

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Take a moment to think about your goals as a business.

You may want to change your industry, solve a problem, improve people’s lives or make a difference in some other way, but in order for any of those things to happen, you need to build a sustainable business.

To put it another way, you need to make sales.

There are many ways to do that but here’s the thing: not all sales are created equal!

If in the long run it costs you more to sell your product than you can actually charge, you’re likely to hit a low point that can be hard to come back from. To build a sustainable business, you need to make sure you’re getting a good return on your marketing spend.

In my last post, I shared why social media advertising can be such a great tool to grow your business. Today, we’re going deeper by looking at the three most important concepts to understand if your social media is working.

Whether you’re running your own ads or hiring someone else to do it for you, it’s critical to be able to take a glance at your data and say “yes, let’s keep putting budget here” or “no, we need to make a change there.” Otherwise, you might wind up pouring money down the drain without even realising it.

#1 Focus on Conversions, Not Likes and Follows

There’s absolutely nothing wrong with wanting to grow your social media following, and while they’re sometimes called vanity metrics, all those likes and follows can be a good indicator of whether you’re doing the right things with your business. However, key to understanding if your social media is actually working to build your business is to be able to tell whether your followers are turning into customers.

How do you do that? First, you need to identify what a conversion is. Depending on your business, it could be an actual sale, or it could be a “lead”, which you’ll need to define, such as customer’s contact information entered into a sign-up form or some other action taken on your website.

If your social media ads aren’t generating conversions, you may need to change your content or targeting, or it could be a different issue. For example, the messaging on your ads might not be well matched to the landing page on your website, or maybe your website isn’t optimized for conversions at all. If it’s the latter, this will usually be surfaced by your website analytics.

Bottom line: if you can’t see a correlation between your ad spend and your sales, you need to improve your strategy.

#2 Focus on Rates Rather Than Hard Numbers

Once your ads have started working and you’re beginning to see traffic and conversions, how do you tell whether you’re getting a good return on your investment (ROI)? Unfortunately clicks and conversions aren’t a good indicator of ROI on their own.

Your analytics will give you many different stats to parse through, but to keep things simple, start by focusing on your click-through-rate (CTR) and conversion rate. (To give you an idea of what you should be aiming for, compare your stats with benchmark rates for your industry for CTR and conversion rates.)

You should also understand how much it actually costs you to get someone to go to your website (cost per click) and to make a sale (cost per conversion and return on ad spend). Compare these rates to other marketing tactics and you can get a good sense of how effective your social media advertising strategy is.

Finally, compare them to the cost of your product or delivering your service and you can see whether it’s worthwhile at all or whether you should be considering a drastic rethink.

#3 Understand How Much Reach You Need to Get a Conversion

To make sales you need to go out there and reach the right people, make them aware of your product or service, engage and educate them, get them to consider whether your offering is right for them, and finally make a purchase. That’s how the marketing funnel works.

Your reach on social media is the number of people who actually see your ads. This is what builds awareness, and allows you to begin moving people down the funnel. Most people will need to see your brand several times before they consider making a purchase (3 - 6 times on average), so don’t expect results overnight.

With social media advertising, you can’t directly buy conversions, but you can buy reach by spending enough on ads to reach your target audience. This is why reach is such an important metric.

So how much reach do you need to get a conversion?

If you’ve already started advertising, you can look at your analytics to see how much reach you currently require to get a conversion. But how do you know if that’s good or bad? Again, this is where industry benchmarks can come in handy.

If you came in with the idea that everyone who sees your ads is going to go to your website and become your customer, you will be sorely disappointed to find that only 1-2% of people who see an ad will actually click through to your website.

So set your expectations and your budget accordingly!

How to Have a Meaningful Conversation About ROI

Now that we’ve covered some of the key aspects that you should be paying attention to on social media, how do you use them to grow your business? Learn how to ask the right questions!

Each month, ask your social media manager (or yourself) the following questions:

How many people did we reach this month?
How many people clicked through to our website?
What was the click-through-rate?
How many conversions did we get?*
What was our conversion rate?*
What was the cost per conversion?*
What was the return on ad spend?*

Compare your stats to the prior month and to your industry benchmarks and you can see whether your social media marketing strategy is working. With time, if your rates are improving and your cost per conversion gives you a good ROI, keep increasing your advertising budget and you should see more and more growth.

*Note: depending on your set up, your social media manager may need you to provide insights into leads and sales to calculate these metrics.