I remember when Facebook began to gain momentum, and there was an option to “poke” someone else. Overtime, the newsfeed changed, the look changed, and suddenly Facebook exploded. Today, it offers a space for people and friends, public figures, businesses, social groups, and more.
As a business owner who uses Facebook for social media marketing, I often take a look at our social engagements and how many “Likes” our page has, as well as how many “Likes” our posts were getting. Naturally, my brain computes that the more “Likes” we were getting, the better.
But then, I began to dissect the “Like”. What is it? How is it defined? And most importantly, what is the value of a “Like”? Turns out, measuring the value of a Facebook Like is done in the exact same way we measure the values of everything else: simple calculations. A Facebook Like is nothing more than an ROI calculation.
Simple? Ok, maybe not.
Doable? Yes, indeed!
We’ve laid out the six steps to calculate the ROI of the Facebook Like so you can know for sure if what you are doing is making a difference to your bottom line:
Step 1: Set Your Conversion Goals
Every campaign will have different conversion goals, but setting one will be your first step in successfully determining your social media ROI. Your Conversion Goals will be a clear call to action that you want your customer to take action on, for example:
- Fill out a form
- Sign up for email list
- Make an online purchase
- View a video
- Engage in social media post
- Go to a specific webpage
- Download a white paper or study
For all intents and purposes, the Conversion Goal we are interested in for this post is the Facebook Like.
If you don’t have a conversion goal or a clear call to action, then you don’t have a starting point for your ROI calculation.
Step 2: Track Conversions
There are many metrics that you’ll want to track in order to get a good number for conversions on your social media posts. There are also a number of different platforms and tools that you can use to track these conversions: Google Analytics, Sprout Social, and Facebook Insights…to name a few. No matter what you use to track or metrics, there are 5 that are of utmost importance to your ROI calculation:
- Reach: The total number of people that your post “reached” or at the potential to be seen by your social media audience. (See here how Reach is different than Impressions.)
- Traffic: How many actual users are visiting your site, or the destination based on your conversion goal.
- Leads: The number of leads coming from each referring social media site onto your conversion page.
- Customers: The number of people who become customers through social media.
- Conversion Rates: The percentage of visitors through social media platforms that are converting into customers. This number helps you define what is working in your social media strategy and what is not.
Step 3: Assign Monetary Value to Each Conversion
Although this step may seem daunting at first, stay with us. There are two different routes you can take in order to assign your monetary value:
- Method 1: Using Historical Data
- Based on previous experience, if you have done Facebook or social posts before with a tracked conversion. This number will give you some idea of what you can expect. If you haven’t had previous experience in this department, then you’ll want to go with Method 2.
- Method 2: Guesstimating
- Guesstimating boils down to common sense and common knowledge. Decide what you’d pay per sign up if your goal was to get 1,000 Likes, whatever number you land on, use that number for for the monetary value.
Step 4: Measure Benefits for Each Channel
The key to this step in the process is organize, organize, organize! Use your social analytic tools to collect important data regarding the conversions for Facebook. These are the benefits of the Facebook Like. Keep track of the total number of conversions that you had per Facebook post and then multiply it by the monetary value from Step 3. For example:
1,000 Facebook likes x $15 = $15,000 in benefits from Facebook
Step 5: Determine Total Costs
In order to determine your total costs, you’ll need to add up everything that went into your social media strategy to gain the Facebook likes in question:
- Fees: How much do your tools cost, or any other fees that you incur for your strategizing, executing and analyzing.
- Labor Hours: How many hours were spent on the specific campaign to acquire your desired conversions?
- Labor Cost: Broken down, what is the cost per hour for said labor?
Added together, these numbers will give you the total cost per channel.
Step 6: Calculate, Analyze and Improve
Now that you have all the numbers, you can finally calculate your ROI. Use your calculations from Step 4 and Step 5 to plug into the following equation:
ROI = (Benefits – Cost x 100) / Cost
Your calculation here will be positive or negative and will give you a good idea of what is working and what isn’t and what you need to improve. But concerning the value in question, the Facebook Like, this number will let you know if the likes you are getting on Facebook are worth the time and energy you are spending on the platform. If your ROI is negative, then you have two critical options:
- Change up your campaign or,
- Change your social platform.
While Facebook is considered the holy grail for social media marketing, if your customers aren’t on it, then it’s time to question if it should be where you are putting your efforts…at least for now. Consider building your social media presence on a different platform and then later you can always make the move and expand on Facebook.
In addition, it would be good to remember that the above equation is not just useful for determining the value of the Facebook Like. You can use the above equation to calculate your ROI on virtually any digital strategy. We hope you find this helpful and would love to know how you implement it into your social media marketing efforts!