Is Your Social Media Campaign Profitable?
In last week’s post, we explained the value of measuring your social media campaigns and shared the 4 metrics we recommend to start with on your tracking endeavor. But, once you have collected your performance insights, how can you find out if your efforts are profitable? In this week’s post, we explain how to calculate social media ROI for insurance agencies to help you quantify your campaign’s success.
What Is Social Media ROI And Why Is It Important?
As you know, ROI evaluates the effectiveness of your investment. Since social media platforms have established themselves as a marketing channel, earning 8.3 billion dollars in advertising last year, it is only natural to assess its return. Social media ROI refers to the net profit received from your social media actions relative to the cost of your investment. You have implemented a strategy, is it working? You are placing time, money, and resources towards social platforms, what are you getting in return?
Measuring social media ROI for insurance agencies is key to acquire a complete overview of the impact social media has on your business. Your ROI will be expressed as a percentage and it will show where your efforts and resources are being placed, which ones are effective, and which ones are being wasted.
How Do You Calculate Your Social Media ROI?
The classic method to measure ROI is by revenue. The formula consists of your revenue divided by your investment, then multiplied by 100. However, there are two different ways you could be using social media: you could share posts in your profile, which is free, or you could use the platforms’ paid advertising system to acquire display ads or to boost your content.
Most likely, not all of your social media activity is paid and, as a consequence, you won’t be able to attribute revenue to every single one of your actions. Thus, below we share 4 steps to calculate social media ROI for insurance agencies.
Set Up Objectives
Start by asking yourself what your social media objectives are and how they align with your business objectives. For example, if your objective is to increase lead conversions, wanting your prospects to ask for a quote when they visit your website, your social media objective would be capturing prospects and redirecting them to your services page. Similarly, if your business objective is to improve your customer experience, your social media objective could be to enhance your customer service.
Set Up Goals
Now that you have defined what social media will help you achieve, you can set up the goals to establish how and when. Continuing with the same examples, if your business objective is to increase lead conversions and your social media objective is to capture prospects, your goal can be to get 20% more email sign-ups per month. Likewise, if your business goal is to improve your customer experience and your social media objective is focused on customer service, your goal could be to reduce your response time to inquiries via social media to 2 hours. When setting up goals, they need to be specific, measurable, and relevant.
Track The Right Performance Metrics
Once you know what you want to accomplish with your social media programs (objectives) and how and when you will achieve them (goals), it is time to decide what the perfect metrics are to determine whether you are succeeding or not. In last week’s post, we shared 4 metrics to start with your tracking efforts. Pick the right metrics considering your objectives and goals. Some questions you can ask yourself to decide what metrics to use are: do they align with my objectives? Am I able to measure them effectively? Do they help me make better business decisions?
Know Your Expenses
This is a crucial step if you want to measure social media ROI for insurance agencies. As we said before, you can’t only look at paid social media efforts; therefore, here are the three elements you should be considering:
Tools and platforms: Social media tools and platforms are generally free, but you could be paying for a premium version, for example, LinkedIn Premium. Take them into consideration when calculating your ROI. If you are calculating the ROI of a campaign that only lasted 2 weeks, keep in mind you would have to divide the monthly costs of the platform by 2.
Social Media Paid Advertising: Paid advertising in social media is easy to track since you know the exact amount of money invested. For example, if you created a Facebook post about your benefits options and you decided to pay to boost that specific post, the cost of the action is clear.
Time and Work: Social media requires people’s time and effort. How much does it cost you monthly to produce your social media content? How much time do you spend on social media promoting your content? Take into consideration the time you spend working on social media when thinking about your monthly costs.
Once you compile all the information and data, you can measure your expenses against your social media objectives. In other words, you will be able to calculate the social media ROI for insurance agencies. To calculate your ROI, divide your profit by the total investment and multiply the result by 100 to obtain the percentage.
We explained how to calculate your total investment in the last step, but how do you calculate your profit? You know you acquired 10 leads from social media looking at the number of leads coming from each referring site, how much is each lead worth to you? To assign a value to each lead, calculate your lifetime value for each customer. The easiest way to calculate customer lifetime value (CLV) is taking the potential revenue of each lead (how much do you earn per customer) and subtracting the money spent on acquiring them, this is, the investment. Here is a helpful article explaining in detail how to calculate your customer lifetime value.
Let’s look at it with an example. Your business objective is to increase lead conversions and your social media objective is to capture prospects and redirect them to your services page:
Final Thoughts About Social Media ROI for Insurance Agencies
If you are using social media platforms to achieve your business objectives, testing and optimizing is key to obtain results. Use tools such as Google Analytics, Hootsuite, and the metrics section in each social media platform to apply marketing analytics and learn from your data. For example, you might discover that posts that feature a picture get more likes, shares, and comments. Calculate the social media ROI for insurance agencies to figure out what content and format delivers the best results, tweak when necessary, and assure your social media efforts are working.