How to know if your social media is working for you

Small BusinessMarketingContent marketingBusiness advice

15 Sept

Measuring social media's return on investment (ROI) can be a real head-scratcher for many small business owners. As a marketing coach, it’s part of a conversation I often have because it’s important - how do you know if all your effort is paying off? And, if you don’t know then what’s the point of putting in all that effort?!

The inspiration for this post was an action plan I worked on recently with a local café owner who was paying a social media manager to post on her behalf but had yet to determine if she was getting a return on her investment. They were no busier nor making more money than they had previously, so before she returned to self-posting she wanted to understand what to look for and how to direct her contractor to be more effective. She’s not alone - many Australian small and micro-businesses face this challenge.

While nailing down the exact ROI of social media can be tricky, especially if you're expecting instant sales from a single post (tip: don’t expect that), there are practical steps you can take to figure out whether your efforts are paying off. So, let’s get into how you can measure social media ROI in 2024.

Laying the groundwork for social media ROI

Before getting into the numbers, it’s important to determine if your social media goals line up with your overall business goals. Ask yourself: Are you trying to boost brand awareness, collect leads, or go straight for sales? I’ve had clients who thought every Instagram post needed to convert into sales immediately, like one who owns a health food store. After some coaching, she realised that not every post has to drive sales - sometimes it’s about building awareness or creating a community. Once you’ve set clear goals, you can figure out what key performance indicators (KPIs) to track.

Key metrics to watch

1. Engagement Rate

Engagement rate shows you how much your audience is interacting with your posts - are they liking, commenting, or sharing? To calculate the engagement rate, take the total number of engagements (likes, comments, shares), divide it by your total number of followers, and multiply by 100. Do it for a few posts and see what percentage you get.

There are a lot of research organisations measuring social media stats and, at the time of writing this, on Instagram 1-3% would be an average number. Anything over 3% would show your audience is pretty engaged with your content and you could be ‘content’ with that 😉 5-7% seems to be a typical rate for successful influencers. But it varies from platform to platform so I would do some research before setting any engagement rate goals. My point is that the number doesn’t have to be high to indicate success.

You should also know that some types of engagement are better than others. One fashion boutique owner I worked with was getting lots of saves and shares of her posts but her likes count had decreased. Because she was watching likes and views only, she didn’t realise that the other types of engagement she was getting meant her content was resonating with her audience - the shares meant her followers were sending the outfits to friends and the saves showed intent to purchase, or at least that they liked the outfits enough to save them for later.

2. Conversion rate

This one’s a bit more direct: conversion rate tells you how many people are taking action after seeing your post, whether that’s signing up for your newsletter or buying something. If you’re not already, you can use UTM links (those special codes you can add to URLs) to track how many clicks are coming from your social media posts. If you’re using paid ads, you can also add some code, called a ‘pixel’, from Meta onto your website to track what people do on your website after they leave Facebook. Some of that stuff might require assistance so please reach out if you need help.

There are less complicated ways to check, such as monitoring your link or contact button taps. You can also check your website analytics to see which social media channels are driving sales. You can also collect anecdotal data by monitoring the sales you get after you post about a certain item - less about the ‘conversion rate’ and more about being able to attribute sales to posts.

3. Click-through rate (CTR)

CTR is all about how often people click on your call-to-action links. The higher the CTR, the more engaging your content is. A friend of mine who is a business coach wasn’t getting many clicks on her links at first because she wasn’t telling people to do it. After a few tweaks to her captions and call-to-action buttons, her CTR nearly doubled, which led to more members joining her group which drives most of her bookings.

4. Cost per click (CPC) and cost per mille (CPM)

For those of you running paid ads, CPC (cost per click) and CPM (cost per thousand impressions) are super important. I had a client who runs a bakery and was pouring money into Facebook ads using the ‘boost’ feature. Once he started using different types of ads and began tracking CPC, he realised he could lower his ad spend by tweaking the ads as they were running, while still driving customers to his store. Boosted posts are measured by the amount of engagement you get and we all know that likes don’t equal sales.

Tools for measuring social media ROI

If you want to keep track of your ROI, thankfully you don’t have to do all this manually - there are plenty of tools out there:

Native platform analytics: Facebook, Instagram, TikTok, LinkedIn and all social media platforms have their own native insights built in but you might need a professional or business account to see them.
Google Analytics to track those UTM codes and see how your social media drives traffic.
Social media management tools like Hootsuite, Buffer or Sprout Social can help streamline things (these are expensive and I rarely recommend them for small businesses).
CRM systems to keep track of leads and customer interactions from social media.

Tackling the attribution puzzle

Here’s the tricky part: Social media often plays a role in a customer’s journey without being the final step before they make a purchase. One client, who runs a handmade candle business, found this out the hard way. People would see her Instagram post, visit her website, and then days or weeks later make a purchase. To track the whole journey, we implemented *multi-touch attribution models and started using unique promo codes. That way, she could see which sales were coming from her social posts, even if they didn’t happen right away.

Customer surveys can also be a goldmine of info. Just ask your customers how they heard about you, and you might be surprised by how often they say, "Oh, I saw you on Instagram!". This can be done in-store just in conversation with customers or it can be part of the online checkout process.

*Multi-touch attribution is understanding how your different marketing channels and interactions with customers or followers contribute to the decision to book/buy. Unlike single-touch models that give all credit to the first or last interaction, multi-touch attribution recognises that multiple touch points influence a customer's decision. You can design a customer journey and direct people along it, adding ways to track where in their journey they decided to purchase (it sounds complicated, but it doesn’t have to be - I can help).

Calculating your social media ROI

I wish I could say there was one formula that could do everything for you, but investment comes in many forms - paid and unpaid (time).

First determine what your costs are (paid ads / paying a social media manager / photography etc). If you have an online store, you can easily track how many of your sales come directly from social media and it will give you a good understanding of whether or not it’s working for you.

It’s worth also noting that "value" doesn’t always mean sales. For example, a woman in a group I’m in recently had an influencer mention her jewellery out of the blue and got a stack of brand exposure on social media. She was able to leverage this exposure to gain a new retail contract. Sometimes it’s about playing the long game and seeing how the relationships you’re building now pay off later.

Going back to the problem my café client was having, as she doesn’t have online sales to track, she needs to find another way to measure how her social media stacks up.

She could take the sales from the current three months and compare them to the three months prior or the same three months last year. She can look at the number of transactions rather than total sales because transactions will show if more people are coming in. If more people are coming in and the rate of engagement has increased then you could attribute that to the social media manager’s work. If there’s been no change, then it’s time to weigh up the return on that investment or to find a more accurate way to measure success - tracking codes, discount codes or loyalty programs etc.

Practical tips for Australian small businesses

Start small: Focus on one or two platforms where your customers are most active. I know a coffee truck owner who decided to just stick to Instagram and Facebook, and it’s worked wonders for him.
Set realistic benchmarks: Don’t stress if you’re not blowing up right away. Compare your results to your industry averages or your own past performance. Slow and steady wins the race!
Leverage user-generated content: Encourage your customers to share their experiences with your brand. A client who owns a small skincare brand started featuring customer reviews and photos on her Instagram, and her engagement rate soared, along with it sales. Social proof is important in her industry.
Experiment with different content types: Try out videos, stories, or carousel posts. One small winery I know started posting behind-the-scenes winemaking videos, and their engagement spiked immediately. What may seem mundane to you, could be the thing that people want to see the most.
Community building is key: Sometimes, the biggest return isn’t immediate sales but a loyal community. I’ve seen this with a yoga studio - their social media isn’t just about classes but is building a global community of yoga and wellness enthusiasts whose engagement helps the studio reach more local people and improves the way they are perceived - a large engaged following makes them more attractive than their competitors.

In the end, social media ROI isn’t just about today’s sales. It’s about building long-term relationships and a brand people trust, so your efforts today lead to continued success tomorrow. Keep tracking those metrics, adjust your strategy, and you’ll see the results!