There’s a common phrase that gets thrown around when executives or department heads get together to determine an organization’s strategy for the coming weeks, months or years; if it ain’t broke, don’t fix it. In layman’s terms, the phrase means that if something has been working just fine for this whole time, there’s no need to change it in any way.
The real question is; how do you know it’s broken or not?
This query can often be answered by evaluating the return on investment (ROI) of a certain activity, especially for associations, non-profit and small businesses for which every dollar counts and providing bang for buck is the name of the game.
As Twitter becomes an important and popular part of organizations’ marketing strategy, it’s essential to know if the platform is giving you a boost, serving as a drain on your resources or if it falls somewhere in between. Measuring Twitter’s ROI can be a tricky business, although most tradition and new media give those in the C-suite similar problems. The difficulty lies in the lack of perfectly correlating numbers. In other words, it’s near-impossible to say, if my association gains X amount of followers and Y amount of interactions, it will mean Z amount of revenue.
This obstacle means that calculating Twitter’s ROI requires looking through a variety of lenses. An organization’s experience on Twitter can be analyzed in two ways; through social ROI and financial ROI.
The goal of measuring social ROI is to calculate the amount of engagement and interaction achieved by the Twitter account. Social ROI can help determine the degree to which an association/non-profit/small business was successful in building relationships, encouraging discussion and generating awareness. Social ROI can be measured in part by examining key engagement numbers and key influencers.
Engaging with content on Twitter is a sign of value. When someone retweets, favourites, clicks on a link or mentions your organization and its content, it means that they receive value and want to connect with the source of that value, which is the organization.
It is essential that your organization measures key engagement numbers every week and month to gauge which content is generating the most interactions and thus providing the most value to followers. For example, measuring the number of clicks on links, mentions and total engagements per day are all great ways to get a big-picture view of social ROI.
Measuring the content’s effectiveness in creating these points of contact and comparing it to past weeks or months will help you determine how well your account is doing that building relationships and expanding awareness.
Another way to measure social ROI is through the charting of key influencers. Key influencers are followers who fall into your organization’s target demographics or have frequent and significant contact with the target demographic.
It’s great to know people are following you and spreading the word about your organization, but it’s more important to know if they are the right people spreading the right words. When you keep track of how many key influencers follow your organization, it allows you to calculate the effectiveness and value of the content you are sharing. And once you have proven your value to these key influencers, you can start building a relationship with them, both online and offline.
Financial ROI is a little more difficult to measure on Twitter, as it is with most other social media platforms and even traditional marketing approaches. One of the most useful ways to calculate financial ROI is to assess the increase in the organization’s reach and engagement compared to the monetary investment that was used to generate this gain.
Financial ROI can be further broken down into three categories; cost-per-impression, cost-per-impression and cost-per-key-influencer. These numbers will help put the success of the Twitter account into perspective based on the goals of an organization on social media, which are to increase awareness, connect with members/the community and provide value to these followers.
The cost-per-impression metric offers a look at how successful an organization’s Twitter account has been at expanding its reach and spreading awareness of the organization’s brand and value. To calculate the cost-per-impression, divide the money spent on gaining impressions by the total number of impressions received. For example, if your organization receives 10,000 impressions in November and allocates $250 to Twitter management, the cost-per-impression is $0.025.
The cost-per-interaction metric expands on what we have learned from the cost-per-impression ratio and highlights how well the account has been at converting those impressions into more tangible conversations and expressions of value. To measure cost-per-interaction, divide the financial investment by the number of interactions in a given period. For example, if your organization generates 203 interactions and spends $300 on Twitter management, the cost-per-interaction is $1.48. This number highlights the value that social media has in achieving the goal of connecting with the community in an efficient, effective and low-cost way.
The final indicator of financial ROI is cost-per-key influencer, which helps us measure the effectiveness of your efforts to reach the right followers, make substantial connections and build relationships that will benefit your organization. To calculate the cost-per-key-influencer, divide the monetary investment you have given to Twitter management by the number of key influencers that are followers. For example, if you have spent $2400 and gained 130 key influencers over six months, the cost-per-key-influencer is $18.46. Making this connection could lead to large investments in your organization services or further promotion of its services. This means that the return has the potential to be much greater than the $18.46 invested.
Using Social and Financial ROI Together
Both social and financial ROI allow for a conclusion on which content provides the best value, the progression of the Twitter through the months and which steps should be taken moving forward. Depending on how intense you want to get in determining which individual tweets performed the best, you can measure both ROIs for each post to decide how certain types of content are performing. Determining how well your account is doing and where it can improve will help boost your association, non-profit or small business and give your members/board/customers a reason to support your efforts.