How to Calculate B2B Social Media Marketing Return on Investment

There are excellent tools for reporting on analytics for your social media marketing efforts such as Social Metrics Pro that will track all of your social media sites in one place and give detailed information about the activity and popularity that happens during any time period. These analytics are very important to track trends and to keep in mind what is working best to replicate it, and what isn’t working so well so you can adjust it. Most marketers can do that fairly easily, but being able to calculate the return on investment is what leaves them confused.

Getting the right data from your social media analytics is the first step in being able to calculate the return on investment for your marketing campaigns. The next set of information you need is total lifetime value of a sale. How you get the total lifetime value of a sale is to come up with the average total of each customer’s purchase. For example, if vitamins and a customer spends on average $1,000 per year, and the average lifespan of your customer buying those vitamins is ten years, the lifetime value of the customer is $10,000.

Set the total lifetime value of your customer aside for a moment and figure out the social media costs to acquire each sale. This is the investment you make to earn the customer. For example, if you have spent $50 dollars a month on a social media advertising campaign and spend about $50 worth of your time for that month maintaining the engagement of that particular social media site, you have a total investment of $100 for that month. Divide this amount by the number of inquiries you got from those efforts that end up bringing in one sale, let’s say that number is 10 and you end up with one sale out of ten.  Multiply that number by the number of leads you needed for one sale. For this example, the calculation is ($100/10)X10=$100.  At this point you can subtract the investment from the lifetime value of the customer, then divide that profit figure by the investment. So, ($10,000-100)/100 = 99. Therefore you have a 9,900% return on investment which is spectacular.

If you consistently run the same calculation and determine that your return on investment is in the negative, then you know you need to adjust your social media marketing in order to bring it into the positive in order to build your business.  This type of calculating B2B social media marketing return on investment should be done on at least a quarterly basis.