The Two Types of ROI: Return on Investment vs. Return on Influence

by Christopher Tompkins

In the marketing world, many businesses focus on ROI (return on investment). However, when they don’t get the immediate monetary results they desire, they begin to pull away from social media marketing.

But there is another side of the coin: ROI 2.0 (return on influence). Many businesses have begun investing more time and money into individuals or organizations who can represent their brand and bring credibility and value to them. Have you considered this?

Either way, both ROIs have a place in a business’s marketing strategy – the decision makers just need to keep in mind that the value of each one will be unique for their business.

Return on Investment
If a business is spending money trying to promote a product or service, it’s essential its leadership be fully aware of its ROI. There are a few things to consider first:

Know how to budget correctly. So many people think that spending thousands of dollars on advertising will result in a huge win for their company.

Yes, more money can result in a greater ROI, but, what if a business doesn’t have thousands to spend in order to acquire new customers? Its leadership needs to be smart and strategic with what it does have. They’ll want to know as much about their target audience as possible. Better to not waste money showing their ad to everyone in the world when they could be showing their ad to just their target audience.

Know the business’s KPIs and marketing goals. Speaking of being strategic, business leaders must know their business’s KPIs (key performance indicators). These are specific S.M.A.R.T. goals (specific, measurable, attainable, relevant, time-bound) that they can keep track of as their campaign progresses.

Without these, leadership is making business decisions that are based on feelings instead of figures. If care isn’t taken, they could be spending money on marketing efforts that end up in little to no results.

Know how to track the business’s ROI using analytics. If you don’t already have traffic tracker set up on your website, what are you waiting for? This is one of the easiest ways to see the website traffic, where they came from, and what pages on the business’s website had a greater increase in visitors than others. Most social media sites offer their own specialized pixel so businesses can maximize their advertising spend with them, enabling businesses to only “pay” when someone clicks through to their site.

Return on Influence
While return on investment is very matter-of-fact and measurable, this is not always the case with return on influence. This is categorized by the social media engagement factors that have a robust effect in terms of business visibility and a knock-on effect in generating leads, sales and awareness.

The return on influence, while it may not be able to be transparently measured in dollars, has a direct effect on the overall campaign.

Know the measurements . . . and what they mean. When a business is measuring its level of influence, there is not a fancy equation that will help it deliver the ideal metric. Each business has its own needs and its own unique focus.

Is it important to have a high number of people connected to the profiles? If so, the size of the audience will be something the business will want to measure and keep track of. Is the business looking to get its audience engaged with its content actively? If so, the business will want to track likes, comments, reactions and shares. Does the business want to use social media links as calls to action to visit its website? If so, it will need to track the amount of traffic it is generating via each site.

Tell your story. Your full story. In real-time. One of the largest returns a business can get on ROI in the influence category is being able to tell the brand’s story, in real-time, while gauging and measuring engagement. Social media marketing is a beautiful complement and extension to a well-executed public relations campaign. Meaning, the business can really tell the brand’s story fully — without being hampered by deadlines, timing, content lengths, restrictions and more. The business is able to comment in real-time to anything that is happening in the universe that it can tie your brand to.

This shows that the business is available, has a finger on the pulse, and is trustworthy. Who do people do business with? Those that they trust.

Positions you as an expert. A business’s social media channels are an extension of its online presence. Consider it the more interactive version of the business’s website or online point of sale. Here, the business is not just making claims but is substantiating itself. It’s an opportunity to craft and share content that helps bring the business’s target audience closer to itself. Businesses can showcase how their product/service/business solves a problem their target audience faces.

Each one of a business’s social media channels acts as a branding and expertise hub where it can illustrate to its audience the value that it and its brand bring to the table and why they need to be interested. Having these authentic communications in real-time offers positioning like none other!

Now, It’s Time to Make the Best out of Both Metrics
While return on investment focuses on measurable goals, return on influence is about the results gained from having a presence on social media and, of course, what a business does with this.

As you continue your marketing journey, look further into how both ROIs can be factored into your strategy, and how you can reap the benefits of these. Measuring your results from a monetary standpoint and an influential standpoint can only help your business grow.

Christopher Tompkins is founder, head strategist and CEO of The Go! Agency. His devotion to helping companies harness the power of online marketing impacts every aspect of The Go! Agency. A fundamental believer in online marketing education, Tompkins speaks at national and international conferences. His latest book, The Go Method: 22 Simple Steps to Creating a Social Media Strategy That Works!, is now available.

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