First of all every marketer trying to measure ROI of social media marketing has to clarify where the company starts. Take a cut and look how much customers you got, how much people are following you on twitter and who likes you on facebook (check your whole online appearance). Second you have create timelines of activity, so that you can see how your number of followers and customers increases. After this one can check the sales revenue, the number of transactions and customers.
In common ROI (Return on investment) is expressed in a formula like ROI= (final value-starting value)/starting value.
Concerning to social media there are 3 ways to measure ROI.
1. Frequency:
You can count the number of transactions. It is very comfortable to see how transactions increases and you get a overview of your customers' activities. However, you do not exactly know how much your customers spent with every trransactions.
2. Reach
Yo can also measure your company's ROI in the number of new customers. Are you and your products attractive enough to reach new customers? Counting new customers gives you a informative view of how your product's image impress customership. At the other side you still do not know how much profit you make with every new customer.
3. Yield
Now a marketer knows it for sure: By counting the transactions' value of each customer you get a specific and acribic calculation of how much profit you achieved.
Excellent remark of measuring the Return on Investment. You went into all the important points and listed the advantages of every method. Great job ;-)
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