Do you manage an influencer marketing program but are unable to tell how well it’s working? You’re probably already aware that your program’s return on investment goes much deeper than immediate sales.
While initial results from an influencer marketing program can be overwhelmingly profitable, an influencer campaign’s ROI offers both short and long-term profitability.
In this guide, we will walk you through the process of calculating and tracking your influencer program’s ROI. We’ll define key terms and then show you how to establish key performance indicators.
Understanding your influencer program results will empower you to make tweaks in the right direction to see your ROI increase over time.
Your influencer marketing program is the sum total of all your influencer marketing efforts. Within your program, you manage a team of influencers and execute multiple influencer campaigns.
Influencers are social media “power users” that curate online communities. These communities often find a common interest in niche products and lifestyles.
Influencers grow their online communities by providing relevant, compelling content to their audience. Because influencers work for themselves and aren’t on any brand’s payroll, they nurture deep trust with members of their audience.
Retailers contract partnerships with influencers to promote, review, or recommend products/services to members of their audience. While influencers are business people looking to convert their social collateral into positive cash flow, they won’t work for just any business.
Influencers partner with brands that they believe in and will deliver value to their online communities. Brands that harness influencer marketing successfully collaborate with their influencers and trust their creative intuition during an influencer campaign.
In an influencer campaign, a brand reaches an agreement with its influencer to promote a product or service.
Typically, campaigns involve a certain number of posts in a set timeframe. The brand and influencer achieve consensus on the number of posts, post content, and general expectations.
Brands use affiliate links, promo codes, and other metrics to track consumer engagement for each influencer post. Depending upon a brand’s objectives, influencers contribute to a dramatic increase in sales, web page visits, leads, and overall brand awareness.
The influencer marketing manager is the main point of contact between the brand and the influencer. Managers oversee the brand’s influencer relationships, track campaign results, report those results to decision-makers, and provide informed recommendations on future influencer campaigns.
Influencer marketing managers typically operate alongside other marketing department heads as part of their employer’s broader marketing mix. As such, these managers align their influencer campaign objectives with the brand’s general marketing objectives.
Key performance indicators (KPIs) help you define whether or not your influencer program is working.
During and after each campaign, you can examine progress based on the KPIs you established. It is common for influencer marketing managers to adjust these KPIs as they gather more data from each campaign.
That said, there are a few different KPIs that you should become familiar with: campaign-based; sales and ad spend; and website traffic.
First, you will want to take stock of all the moving pieces within your influencer program.
Influencer campaign posts result in product sales for both the short-term and long-term. Your sales KPIs represent your short-term influencer ROI. These KPIs are valuable to show you and your superiors the immediate
When repurposing user generated content for paid advertising, your KPIs should include:
Many of your customers will buy your products, but they may not be ready to do so right away. As a result, influencer posts send consumers to your website, looking for more information.
Web traffic KPIs can help you understand consumer behavior on your site and how often that behavior results in sales later on. You can identify these KPIs by answering the following questions during and immediately after each campaign. We recommend using Google Analytics to help you answer these questions.
Establishing your influencer marketing KPIs isn’t always easy. However, you cannot find out if your influencer program is working without those KPIs.
Depending upon the tools you have at your disposal, you can either calculate your influencer KPIs manually or use aggregator software.
With a manual approach, you will want to monitor your influencer posts carefully. Most social media channels allow you to add up hashtags (which is why you might want to make liberal use of hashtags in your influencer campaigns).
When monitoring your influencer posts, count the number of comments and post shares. You can use these numbers to find the engagement rate of each post.
For sales KPIs, you can review the following formulas and use a pencil, paper, and calculator to establish campaign ROI.
Or in the case of ad spending (repurposed influencer content):
Here is a review of website metrics to help you manually calculate your KPIs:
Even if you are manually calculating your KPIs, you may want to use spreadsheets and create formulas within your spreadsheets. Doing so will simplify your manual calculations so that all you need to do is plug in totals, and your spreadsheet can do the rest.
Also, using Google Analytics to track website metrics is free. And as a free tool, it provides an astounding amount of critical web page KPIs. As you become more proficient with this tool, you will be able to establish customer journeys and milestones to further streamline your manual calculations.
Ideally, you have some form of aggregator software to streamline the KPI tracking and calculation process.
Aggregator software will track and count data for you. Within the software industry, there are many different types of aggregator platforms tailored for specific industries. Therefore, your influencer aggregator tool should be influencer-marketing-specific.
For example, GRIN’s influencer management software automatically generates affiliate links, promo codes, and tracks each influencer post. Instead of manually counting every post, comment, share, and hashtag, GRIN does it for you. Additionally, GRIN generates KPIs on the spot, such as engagement rates and campaign profits/losses. These aggregator capabilities save you enormous amounts of time and money as you scale your influencer program.
Whichever aggregator software you choose, you will want to be careful not to invest money in a software that already does what you do in your spreadsheets. The tool should be intuitive and make your job more manageable.
After gathering the data, the right software will enable easy reporting. You can select which KPIs to display and deliver a formal report to your immediate superior, client, or team.
The most important KPI in influencer marketing is engagement. How much it costs to obtain meaningful engagement tells you how mature your influencer program is.
The lower the cost per engagement, the higher the ROI.
You can calculate your CPE in much the same way that you found your cost per order. But instead of summing up your total revenues, you’ll find the total number of engagements – post comments, shares, hashtags, etc. – per influencer post.
When tracking CPE over time, you may wish to track changes on an influencer, campaign, and program level.
If a single campaign included more than one influencer, you would need to calculate the average CPE across all influencers.
When tracking your influencer program CPE, you should calculate the average CPE for all campaigns in a given month or quarter.
By keeping tabs on your influencer, campaign, and program CPEs, you will notice changes month-to-month. These changes can help you understand factors that lower or increase your CPE. Again, your goal is to steadily lower your CPE over time as you and your influencers get better at producing compelling content.
Whether tracking sales or increasing web traffic (brand awareness and future sales), all the metrics we’ve listed can help you determine ROI for each influencer campaign. Additionally, you will want to be able to analyze your entire influencer program ROI at any point in time.
So long as your influencer program runs, your ROI is subject to change. As such, calculating cost per order, cost per engagement, and campaign profitability will also change over time.
As with any marketing strategy, trial-and-error makes for ongoing improvements and better results.
The more time it takes for you and your team to count every post, comment, hashtag, and share, the easier it is to make mistakes. More importantly, manually tracking and calculating ROI is time-consuming.
Often, brands identify their influencer, post, and engagement costs but fail to consider the cost of human work hours that go into producing those numbers and reports. When your bottom line ought to be growing, profits remain mysteriously stagnant; or, team members are burning out.
That’s why influencer marketing managers are leaning heavily upon influencer relationship management (IRM) software. An IRM platform like GRIN can track each relevant KPI and seamlessly display them in a variety of easy-to-read reports.
Using the right influencer marketing tools allows you to scale your influencer program faster while also freeing up your time to examine KPIs and improve campaign results. You’ll also have more time to nurture influencer relationships and focus more on your overall marketing strategy.
In this guide, we:
Now you can scale your influencer program with confidence, knowing exactly where and how your influencers contribute to the overall success of your brand.
This article originally appeared in the Grin.co blog and has been published here with permission.
