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.
What is an Influencer Marketing Program?
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.
Who is the Influencer?
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.
What is 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.
Who is the Influencer Marketing Manager?
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.
What are the Most Important KPIs of an Influencer Marketing Program?
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.
With campaign-based KPIs, your goal is to know the frequency with which your influencer program engages audiences. Additionally, campaign-based KPIs help you detect changes in this frequency over time.
First, you will want to take stock of all the moving pieces within your influencer program.
- How many campaigns are you running? Are the number of campaigns per month increasing, decreasing, or staying the same?
- How many activated influencers do you have? By “activated influencers,” we mean those influencers that you have vetted, hired, and are now posting per your campaign agreement.
- How many newly activated influencers do you have? Tracking the ROI of your influencer program includes knowing whether or not your team of influencers is growing.
- How many total influencer posts are there?
- How much content are you getting from each campaign?
- How many influencer posts are there on a monthly basis? Are the number of posts increasing, decreasing, or staying the same?
Sales & Ad Spend KPIs
With sales and ad spend KPIs, your goal is to know how much each influencer post costs and how much revenue you generate from each post.
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 impact your influencer program has on revenue.
- How many orders have you received from each campaign?
- What is the total revenue from each order? How much in total revenue have your campaigns generated up to this point?
- Factoring in the price of your influencers, what is your cost per order?
- Cost of the influencer / number of influencer orders = cost per order
- Are campaign and post costs breaking even with revenues?
- Revenue per order = cost per order
- How many campaigns and posts are generating a profit?
- Revenue per order > cost per order
- How many posts can you repurpose for paid ad content (thus extending the post’s value)?
When repurposing user generated content for paid advertising, your KPIs should include:
- The number of orders per ad
- The total revenue from an ad set
- In an ad set, you will likely be using one influencer post with a few different variations on ad design and targeted demographics.
- The cost per order (based on the cost of the ad or bid)
- Cost of the ad / number of orders = cost per order
- The number of posts breaking even with ad spend
- Post ad revenue = cost per order
- The number of profitable posts used for paid ads
- Post ad revenue > cost per order
Website Traffic KPIs
With website traffic KPIs, your goal is to identify the long-term impact of your influencer marketing program. Boosts in web traffic result in greater brand awareness and future sales.
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.
- How many website visits (sessions) resulted from each influencer post?
- Of those visits, how many users were new, and how many of them were returning?
- How long do those users remain on your site (session duration)?
- How many pages do your users visit during each session?
- How many of those users signed-up or made a purchase? This KPI represents the total number of conversations.
- What is your conversation rate?
- Total number of sessions or users / total number of conversions
How Do You Calculate Influencer Marketing KPIs?
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.
(Post Comments + Post Shares) / Number of Influencer Followers = Engagement Rate
For sales KPIs, you can review the following formulas and use a pencil, paper, and calculator to establish campaign ROI.
Cost of the Influencer / Number of Influencer Orders = Cost Per Order
Revenue Per Order – Cost Per Order = Influencer Campaign Profit or Loss
Or in the case of ad spending (repurposed influencer content):
Cost of the Ad Set / Number of Orders = Cost Per Order
Revenue Per Order – Cost Per Order = Ad Campaign Profit or Loss
Here is a review of website metrics to help you manually calculate your KPIs:
Total Number of Sessions or Users / Total Number of Conversions = Conversion Rate
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.
How Do You Track Influencer Marketing Program KPIs?
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.
Cost Per Engagement (CPE)
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.
Cost of the Influencer / Number of Engagements = Cost Per Engagement (CPE)
CPE Change Over Time
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.
How Do You Determine the Final ROI of an Influencer Marketing Program?
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.
Using the Right Tools to Streamline the ROI Tracking and Calculation Process
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.
Final Thoughts: Calculating and Tracking Influencer Marketing Program ROI
In this guide, we:
- Defined influencer program terms and key personnel
- Discussed how to establish three critical KPIs: campaign-based; sales and ad spend; and website traffic
- Calculated all the essential influencer marketing KPIs
- Learned how to track CPE (cost per engagement)
- Established the final ROI for your influencer program
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.