Computing and Tracking ROI on your KOL Marketing
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. Are you using KOL marketing but have no idea how well it’s working? You probably understand that return on investment (ROI) goes far beyond immediate sales when it comes to KOL marketing. Sometimes initial results from KOL marketing can be very profitable and drive immediate sales but more often than not you need to consider both short and long-term profitability. In the short guide below, we are going to discuss how you can compute and track your KOL marketing ROI. We’ll set up some definitions and show you how you can set up some key performance indicators (KPIs)Understanding your results help you optimize and see your ROI increase over the long run.What is a KOL Marketing Program?Your KOL marketing program is the total of all of your KOL marketing efforts. In your program, you have a group of KOLs and execute multiple KOL focused campaigns.
Who are KOLs?
KOLs are content creators on social media platforms that curate a community. The community usually has a common interest in a niche of products and a certain lifestyle.
KOLs grow the community by creating timely, memorable content for their audience. Since the KOL is not working under for company the audience and the KOL gradually build a deep trust with each other.
Brands will form collaborations with KOLs to try their goods or services. They will then provide a review and recommend the good/service to their community. While every KOL is trying to monetize their following, they are extremely picky about which brands they will collaborate with.
KOL forms partnerships with brands they believe in that their audience will also find interesting. Brands need to put their trust in KOL they collaborate with and trust the content creation process instead of micro-managing this process.
What is a KOL Campaign?
In a KOL campaign, a brand comes to an agreement with different KOLs to promote a product or service.
Typically, a campaign is multiple pieces of content in a set timeframe. The brand and KOL are left to discuss the exact number of posts, type of content, and other expectations required.
Using affiliate links, promo codes, and other relevant KPIs, brands are able to track customer engagement for each post. The goal for each campaign is different and KOL can contribute to upticks in sales, website impressions, sales leads, and overall brand image.
Who is managing your KOL program?
Most SMEs do not have a dedicated KOL manager and the marketer usually takes on this role. This person is the main point of contact between the brand and KOL. Platforms in the market can help marketers keep all the communication in one place. Duties include managing the KOL relationships, reporting campaign results, and providing insights for future KOL campaigns.
What are the KPIs around a KOL Marketing Program?
KPIs help you figure out whether your KOL campaign is effective or not. You should make it a habit to set expectations before the campaign, monitor results during the campaign, and of course, dig into the post-campaign results.
Several of the most relevant KPIs to get familiar with is campaign-based sales, ad spending, and website traffic.
Campaign-Based KPIs
The most important thing to figure out is the frequency of engagement between KOL and their audience. By tracking this, you will also see the changes over time and the causes of these changes.
Some questions you want to ask would be:
How many KOL campaigns do you have running? Is this number constant? Or is it increasing/decreasing each month?
How many KOLs have you engaged or activated? We often use “activated” to describe a KOL that you have looked into, hired and contracted to work on your behalf.
How many content posts in total are there? Is this number constant? Or is it increasing/decreasing each month?
Ad Spend and Sales KPIs
With this metric, you want to know how much each KOL post costs and how much revenue was generated from each. Keep in mind, revenue can be short term and long term. The sales KPI here only represents your short term ROI. This is only valid to show the immediate impacts from the KOL.
How many orders have their been?
What’s the revenue per order? How much total revenue has been generated?
What’s cost per order when you add in the KOL cost? (Cost of KOL / Number of KOL orders)
How many posts can be used for paid ads?
Website Traffic
With the money spent on KOLs, if the program is not generating sales immediately, you should at least see an uptick in web traffic. This is a long-term result that means greater brand awareness and possible sales in the future. More often than not, customers may make a purchasing decision in the future and not right away.
One important FREE tool to use for this would be Google Analytics which can help you answer the following:
What is the number of visits from KOL posts?
How many users are returning in the cohort and how many are new?
What is the session duration? How long does the user stay on your site?
Which pages are most often visited?
How many conversions were there? This could be sign-ups or purchases.
By monitoring your activated KOL content (we suggest using hashtags), you can use the following formulas to find the engagement of each post.
Comments + Shares / Followers = Engagement Rate
KOL cost / Orders = Cost per order
Revenue per order - Cost per order = KOL campaign profit/loss
Cost Per Engagement (CPE)
KOL cost / Engagements = CPE
Remember to track the average CPE for all your campaigns to see what is working and what is not. You want to increase CPE over time and this also helps you figure out which KOL to use for creating content that works with your audience.
Figuring out your final ROI
All of the metrics above helps you determine ROI for each KOL campaign. ROI consistently changes and like any marketing strategy, you need to prepare for a trial and erorr process for ongoing improvements and better results.
Now you can scale your influencer program with confidence, knowing exactly where and how your influencers contribute to the overall success of your brand.