Building brand reputation and loyalty is the top business priority for leaders in the current economic climate, according to the 2023 State of Social Media report. Influencers play a growing role here—these digital trendsetters help brands establish credibility with target audiences while extending their reach.

I spoke with Peter Kennedy, original Founder and General Manager, now Sprout Social Influencer Marketing (formerly Tagger), to discuss how leaders can measure and maximize their influencer marketing return on investment (ROI) at each customer journey stage.

Why influencer marketing ROI matters

Nearly half (47%) of social marketers say measuring the effectiveness of campaigns is one of their top influencer marketing challenges, according to our Q3 2023 Pulse Survey. ROI is a critical proxy for gauging effectiveness, not to mention a jumping-off point for future budget asks.

Let’s cover three reasons why influencer marketing ROI matters:

1. Influencer marketing encompasses the entire customer journey

Kennedy says people often think about ROI as it relates to sales, but influencer marketing has changed the game. He explains ROI is often confined to bottom-funnel metrics like downloads or conversions, but influencer marketing drives returns across the customer journey.

“When you start to use influencer content across the entire journey, sales are definitely part of [your results]. But what’s the ROI of the awareness you’re building and the consideration?” he says.

In our LinkedIn influencer marketing roundtable, Kennedy emphasized how influencer content often fuels higher engagement than branded content. Our Q3 Pulse Survey also found that 79% of marketers describe influencer content as necessary for their customers’ experiences, and 81% describe influencer marketing as an essential part of their social media strategy.

“We’re getting better awareness, engagement, purchase, retention and advocacy because the content resonates more with people,” he says.

2. Influencers can help balance brand and performance marketing

The push and pull between brand and performance marketing is a common experience among chief marketing officers. Leaders often view performance marketing as a safer bet because it can be measured clearly and held more accountable for business results, making it easier to see how a company’s marketing dollars connect to revenue. But today’s consumers are savvy and recognize when brands only see them as dollar signs—so balancing brand and demand efforts becomes even more important.

Kennedy agrees and notes that, historically, performance marketers haven’t tapped into influencer marketing—but the landscape is changing:

“With A/B testing, they’re finding that influencer content converts faster and gets better click-through rates than branded content.”

3. Marketers must measure ROI to earn more buy-in

ROI is the key to commanding a larger influencer marketing budget. Even though the majority of marketers say influencer marketing is vital to their social strategy, only 34% have a dedicated budget for influencer marketing.

Influencers can help marketers reach their goals and earn more buy-in for future collaborations. Our data reveals social marketers rate influencer marketing as having a significant impact on their brand’s efforts including brand awareness (89%), increased brand reputation (87%) and customer loyalty (87%).

How to measure influencer marketing’s ROI: The 5 W’s + H of influencer strategy

Kennedy explains that calculating influencer marketing ROI is tricky because there isn’t a simple equation.

“You can’t just say, ‘We spent X on influencer marketing, we got this many sales and our ROI is Y.’ There are a lot more variables that need to go into that.”

Instead of searching for a formula to calculate success, consider several factors that impact a brand’s ROI. Kennedy organizes most of these into the Five W’s of influencer strategies (who, what, when, where and why)—and advises how leaders need each to better understand audience interest, behavior and preferences, which can further inform your influencer selections and campaign execution.

The who: Influencer identification

Our Pulse Survey data shows finding the right influencers is the top influencer marketing challenge. This is where the first of the Five W’s comes into play.

The “who” includes your target audience, their demographics, interests and affinities. Kennedy underscores the importance of hiring influencers based on audience fit and historic performance. He recommends looking at influencers who talk about your industry and whose content outperforms when they mention your topic or product.

Many marketers will start by searching a database to find influencers for their campaigns. They search based on audience demographics, location or topics the influencers discuss.

“Before I can even think about the influencer I need to hire, I need to consider what my channel strategy is,” he says. “I want these influencers to be authentic when they talk about certain themes or products.”

He says you must understand your product category or industry to help determine the most important channel(s) and which influencers to hire based on their social presence. Then he recommends filtering down to the target demographics and geolocation. For example if your fitness target audience is largely UK-based it may be wise to choose a UK fitness influencer they are more likely to recognise. Historical performance is another essential metric to track to ensure the influencer maps to their goals.

Another integral piece of the influencer identification process is checking their audience’s affinity. He points to an example of a health food company.

“The company may want to work with a particular influencer. But when you view their audience, their followers care about candy bars. That’s not the right audience because they’re not necessarily looking for healthy products, even if the influencer is on board,” he says.

“If the influencer’s audience makes sense, the influencer makes sense because they both talk about these [topics or interests]. Two plus two can equal eight with influencer marketing. So historical performance and audience alignment within your category are most important,” he says.

The influencer identification process is a manual journey that can take a lot of time and effort, but with Sprout, you can use People View to discover and organize profiles that interact with your brand.

Sprout's People View. Several VIPs are listed on screen.

This view ensures that you can authentically interact with the people who engage with your brand the most. People View can help foster connections with influencers, manage your VIP lists and view conversation history. This feature helps expedite the influencer identification process because you can see your most active audience members.

The where

Where you activate your influencer campaigns is equally important as the content. If your brand’s community is more active on one network versus another, that can help narrow down which influencers your brand should partner with to capture share of voice.

Kennedy explains when he asks brands why they are running a campaign on one platform, it’s widely based on assumption. But they’re often better suited to another platform because of their industry and audience. The engagement they are looking for is happening on entirely different channels.

The what

The “what” refers to the content types that will resonate with your target audience. For example, a 30-second makeup tutorial on TikTok may see higher engagement for people under 25, but longer videos may resonate with older audiences.

The content type you choose will depend on your brand’s audience, but our Pulse Survey shows giveaways (65%), product collaborations (62%) and influencer-led advertisements (57%) are the most common.

Each phase of the customer journey has different goals and KPIs. To maximize influencer marketing ROI, Kennedy advises brands to incorporate influencer content across all of them.

When most people think of influencer marketing, they think of content within the purchase stage like product reviews, tutorials and Live shopping experiences that support sales KPIs, but there are opportunities at every stage.

For example, in the awareness stage, the goal is to boost brand or product visibility. KPIs may include impressions, reach and views. This is when you could leverage posts on an influencer’s profile and repurpose influencer content for paid media.

In the retention stage, you’re aiming for repeat purchases and to increase KPIs like retention rate and customer lifetime value. You could leverage influencers in exclusive memberships or customer appreciation content. For advocacy purposes, influencers can support referral programs.

The why: Influencer marketing business goals

The “why” refers to your business goals. The driving force behind influencer campaigns is often one of two reasons: your competitors are spending a ton in this space, and you need to level up, or there are benefits to your products that you must highlight. For example, let’s say you want to understand the current landscape of influencer content about pickup trucks in the U.S.

“You may discover that towing capabilities are a popular topic. But when you review existing influencer content, another brand is being talked about most regarding towing capability. Although your product may have the best functionality, you’re actually being talked about the least. But now you’ve identified the white space in your industry and can start building a content strategy.”

Our survey shows two-thirds of marketers use social media engagements such as likes, shares and comments to measure the effectiveness of their campaigns. Social engagement data and conversion rates (in terms of sales, signups or downloads) rank as the two most important metrics to secure buy-in for influencer marketing campaigns.

The when

Campaign timing can make or break your influencer marketing results and effectiveness. Time can be broken down into multiple increments in terms of year, day of the week, or even the hour of the day that will yield the highest engagement.

Kennedy points to the example of content for a yoga company. The holiday season isn’t an ideal time for investment because people prioritize time with family and friends or travel for vacation. But after the holidays, you’ll see a spike in interest because people often focus on renewing their health and wellness rituals in the new year. Spring would be an ideal time as well.

“Understanding those time periods and the seasonality of your industry will be important. We’re going to get better engagement during the times of the year when people care about your industry and product,” he says.

The how: Influencer management overhead

Along with identifying the right partnerships, leaders have to consider influencer management overhead. From contracting to creative collaboration, there’s a lot that goes into daily influencer management. It can be an expensive undertaking if teams lack a transparent process for working with influencer management. Our survey reflects that 64% of markets manage influencer campaigns by working directly with their agents or reps.

Kennedy advises brands to consider local influencers to minimize travel and accommodation expenses. He also stressed considering the “when” of influencer management overhead to get the most out of your spend. “Even if you’re doing an earned campaign where I’m handing the influencer a product, we still incur manufacturing and shipping costs. It’s still paid media,” he says.

With Sprout Influencer Marketing, you can integrate influencer marketing with your brand’s social strategy by harnessing data and analytics. With tools like Sprout’s publishing calendar and influencer marketing, marketers can manage social campaigns and content, streamline influencer workflows, collaborate with talent and provide influencer compensation through a dedicated workspace.

Proving influencer marketing ROI with data insights

Illustrating influencer marketing ROI is a nuanced process. But by considering the Five W’s of influencer marketing strategy and weaving your content across the buyer journey, you’ll be able to prove your marketing dollars are well spent.

Use Sprout Influencer Marketing to shape the best path forward for your brand’s influencer marketing strategy with a free 30-day trial.