TLMM #004: The Two Most Important Social Media Marketing KPIs for Local Small Businesses

Read time: 4 mins

Today, I want to talk about the real objective of social media marketing for local small businesses…

And I’ll give you a hint, it’s not to build up a huge following.

Surprise, surprise!

But before I explain why that’s not an objective you should focus on when providing social media marketing services to local small businesses…

Let’s take a look at some of the traditional KPIs (Key Performance Indicators).


Social Media KPIs

Let’s quickly define some traditional social media KPIs…

  4. Engagement
  6. Conversions

I think we can all agree that those are for the most part the primary traditional KPIs when it comes to social media marketing.

However, it’s usually extremely difficult to measure social media marketing success using traditional KPIs for local small businesses.


Because local small businesses usually don’t have a huge audience due to geographic restraints (i.e. serviceable area).


Serviceable Area

Each local small business’s serviceable area will likely be unique to the actual business itself.

By that I mean, most local small businesses don’t have the capacity to offer their products or services to everyone that’s not specifically within their geographic region.

There are a number of reasons why and here are just a few…

  1. Their own physical location
  2. Population density around their location
  3. Distance between their location and their customers

With that being said, there’s a very good possibility that a local small business will not get a lot of or any of those KPIs with their social media marketing efforts.

Does that mean that social media marketing will not work for them?

Absolutely, not!

In fact, there are two other KPIs that carry far more weight and should be prioritized.


Impressions and Reach

But wait, doesn’t “reach” mean that they would have to be in a large city or have a large audience?

Isn’t that counterintuitive?

No, not at all…

Let me give you an example…

Local Small Business A is in a city with a population of 200,000 and can service the entire city.

Local Small Business B is in a city with a population of 5,000,000 but can only service a specific area of the city due to travel constraints.

Local Small Business A will not have a huge audience to reach since it cannot service anyone beyond their own city limits or the 200,000 people who live there.

Local Small Business B will have a larger audience to potentially reach since it is in a much larger city, however they still may only be able to serve a small portion of people in that audience…

Because either the business does not want to travel that far to provide their service or the customer does not want to travel that far to receive their service.

So while Local Small Business A’s audience is relatively small compared to Local Small Business B’s…

If Local Small Business B can’t service any more customers/clients due to their own or their customer’s willingness to travel for service…

Then it doesn’t really matter how large the city is for Local Small Business B.

And I think it’s fair to say that neither business will ever build up a huge following on social media.

In the examples above…

They both will likely have to rely on reach and impressions as their top two KPIs as the other traditional KPIs just won’t measure up.


How to measure impressions and reach KPIs

Impressions are the number of times people have seen a post, even if they didn’t click, comment, or otherwise engage with that post.

Reach is the number of people who have seen a post, even if they didn’t click, comment, or otherwise engage with that post.

See the difference?

Reach is a one-to-one relationship.

Meaning, each unique person the post reaches is tracked.

Impressions are a many-to-one relationship.

Meaning, one person (1 reach) could see the same post more than once.

Does that make sense?

The bottom line is that you can track some more granular KPIs based on impressions and reach.

Here are the top two:

  1. Cost per impression 
  2. Cost per reach

Both are usually measured as a CPM (Cost Per Thousand Impressions)

CPM measures the total amount spent on an ad campaign, divided by impressions, multiplied by 1,000. (Example: If you spent $50 and got 10,000 impressions, your CPM was $5.)

Yes, even “reach” is measured this way only instead of dividing by impressions you’re dividing by the total number of people reached.

But luckily, most if not all ad platforms do these calculations for you.


Vanity Metrics

So while it’s always impressive to have thousands, tens of thousands, or even hundreds of thousands of followers on social media as a local small business…

It’s absolutely not necessary and highly unrealistic for local small businesses to reach those gaudy numbers.

And likely wouldn’t make a bit of difference with their social media marketing results.

While most local small businesses will only have a few hundred followers on any one social media platform…

The importance of their social media marketing efforts will be gauged primarily by KPIs around both impressions and reach.

Local small businesses who focus on vanity metrics (the wrong KPIs) will not be able to stay in business long.

So the next time a local small business is concerned about any vanity metrics…

You can confidently now steer them in the right direction towards the KPIs that do matter on how effective their social media marketing strategy is.

And if God forbid they don’t have a social media marketing plan in place…

You can develop one for them using the KPIs that can be found in this week’s newsletter!


See you again next week.
When you’re ready… 😉

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