Social Media Marketing: What is the ROI?

When it comes to marketing your business, there are many strategies to think about. How you deliver your message is just as important as what your message communicates. In this blog, I will share with you what I learned from Luan Wise’s course “Social Media Marketing: ROI” on Lynda.com.  Using social media marketing can increase your ROI (return on investment) if you treat it differently than other forms of marketing.
First off, social media is not in itself the business strategy.  A business strategy is comprised of four areas. They are market penetration, product development, market development, and diversification.
When we use social media channels to market our product or service “we need to understand the big picture to know where we’re heading with our tactics. And if we understand that big picture, we’ll know which social media platforms will be most appropriate for our business needs, and we’ll also know what we’re aiming to achieve for that individual social media posts” (Wise, 2017).
In order to know if we have achieved our marketing objectives, we must understand our need for using numbers in measuring our business activities. We use these to see if we are on track or if we need to make changes to get on track.
You’ve probably heard about setting SMART goals.

  • Specific, Measurable, Achievable, Realistic, and Timed.

SMART objectives for your business strategy gives you the plan of action you need to be successful. One thing to keep in mind is how you word your goals is just as important as what your goals are. Instead of saying “Attract more visitors to our website”, say, “Attract 25% more visitors to our website’s homepage.” The specifics are measurable.

So, What is Social Media ROI?

There are some challenges when trying to calculate ROI when you are using social media channels for your marketing efforts.  “Perhaps, harder still to identify the trigger point for real interest, when the prospect wants to find out more about your business. And then, converting that interest to a desire to purchase and to take action” (Wise, 2017). On average it takes 5-12 interactions with customers to get a response. It can take that many more to close a sale.
To understand if your social media efforts are reaching your target audience, you’ll need to track some metrics.  These metrics consist of volume (how many), engagement (a two-way interaction), and clicks to your website.  In social media our goal should be ‘to attract, retain, and convert potential customers” (Wise, 2017).
The true cost of social media is the time it takes to be involved in it. You’ll need to stay on top of trends, prepare and post engaging, entertaining and educating content and respond and engage with other users on the platforms you are involved in.

Understanding the Metrics of Social Media

There are three areas to consider when looking at the metrics of your social media efforts.  They are:

  • Volume

The more people that see your content the better chance you have reaching your target audience. If they like your content, they will likely share it with others. That leads to more people seeing it and the chance for more business opportunities to be gained.

  • Engagement

Engagement is a two-way street. You cannot just publish your content, leave it and think other users will listen to or follow you. There must always be a reaction. One thing that is important to mention is that each social platform has a different type of engagement. “On LinkedIn, it’s the likes, comments, shares, and views on your updates. On Twitter, it’s the replies, the mentions, the retweets, the likes of your posts. Facebook, reactions, comments and shares. And finally, Instagram again likes and comments” (Wise, 2017).
If you want to reach more social media users give valuable content that is easy to engage with. This will generate more activity.

  • Traffic

You should always aspire to attract your target audience and lead them to your website, no matter which social platform they come from. You own your website so you have control of what happens with it, unlike social platforms. Google Analytics can be integrated into your website.  This data is extremely helpful in tracking the activities behind the scenes of your website.  It is easy to set up. Here is more information from another blog I wrote all about Google AdWords. If you scroll down in it you can learn more about the importance of Google Analytics.

Measurement Tools

Each social platform has its own analytics dashboard built into it. You can experiment right from the platform to see how well you are doing with reaching your goals. I have included a picture to show what one looks like.  The four major platforms I use to measure my social media strategies are Twitter Analytics, LinkedIn Analytics, Facebook Analytics, and Instagram Analytics.
Twitter Dashboard analytics

Analyzation of Social Media ROI

At this point, I think it’s important to define ROI in marketing terms.
“It’s the value that an organization receives from investing in a project or a piece of marketing activity. It’s a performance measure used to evaluate the efficiency of an investment, and it’s also a measure of the profit earned from each investment” (Wise, 2017).
How do we calculate social media marketing ROI? It seems like a complicated task. In simplest terms we take the revenue we’ve gained, subtract the cost from it and divide that by the cost. This process is easy to do using Google analytics and sales data.  Let me share an example with you. If you gained 1000 clicks from 10 social media posts on Instagram, of those 1000 clicks, 500 were converted to a lead by subscribing to a form on your landing page or website. From those 500 opt-ins, 100 made purchases. Therefore, our traffic to lead conversion is 50% and our lead to sale conversion is 20%. This is a simplified example but just know that the metric dashboards and built-in analytics all help to give us the data we need to assess our marketing efforts.

Non-Financial Benefits to Using Social Media

The last thing I’d like to mention is that there are just as many non-financial benefits as there are financial benefits to using social media marketing.
“Firstly, social media is excellent for generating and maintaining brand awareness” (Wise, 2017). There are two ways to make this happen.
Organically & Through Paid Social Media Advertising Campaigns
Another social media benefit is customer insight. This is one of the most interesting discoveries. Each social platform gives insight into what actions your target audience is making. This information is critical to understanding how your ideal clients are behaving in response to your social media efforts. All of this data is instrumental in growing your business.

“Social media allows us to observe what’s going on inside our industry and amongst our competitors” (Wise, 2017).

The next but most measurable benefits I want to speak about is “lead generation, customer acquisition, and retention” (Wise, 2017). We may not be able to definitively say that social media efforts achieve all of this in our business but through tracking the data we receive from these platforms we can get a better understanding of the journey to purchase our customers take. Undoubtedly this is a major advantage for any business, especially when going forward with future marketing efforts.
The final piece of the puzzle when it comes to measuring the non-financial benefits of using social media is the real and timely conversations we can have with our customers through the social media platforms. Nowadays, as a customer its easier to go to Twitter to talk to businesses and actually get a real-time conversation with them.  Years ago, we only had the option to call them on the telephone and more than likely we would not get answers to our inquiries due to company size and busyness. Social media provides a great advantage to the customer and the business.   Below is a snapshot of how Twitter can be used to reach a business with customer concerns as well as accolades.
I hope you have realized by now that social media marketing is not just an add-on to a business’ marketing strategy. It is a standalone option that can complement any business in reaching their target market, converting them to paying customers.


Wise, L. (2017). Social Media Marketing: ROI. Retrieved from Lynda.com: https://www.lynda.com/HootSuite-tutorials/Social-Media-Marketing-ROI/504398-2.html