Social Media ROI: How can its value be measured in your business?

by Jun 6, 2018Marketing, Social Media

Social Media ROI

Social Media ROI: How can its value be measured in your business?

Investing in Social Media: Focus on Returns

Every marketing expert out there claims that social media is a vital form of advertising for every business. The problem is, it can be tough to measure its value, unless you know how to track its impact on your business. Social media ROI is real, and you can analyze several different factors to see its impact on your business and total revenue.

What is Social Media ROI?

ROI stands for return on investment, which is something that is important to any business, no matter the industry or niche. Simply put, anytime you invest time or money into your business, you want a measurable return that yields positive results.

To make it simpler, if you spend $500 on advertising, you want to gain at least $500 in new business just to break even on your investment. If you gain $1000 in new business revenue, you’ve doubled your return on your investment.

Why you should measure your social media ROI

There are several benefits to measuring the ROI of your social media. From a business standpoint, you want to make sure that everything you spend money or effort on is profitable. Another reason is that is you’re spending money on social media marketing that isn’t working, you can evaluate what isn’t working and change it.

Social Media platforms

Sometimes, different social media sites work better for a business than others do. For example, Facebook might work better for a coaching business, while Instagram may be better for a lifestyle business that sells luxury products.

What works for you

Essentially, if you’re not measuring your efforts and the results, you won’t know what is working, what isn’t, and what needs to be changed. Once you know what isn’t working, you can change your social media marketing tactics for better results.

How do you measure ROI for social media?

This is a tough area for many business owners, because you don’t always see immediate results. It can be pretty discouraging, especially if you’re just starting out with a small budget and every dollar counts. If you don’t see an immediate return, you may panic. Here is a way to measure your return on your investment into social media marketing.

Lead Generation

Every business needs leads. More customers equates to more revenue. If you don’t have new customers coming in constantly, it’s tough to manage your business’s cash flow. Many businesses, from doctors, to lawyers, insurance agencies, and more rely on leads to grow their business. A simple way to evaluate the social media ROI for lead generation is to determine how much a new customer is worth to you. If you gain a new client from your social media marketing, compare how much you made from that new customer, compared to how much you invested to bring them in. If you invested $500 to gain that one customer in a month, but they spend $1500 on your services, then you’ve gained $1000.

Of course, you need to factor in work time, overhead, resources, etc. However, any business owner or entrepreneur will tell you that anytime you can invest a dollar and get back 2, you’re doing something right.

Website Traffic

Your goal could be to drive more traffic to your website. If you have a great website, you could convert those visitors into paying customers. It could also be a way to funnel in leads with lead magnets, that eventually become customers. Website traffic, if approached properly, can help you to open the doors to a long term customer relationship built on trust and authority.


You could want more interaction on your social media accounts. The ROI of engagement can be to build a community on social media, such as Facebook, where you build a relationship quickly with potential customers. I know many businesses that funnel customers into Facebook groups, provide value, and then provide done-for-you services that save their customers time and money. It all depends on what your endgame is.

Networking Opportunities

Depending on your target audience, social media marketing can provide networking opportunities with potential customers. You may target other local businesses, putting on a workshop that teaches them skills. At the end of the workshop you could provide a done-for-you-service or a product that helps them do something easier and quicker.

With advanced targeting, you can be very specific about the audience you’re trying to attract. With Facebook pixels and retargeting, you can serve ads to them that eventually convert them to paying customers.

Reach & Visibility

Reach is a tough area to calculate ROI, only because there isn’t really a way to determine how it translates into direct revenue. Sometimes spreading the word about your brand, and brand recognition has enough value to warrant the expenditure. If your goal is awareness, you may want to look at brand mentions, or how many times others mention your business.

Long Term Growth

Long term growth can and should be a part of your marketing strategy. Not everyone who visits your website or social media pages are going to translate into immediate buyers. That’s why it is important to focus on consistency and long term business relationships. “No” doesn’t mean no forever, it just means “not right now” or now isn’t the right time”. However, if you’ve built up trust, provided value, and you’ve been consistent in your quality service, you’re likely to convert those long term relationships into sales.

You can nurture long term relationships with good content and information, and taking care of the customers you already have. Another way to look at the ROI of social media for the long term is repeat business. People like to buy from companies they already know and trust. It’s easier to get someone to buy if they already like and trust you, and if they’ve bought before.

Search Engine Optimization

Social media activity is a ranking factor for SEO, but Google doesn’t reveal how much. You may see an increase in rankings for your website. Higher rankings means that you get a bigger chunk of search traffic, which can lead to more customers. of course, the top spot gets the most traffic, and then the 2nd and third spot get a lot, but it tends to trail off significantly, even as you go lower on the 1st page. To track and evaluate the social media ROI here, you’d need to track where your new customers came from, either via analytics, or in your lead capture forms, and look at the revenue gained from those customers.

However, it’s hard to determine how much your rankings are affected by your social media activity. Chis walker, a leading SEO expert, explains how social media engagement can be a factor in higher rankings in search engine results.

The whole point of SEO is to give Google and other search engines enough information to know that your site is the one it should rank higher. Social media is important in this regard because it tells Google that a particular piece of content is being discussed, and therefore it must be interesting and valuable. Since their product is their search results they want to give user the best results possible so this signal tells Google that they should reward your content with improved rankings because people are engaging with it.

Chris M. Walker

Superstar SEO

Measuring Social media marketing ROI

Each platform has analytics for measuring activity, which is something you can be monitoring. Facebook has insights, which tells you so much about your page’s activity. You’ll see views, engagements, clicks, demographics and more. They break it down into a just about every piece of data you’ll want to see. Instagram, Pinterest and Twitter have information like this, too.

Hootsuite & Buffer

Personally, I use both, but they both also have analytics and reports that help you to see what is happening across your social media platforms. I like that Hootsuite will generate a regular report for you, which is great for tracking your activity long-term. Personally, I want to see how many clicks to my website I am getting. Then, from those clicks, I want to see where they are going, what they are doing and if they translate into a new customer.

Social media ROI is vital

I’m sure you’ve always heard that it takes money to make money. You just want to make sure that the money you’re spending translates into profit for your business. Measuring the ROI of social media can be perplexing and elusive, but if you look at the factors mentioned above, you can evaluate what works the best for your business to maximize profit.

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