Unravel its Potential: Understanding ROI from Social Media

Businesses that recognise and harness the potential of social media ROI (Return on Investment) stand to gain a competitive edge in a digitally-driven marketplace.

Beyond just being a platform for sharing photos and updates, social media has evolved into a powerful marketing and communication tool.

We need to adapt our business and marketing strategies to allow social media to reach more of our prospects, grow our brand awareness and help drive revenue.

Defining ROI from Social Media

ROI is, of course, a fundamental business metric that quantifies the profitability of an investment relative to its cost, so measuring the success of your marketing spend is essential.

When applied to social media, ROI often represents the net profit generated from social media marketing efforts in relation to the resources invested, including time, money, and manpower. Lead generation is a relatively simplistic measure and doesn't actually reflect true ROI on its own.

Measuring Financial ROI Metrics

Direct financial metrics are a common way to measure social media ROI. These include:

Revenue: Tracking revenue generated through social media-driven sales.

Savings: For example, calculating costs saved by using social media for customer service and support, potentially reducing the reliance on traditional customer service channels.

Cost of acquisition: Comparing the cost of acquiring a customer through social media versus other marketing channels.

Lifetime value: Calculating the average total lifetime value of a customer that’s come into the business via social media (if you offer after-sales products/services, or if your product is something that can be purchased more than once, for example, clothing, or pet food).

Measuring Non-Financial ROI metrics

Not all benefits from social media are easily quantified in monetary terms. Although there are some overlaps between financial and non-financial, the non-financial metrics typically include:

Brand Awareness: Monitoring increases in brand mentions, follower counts, and engagement rates.

Customer Loyalty: Assessing customer sentiment, and advocacy through social media interactions.

Website Traffic and Lead Generation: Tracking the volume of website traffic driven by social media referrals and measuring the number of qualified leads generated through social media campaigns.

Calculating direct revenue from social media efforts is important, it's equally crucial to acknowledge the multifaceted benefits it brings to the table. A successful social media strategy can catapult a brand's visibility, build customer relationships, generate sales, and offer actionable insights to refine marketing tactics.

It’s a great way of maximising your opportunity to reach people who may not have searched for you on Google because they didn’t know your brand existed prior to seeing your ad within their social media newsfeeds.

It will drive awareness, and over time will generate sales/leads for your business.

There are also ways in which we can look at industry benchmarks, to enable you to set realistic KPIs (Key Performance Indicators)/ROI goals.

In summary, a good social media strategy should see your awareness and lead/sales numbers grow, your cost per sale decrease over time, and a strong overall ROI from social media.

Please feel free to contact me to discuss your social media ROI challenges:

Blog by Tanya Whymark.

Strategist and Director

Cyclone Marketing UK.

#socialmedia #socialmediamarketing #digitalmarketing #marketing #marketingROI #socialmediaROI

Top tips:

Track your social media ad performance: Ensure you have your pixel in place so you can track website visits from your social media channels.

Retarget them: Retarget prospects that have expressed an interest in your brand from your awareness-driving activity.

Nurture your prospects and customers into your brand/product by communicating with them via social media and CRM (customer retention management) emails.

Keep them coming back! ;)