How Can Social Media Improve the ROI of your Business?

By James Tredwell on March 12, 2020

Nowadays, it has become necessary to market your brand over online platforms. This is because most people like to do online shopping instead of going to the marketplace. Social Media is a very effective tool to engage with your current and potential customers and can generate huge ROI for you. Before discussing the benefits of social media for your business, let’s familiarize ourselves with the concept of Social Media ROI.

What Is Social Media ROI?

ROI is an abbreviation for ‘Return on Investment.’ It is basically the sum of all the social media interactions that generate revenue for your brand. This depends a lot on the kind of business goals and objectives that you have.

Benefits of Social Media Marketing Related to ROI

Social Media can generate considerable revenue for your brand if the marketing strategies are on point. Below are some perks of marketing your brand through social media.


Social Media is the best platform to search for potential clients. People use these networks to search for something even as trivial as paying a bill. So, you can gain a lot of information from social media regarding people’s preferences. This can help you in effectively selecting your customer niche and hence generate more ROI through strategic marketing.

More Customer Engagement

Social media can help you to effectively build rapport among your customers. When you post a blog or an image, the customer or follower is likely to leave a comment. The quicker you respond to a customer’s comment or query, the better are the chances of that customer buying something from you. It is all about engaging your customers; the more, the better.

Opportunity to Attract New Customers

A constructive marketing strategy can help you in attracting a lot of new clients. If you invest enough energy and resources in your social media posts, then your current customers are likely to share it with their friends and family. And this, in turn, will help your brand get more recognition and ROI. Eventually, lead generation gets much improved by acquiring new customers.

Increase in Website Traffic

Your social media business account is not only a platform to entertain and engage your customers; it is also a means to increase traffic to your Website. On your Instagram and Facebook page, you can leave a link to your Website that will help in driving more traffic to it. This, in turn, will boost your business sales and generate more ROI.

Better Marketing of Products

As people are using social media to search for their desired products, social media can help these customers locate your brand. Just a few tools can drive the customer to your products and increase your sales.


Traditional advertising is costly and ineffective nowadays. As people are spending more and more time online, social advertising is the perfect choice for you. Social media keeps track of people’s search history and shows them the products/brands that might interest them. So, it is a much cheaper and effective means to display ads than the traditional one.

Brand Building

Social media is a great tool to make your brand more popular. As more and more people share your posts and videos, your brand gains more recognition and hence the chances of improved ROI of your business increase. Brand Storytelling on the other hand plays a vital role when taken up to social media.

Improved Customer Service

Social Media can help you in cutting Customer Support costs. When you post publicly regarding a customer’s concern and the solution, others can view it as well. So, this makes it easier for people to find answers to their questions on these platforms. A phone call or other traditional support means will not be required.

Better Human Resource Management

Whenever you are in need of a resource, you can use social media to advertise the opening of a position. You can save costs by posting it for free. Also, you can approach the candidates via their social media accounts and interview them online. This will help you in saving the standard recruitment costs.

Social Listening Tools

Social media can help you in gaining some intangible benefits as well. The tools employed by social media can calculate your brand’s recognition and sentiment analysis. This, in turn, can help you to calculate these qualitative benefits.

Measurability of Public Relations

Social media can keep track of your progress and your relationship with the public. This, in turn, generates an opportunity to come up with new and effective strategies to improve public relations.

Research Opportunities

Social media can also help you in knowing about the current and upcoming economic and social trends. You can make flexible strategies in response to these trends. This will save you both the time and costs of manufacturing unsustainable products and services.

More Opportunities for Business Partnerships

Through social media, you can reach other brands and build partnerships with them. This will help you in saving money and developing high-quality products.

Why Is It Difficult to Calculate Social Media ROI?

While the quantitative benefits of social media for your business are manifold, it is not an easy task to calculate those. Below are some of the reasons why businesses struggle to calculate social media ROI.

⦁ Unclear Business Outcomes: It is one thing to track customer engagement, it is another thing to understand its relation to your business’s ROI. Most brands start marketing without fully understanding this relation.

⦁ Lack of Skills and Resources: If you have an unskilled marketing team, they might not allocate adequate resources to measure ROI.

⦁ Inaccurate Metrics: While a platform might provide you a great opportunity for customer engagement, the metrics to measure it might not be that efficient on it.

⦁ Inconsistent Analytical Perspectives: If your team is not reporting truthfully and consistently regarding the metrics, then you won’t get a clear idea regarding the ROI.

⦁ The Data Sources are Poor: Activity from fake accounts can discount your efforts to calculate the social ROI.

How to Measure Social Media ROI Effectively?

Nothing can convince your audience of your worth more than the proof of your ROI. Therefore, it is really necessary to measure the ROI carefully. Here are a few ways in which you can do so.

Set Clear Objectives

It is important to set clear goals that a particular social media platform will help your business to fulfill. It will help you in making effective strategies to achieve these goals. If your business is an established one, keep a record of areas for improvement at work history so that you can set new benchmarks easily. By looking at your past performance, you can easily identify areas that need improvement. A smart objective setting exercise will make it easier to measure the ROI.

Know the Costs

Often, many organizations fail to calculate the total costs of social media marketing. This prevents them from calculating the ROI effectively. So, keep track of the costs of your premium platforms, their tools, the ads, and the written and visual content to easily measure the ROI monthly.

Calculate the Time

Time is as important as other factors in the calculation of ROI. So, know about how much time your team or employees spend to manage content on social media and your website. You can calculate the ROI through this formula: Profit / total investment X 100 = ROI percentage

Know about All the Social Media Metrics

It is very important to know about the right metrics that can give you an idea about the ROI. The likes, comments, and shares are all accurate indicators of your performance as a brand. Some of these metrics are:


This metric tells you how many people know about your brand. Two of the most common indicators under this metric are ‘audience growth rate’ and ‘reach.’ The former tells you about how speedily you gain followers on a particular platform. The latter indicates how much the audience has viewed your content since it went live.


This metric indicates how people are receiving your content. ‘Applause rate’ and ‘Average engagement rate’ are two common indicators. The former tells you about the number of likes and favorites your post has received. While the latter one tells you about the likes, comments, and shares.


This metric tells you about the number of people who visit your website and engage in some form of activity there like downloading a form or subscribing to the newsletter extra.


Customer satisfaction rates and customer reviews are two very important metrics to measure your business’s ROI. Good customer reviews will boost your brand’s rapport and help it in attracting more customers. Customer satisfaction rates can be measured using a numbered scale. Make it public so that more people know about the value of your brand and its products.

Social media marketing promises huge business benefits with very little capital investment. Back when I started my company, the first thing I did was diving into social media marketing. Within a month, I saw quantifiable benefits! Since then I’m convinced of its importance for businesses.

Author Bio. :- Yash Chawlani is a Digital Marketing Strategist associated with UnboundB2B, who specializes in SEO, Social Media Optimization (SMO) and Content Marketing.

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