Understanding the True ROI of Social Media

January 22, 2015

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Originally Published in Progress Magazine, Vol. 21, No. 7
by Frances Leary

There seems to be a general lack of understanding around why social media is important and how it actually generates a return that leads to business growth.

Businesses seem to “do social media” because they are supposed to without really understanding why.

The truth is that the ROI of social media is much greater and more powerful than simply the impact it has on your bottom line.

Understand Your Investment

In order to understand what ROI you can expect from social media, first you must understand the investment itself. What is the investment required to produce a return on social media? There are many variables at play; however, at the most general level every organization will need to invest:

  • Time to develop relationships with online audiences
  • Time to create and deliver consistent content that is focused on bringing value to your audience
  • Time to actively engage with audiences and provide superior customer service
  • A dedicated person/team to manage social media
  • Possible promotions to support organic conversations
  • Funding to support the above initiatives

Understand the Deeper Return

When time and resources are invested consistently to develop audience-focused social media communication, the ROI can be very powerful. You can expect:

  • Increased brand recognition and credibility in all your markets
  • Increased audience loyalty and trust
  • Engaging conversations with social media audiences
  • Consistently superior customer service
  • Consistent and engaging communication
  • Viral marketing…your audience begins spreading your message for you
  • Bringing true value to your audience

Understand the Impact on Your Bottom Line

While the deeper return is all well and good, if ultimately all of that doesn’t lead to actual business growth, then what’s the point, right?

When a social media campaign achieves the above returns, the revenue returns follow. Specifically, the ROI is evident through:

  • Increased fans/followers (more people know about your product/service)
  • Increased engagement activity (more people talk about your product/service)
  • Increased website traffic due specifically to social media communication
  • Increased customer leads produced through social channels
  • Increased customers (who were first introduced to you through social media)
  • Increased sales from these new customers
  • Increased repeat business due to deepened audience loyalty
  • Increased revenue due to all of the above

Social media communication does not produce an overnight return on investment. The investments in social media must be made consistently over time, and over time they produce a valuable and long-standing return. The beauty is that as long as your communication remains consistent and focused on your audience, the ROI continues to increase over time.

The more you are committed to consistent social conversation that brings true value to your audience, the greater your ROI will be.