Converting Leads to Sales: The ROI of Social Media

Converting Leads to Sales: The ROI of Social Media



Today, social media platforms have invaded and taken over public consciousness. It has become a big part of day to day routines and an indispensable communication tool for people to connect and stay in touch. Consumers have used social media presence as one of the integral basis of a company’s legitimacy, reliability and viability.

Businesses today are judged based on their Facebook or LinkedIn profiles, and consumers expect companies to respond to the concerns and queries they have tweeted within the day or within the hour.roi_ok


Suffice it to say, social media has managed to steal the thunder away from traditional marketing methods. Modern marketing strategies today have a mix of social media tactics as its integral component for reaching business goals.


Highly competitive companies have taken the aggressive path and actively pursued the “Social 5-Pack”, made up of: Facebook, Twitter, Google+, LinkedIn and YouTube. This is in line with the aim to engage their target market and existing client base in order to fill the top of the sales funnel as well as understand the prevailing consumer preferences and behaviors to ensure brand loyalty.

Like any business endeavor, you naturally want to have a fair idea on the return of your investment in social media and not simply jump right in just because it’s the popular thing. The ROI cycle of social media
can be separated into 3 stages.



Stage 1: The Launch


At this stage, 100% of your focus is on setting up accounts on the 5 Social Packs: Facebook, Twitter, Google+, LinkedIn and YouTube. While there are a number of other popular social networking sites, the 5 are considered to be the critically important ones. You simply can’t afford not to have presence on all 5 platforms.

The Launch stage is more of executional with the primary goal of getting started.

Here are the details of this stage:

Approach: Executional

Objectives: Social Media Presence

Focus: Short-Term

Results: Negligible

At this point, you won’t be able to expect any significant impact or derive results.



Stage 2: Managementfree3

At this stage, about 60% of your company’s efforts will be focused on developing the 5 social media sites. About 10% of the focus is directed towards the creative and brand offer and 20% on setting up quantitative metrics like inbound links, traffic, Facebook “likes”, etc.
The remaining 10% will be focused on qualitative metrics such as survey results, pools and studying brand sentiment.

Approach: Tactical

Objectives: Customer Engagement

Focus: Mid-Term Results:

Increase in Traffic



Stage 3: Optimization


During the Optimization stage, 25% of the focus is on gaining more leverage on all 5 social media platforms, and 30% will be distributed to creative and brand offer development, as well as the quantitative and qualitative metrics. The other 25% of the focus will be directed to improving the conversion rate and the optimization of campaigns. The remaining 20% will be used to measure success of the campaign which will be the basis of your ROI.


Approach: Strategic

Objectives: Social Media ROI

Focus: Long-Term Results: Increase in Revenue


Despite what many social experts claim that ROI of social media cannot be measured, there is actually a way to measure it. This process will require a better understanding of your customer lifetime value (CLV) or the average revenue generated by a customer during their entire engagement period with your products and services. This figure will be used to compare the results that have been generated on your campaign in social media.



For example:

If a typical customer spends about $10 every month on a particular product and has been a loyal patron of a certain brand for about 3 years, this equates to the average customer lifetime value of $360.00.

Most companies are willing to spend about 10% of their CLV for the acquisition of new customers. This means, they are willing to spend $36 to acquire a new customer who is expected to spend $360 all throughout her engagement with the brand.

So if your social media efforts will cost you $36, 000 for one full year, and your campaign will be able to generate 1, 000 new customers every year, then you definitely have a clear winner in your hands.