People that claim it’s impossible to calculate ROI in the social space are really just saying that they can’t calculate ROI in the social space, or probably in any space. The truth is, calculating ROI for social media is just like figuring it out for any other media – print, TV, radio. I’m not saying it’s easy. ROI is difficult to calculate across any medium, especially on the “return” side of the things. For example, you know how much that magazine ad cost, but how much business did you see as a direct result of it? It sounds difficult, but I assure you, it can be done! The tips below will help you get a handle on social ROI:

1) Plan and Understand How Social Fits in Your Company

Social media is like the new telephone. It’s not a department within your company like the marketing or PR team; it’s a tool that those departments can now use to communicate with consumers. Think about it, when the telephone was invented and companies started using call centers to provide customer service, those were still called “customer service departments.” There’s no such thing as a “telephone department,” and there should be no “social media department”. It’s silly. So the first thing you need to do before you even think about ROI, is understand where social media fits into your overall business strategy.

In other words, maybe your goal is to increase overall sales. And maybe you plan on reaching that goal by getting new customers through an increase in brand awareness. The right way to do this is not to set a goal of getting 10,000 Likes on your Facebook business page. The goal should be to acquire 10,000 net new customers through Facebook. As in, Facebook is the tool with which you accomplish this goal. Now that you have a goal, an objective and a tool, what’s your tactic? Before social media, your tactics may have been putting up a billboard or putting an ad in a magazine. Now you can use a highly targeted Facebook ad and have clickers land on your branded Facebook page where you advertise a 25% off sale to all new customers if they share your link with a friend. Or, perhaps, convert your Twitter page into a customer service network where you can get instant feedback and provide real-time support.

2) Know What You Can Measure

If you’re exclusively an e-commerce company, you’ve got it made in the shade. Tracking a sale through your site back to a Facebook or Twitter link is as easy as setting up a free Google Analytics account. But we don’t all have such a cut and dry business and therefore not all metrics are available to everyone.

Think logically about what you can measure. Don’t worry yet about what you should measure. Metrics are not one-size-fits all.

3) Decide on ROI vs. Correlation

There’s only one way to calculate return on investment, and that’s sales minus expenses, divided by expenses, expressed as a percentage. There is no other formula. But sometimes, getting at true ROI is difficult, especially on the “return” side.

In those instances, you might opt to instead examine how social media success ties to business success over the long haul, and make correlation studies about that relationship. What you want to see is a situation where business success (sales, donations, etc.) increased in conjunction with social success (or slightly trailing social success). While correlation does not equal causation, and one or two statistical anomalies can and should be ignored, it sure looks good when you data points consistently coincide.

4) Select Metrics

Once you’ve gone through the first 3 steps, you can pick actual metrics that make sense for your company. Picking them before you get heavily involved in social media reduces the temptation to pick metrics that support your position down the road.

There’s a lot to be said for picking just a handful of good metrics that fit into your business well, rather than selecting too many and being overwhelming or doing unnecessary tracking.

For example, if you’re trying to increase sales by getting more repeat business, tracking return visits to your site through Facebook and Twitter are great metrics to record. But in this case, it wouldn’t make sense to record your daily increase in fans and followers.

5) Share the Data Widely

If you want your whole company supporting your social initiatives, it will help if the whole company (more or less) has access to the scoreboard. Don’t treat social media results like nuclear launch codes. Sharing your results will inspire the internal discussions and ideas necessary to take your program to the next level. Two heads are certainly better than one, and by making the information available to nearly everyone, people will see the company’s success, thus motivating continued effort.

6) Embrace Stories

Anecdotes (or other qualitative measurements) are not mathematically defensible in the way ROI is, but you should try to include them in your social media metrics. Get your customer service and community management teams to document instances where you delighted a customer, turned a frown upside down, or just did something awesome in social media. A lot of times those unique case studies create more internal support than a whole stack of spreadsheets because of the actual people and dialogue behind the exchange. It’s something you can point to directly and say “we made a difference” or “this resulted in a sale, guaranteed.”


Metrics and ROI in social media have been typecast as unattainable for too long. Hopefully now you see that when you draw out a comprehensive plan and focus on only the numbers that make a real difference to your business and its goals, it’s a relatively straightforward process. The key is to not lose sight of what your brand is trying to accomplish. Write it down somewhere and be able to answer “How does this support my business goals?” when you do something in the social space.

Written by Brennan White