Social media ROI: How to measure and improve your ROI

Karishma Borkakoty

July 13, 20238 min read

Share this Article

You're about to step into the shoes of a small-town bakery owner. Your bakery, "Bake the Corners," is a hidden gem, known only to locals. Enamored by the power of social media, you decide to launch a social media campaign called "#RelishTheFlavor," showcasing your colorful pastries and enticing coffee selection. 

Your campaign rolls out with beautiful close-up shots of buttery brown croissants and steamy lattes, cozy interior shots of the bakery and even a playful boomerang of powdered sugar dancing in the air before settling on a batch of freshly baked donuts. Each post is carefully curated, each caption is crafted with humor. 

Weeks pass and you sense a shift in the vibe of your store. A customer walks in, eyes wide with excitement. "I've seen your #RelishTheFlavor posts, and I couldn't resist." She becomes a regular, her social media abuzz with check-ins at your bakery and pictures of your red velvet pastries. Her posts generate buzz, and soon, her followers become your regular customers. Your customer base grows, the cash register keeps ringing, and your social media engagement is through the roof.  

Your brand is now associated with warmth, and of course, irresistible cakes. Now that’s proof in the pudding (or should we say, pastries:)) that your social media strategies are working. 

Amazing, isn’t it? 

Now, let's dig a little deeper and understand the importance of social media marketing and its return on investment (ROI).

Table of Contents

What is social media ROI?

Social media return on investment (ROI) is the outcome you generate through your social media marketing efforts. Be it increased brand visibility, higher customer engagement or even elevated sales. In simple terms, social media ROI is the return a brand gets from the time, money and effort invested in social media marketing.   

Social media ROI calculator formula 

In most cases, social media marketing encapsulates areas like brand awareness, customer engagement, customer retention and customer acquisition. These areas are not that easy to measure in terms of direct monetary gain. As a result, marketers often rely on other social media KPIs and assign monetary value to these parameters to accurately calculate 'Return from Social Media’ or social media ROI. 

Social media ROI calculator formula can be expressed as follows: 

Social Media ROI (%) = (Return from social media - Cost of social media marketing) / Cost of social media marketing * 100% 

While the social media ROI formula is a good starting point, keep in mind that it requires careful assessment of both direct and indirect returns from your social media activities for an accurate estimation of ROI.  

Keep reading to find out why social media ROI is important, how you can measure it, and most importantly, how you can improve it.  

Importance of measuring social media ROI 

Measuring social media marketing ROI is crucial for several reasons. Here are a few key reasons why you should focus on measuring social media ROI 

  • Performance insights: It helps you understand what's working and what's not. Look at LEGO's Instagram strategy; it continually experiments with different types of content and measure their performance. It posts a wide range of creative content on Instagram, with two focus areas — inspiring parents and educating and entertaining youngsters. They keep iterating based on the insights gathered from each post. This helps them fine-tune their approach, creating more of what works and less of what doesn't. 

    An Instagram post from LEGO showcases how the brand loves to experiment with different types of content and injects humor into content to attract both adults and kids

  • Budget allocation: Measuring ROI can help you determine where to spend your money. Glossier, the cosmetics giant found that its community-driven approach was successful on Instagram, which led it to allocate more budget toward that platform. 

  • Value proposition: It showcases the value of your social media efforts to stakeholders. Let's take the example of Airbnb. Its well-defined user-generated content strategy on social media platforms significantly boosts its brand image and fosters customer trust. By demonstrating the ROI earned from such strategies, it can easily prove the value of these efforts to its stakeholders.

    An Instagram post from Airbnb showcases how the brand incorporates  user-generated content strategy to engage customers.

How to measure the ROI of social media 

Measuring the ROI of your social media activities combines elements of creativity and data-driven science. With clear objectives, appropriate key metrics and a well-defined approach, you can unveil the full potential of your social media campaigns and demonstrate the ROI unequivocally.  

So where do you begin?  

You begin by asking yourself: what's my end goal or what do I want to achieve? Are you looking to improve your brand's visibility, or are you focused about acquiring those leads and turning them into customers? Maybe you want to see your follower count rise, significantly turning up your click-through rates and ramping up conversions. Your objective could even be to get your audience to fill out those lead generation forms or download your latest white paper. Whatever it is, you've got to know your goal. 

Once you've defined your goals, you're going to need to track your progress using metrics. Consider these as your social media success metrics


This metric demonstrates the level of interaction your audience has with your content and brand on social media. Are people liking, sharing and commenting on your content? It tracks and includes shares, clicks, likes and even brand mentions. A high engagement speaks volumes about the relevance and resonance of your content.  


This metric is all about how far your content travels to people’s feeds and how many of them see it. Although reach can be trickier to measure than engagement, understanding your audience size and how widely your content is shared is important and will give you a fair idea of how many eyeballs your content has attracted.  


Social media can be a powerful channel for lead generation. Understanding what channels and types of content attract potential customers can significantly enhance your ROI. 


Finally, after putting significant efforts into creating appealing content, you want to see it convert. It’s like a yard stick to understand how many people actually love your content and willing to act based on it. To effectively measure this, implement UTM parameters on your broadcast links, enabling you to track clicks at both campaign and platform levels.  

So how can you accurately calculate social media ROI? 

5 tips to improve social media ROI 

Finally, let's talk about how you can improve your social media ROI. Investing in ways to maximize the return on investment (ROI) is a crucial and continuous effort. So, here are our five tips to improve your social media ROI.  

Know your audience well enough 

Identify your target audience and understand what exactly they want from you on social media. Try to read their minds like you're Sherlock Holmes. You've got to get inside their heads to understand what drives and influences them.  

What platforms are they into?  What content they want on their feed. Make efforts to know their persona as you would your best friend. Wendy's — the fast-food restaurant chain understands that their audience appreciates humor and wit, and their X, formerly X, formerly Twitter account reflects that leading to higher engagement and better interactions, ultimately driving ROI.

A tongue-in-cheek reply by Wendy's to a user tweet on Twitter

Source: Photo: Metaweb / GNU Free Documentation License  

Do not shy away from experimenting with your content 

Amid the noise and chaos of social media, standing out requires you to create content that speaks to your audience. What’s the USP of your content strategy? Channel all your energy into creating content that is relevant and entertaining to all age groups rather than churning out post after post mindlessly. Remember quality beats quantity every single time! Apple, for instance, doesn't post every day on social media, but when they do, it's impactful, exciting and highly curated, leading to steep engagement coming from all kinds of audiences.

“A 3x3 grid with Apple’s otherworldly Instagram posts.”

Capitalize on lead generation from social media 

According to Statista’s report on social media budget share, 15% of marketers' budgets go to social media and there’s a reason behind it. If you embed lead generation forms into valuable content assets like e-books or white papers and share them on social media, you’ll not only be able to capture customer information but also give them something of value.  

Make optimizing and tailoring a ritual 

Switch things up with your social media posts whenever there’s a need. Tweak and optimize your organic social posts using new imagery, keywords and headlines. On social media, it’s all about trial and error. On paid media try out new ad types and track how your audience receives them.  

Also Read: Organic vs paid social media: Choose the right channel 

Bring in the big guns a.k.a. influencers to communicate your brand story

We all know social media influencers carry a lot of clout and can instantly boost a brand’s online presence with their posts. However, it’s important to find influencers whose values align with your brand. If you're just stepping into the influencer community, launching creative outreach campaigns can help you forge strong and impactful connections. Take inspiration from Daniel Wellington, the Swedish watchmaker lauded as a forerunner in influencer marketing. The company sent its sleek and minimalist watches to influencers with followers ranging from a few thousand to several million.

An Instagram post by a social media influencer promoting a Daniel Wellington watch.

These influencers, in turn, posted a picture of themselves wearing the watch, along with a special discount code which their followers could redeem while purchasing a Daniel Wellington watch. This brand nailed its outreach influencer campaign by not just driving sales but also creating a popular trend among young men and women.  

Also Check: A comprehensive guide for Influencer marketing strategy

Stay sharp and keep your eyes on the evolving social media trends

Social media trends NEVER stay stagnant. And customer behavior is just as slippery. Stay in the loop and invest in trends that truly matter to your brand. Stay updated on social media nuances no matter how small to understand where to direct your marketing efforts. 

Final thoughts 
In a world where social conversations are ever-evolving, monitoring social media becomes critical. Sprinklr's social media management solution is a complete solution for your social media needs. It not only tracks brand related chatter and conversations, but also offers valuable insights from different platforms, enabling you to respond effectively and in a timely manner. Whether it's managing brand reputation, mitigating crises or driving engagement, Sprinklr helps you navigate the chaotic landscape of social media with ease.

Share this Article

Sprinklr Social
Sprinklr Social Platform

Related Topics

The new Sprinklr Community is bringing customers together like never beforeEmpowering excellence together: Sprinklr ChampionsHow to Infuse Your CX Initiatives with Honesty feat. Ian Golding