In business, everything eventually comes back to the all-important bottom line.

That fact has been – and continues to be – one of the biggest stumbling blocks with social media marketing. How do you quantify Return On Investment (ROI)? Where is a formula for determing what followers and “likes” are worth in real money?

Here’s a better question.

Every company, from the one-man-show small business to corporate giants seem to grasp the inherent value of “Word of Mouth”…

But how do you measure the ROI of WOM? What formula will give you the precise dollar amount generated by folks talking about your brand?

There isn’t one.

(For that matter, you can’t measure a return on sponsoring kids’ sports teams… or charitable work… or many of the ways businesses have traditionally given back to their communities. Doesn’t stop ’em.)

Sure, there are self-proclaimed social media scientists who swear they can determine exact figures. (We talked about it before…) They make brilliant statements, like:

Businesses exist to make money, not friends. It can be easier to get our friends to become paying customers, but it’s the customer part that’s the real goal, not the friendship…

Measuring stuff like “engagement” or “reach” is great, and I recommend advanced social media users do it. But you must understand that those numbers are merely proxy metrics for what really matters: the bottom line.


Except we still believe that if you treat people like proxy metrics (as opposed to treating them like friends), you risk acheiving the very opposite of your goal – like driving them to a competitor with better people skills.

We don’t have a formula for ROI. We told you, we’re leaving that to the guys with the ginormous brains and blackboards. But how about a law?

Namely, Metcalfe’s law… which basically states that the value of a network is proportional to the numbers of users connected to the system.

Well, not only are the numbers of people on social networks still growing (we channeled our inner Carl Sagan to highlight those figures for you), the number of businesses who are using social media to listen to their customers is also still growing.

If Metcalfe’s law applies, the value of social media grows every single day — exponentially.

We keep telling ya… social media IS word of mouth. And it’s getting louder by the day.

In a face-to-face situation, would you treat a customer like a proxy metric? Would you mentally calculate the ROI of being polite… and helpful… and providing good customer service?

No. You’d take care of your customer, in the hopes that they’ll remain your customer… and possibly spread the good word about your business.

It’s true that “businesses exist to make money, not friends”. But in social media if you’re NOT making friends (or worse yet, if you’re treating people like numbers and making enemies instead) you’re not going to make money either.

If ROI is still your MVP, maybe you need to change your mindset… instead of your metrics.