How to Make Money with Social Media: An Insider’s Guide on Using New and Emerging Media to Grow Your Business

Chapter 23. Step 3: Measuring the Only Really Important Thing—Your Return on Investment

WE’VE TALKED ABOUT WHERE MARKETING HAS BEEN AND WHERE IT’S GOING. NOW IT’S TIME TO TALK ABOUT SOMETHING THAT’S IMPORTANT RIGHT NOW: YOUR RETURN ON INVESTMENT (ROI). AFTER ALL, THE ONLY REAL REASON YOU’RE SETTING UP, RUNNING, AND MANAGING A SOCIAL MEDIA CAMPAIGN IS TO MAKE MONEY, RIGHT?

Understanding Customer Lifetime Value

Before we dive into ROI, let’s talk about an important concept called Customer Lifetime Value. Customer Lifetime Value (CLV), is the amount of revenue you’ll generate from one customer during the lifetime of your relationship.

For example, let’s assume that you’re a cable TV provider who knows that the average customer spends $100 a month ...