Social media is an extension of "word of mouth marketing" (the most powerful form of marketing).
Businesses on social media build loyalty and trust with customers. Additionally customers are provided a platform to share their experiences with businesses. These conversations work both ways, allowing businesses a new degree of feedback and interaction with their customers.
Conversations can be leveraged and can also begin with posts from the business. Businesses are seen as reliable resources and as such when they provide information to customers on social media they develop themselves as an authority in their field.
Lastly, a strong social media presence contributes to your SEO strategy by attracting genuinely interested customers who are the most likely to buy.