Dell’s big Twitter returns: let’s not break out the champagne just yet.
There is a devoted slice of the social-media-marketing population intent on demonstrating the commercial value — and especially the ROI — of Twitter. For them, the news that Dell can credit something like $3 million in revenue to its @delloutlet Twitter account is very good news indeed.
But here’s my advice: don’t focus on the money.
In his post on the Dell news, Brian Solis quoted Richard Binhammer of Dell thus:
Like you say in your book Brian, this is about putting the public back in public relations where relationships are direct. The dedicated practice of connecting with customers generates real results on many levels. While this announcement focuses on revenue results and referrals to dell.com, they are also reinforced by the relationships and direct connections we have with customers everyday using the Web.
Just so. A similar point emerges from Marshall Kirkpatrick’s treatment of the subject — “Social Media ROI: Dell’s $3m on Twitter and Four Better Examples” — and especially in the “four better examples” Marshall gives at the end of the piece, which include much lower cost for customer-support interactions that take place through social-media channels.
So, great — there are many reasons besides raw dollars to like what Dell is doing. But why not focus on those millions of luscious, luscious dollars?
Because it’s too simplistic — for two reasons:
1. If I had an itty-bitty company and used Twitter to generate $3 million in revenue in less than a year, that would be amazing news. But Dell took in $61.1 billion in revenue in 2008. So $3 million, while a lot nicer than a kick in the teeth, represents about 26 minutes of revenue, based on what Dell made all-day-every-day last year. A lovely drop in the bucket, but a drop in the bucket still.
2. Let’s imagine that I bring the good news to my boss that a new social-media sales channel is bringing Hoover’s $100,000 per month. For extra fun, let’s imagine that I’m really wet behind the ears.
Me: Hey, our new XYZ program is bringing in $100k per month — and it looks sustainable!
Boss: Great! How much is it costing us to bring in these dollars?
Me: Not much at all! [Cites low-low figure.]
Boss: Awesome! And how much of this is incremental revenue?
Me: Excuse me?
Boss: Incremental revenue? New money that isn’t just being siphoned away from some pre-existing channel?
Me: . . .
You see what I mean.
So, Dell’s figures are excellent, and the more numbers like this we see, the more they flesh out the concept that selling via Twitter (and other social-media channels) can be valuable, not only in raw dollars but in terms of (a) the cost of doing business and (b) the additional benefits of enhanced brand interest and customer evangelism on a company’s behalf.
Great. But it’s not the same thing as three million new dollars falling out of the sky onto your company’s top line, or mine — or even Dell’s.
Category: Marketing & Sales, Social mediaIf you liked this post, please consider subscribing to the RSS feed so you can receive future articles delivered to your feed reader.
11 Comments so far
Leave A Comment
Tim,
I just LOVE how you boil these things down. 26 minutes…wow.
From my perspective..it is unclear to me how a company like Dell can separate true sales via social media outlets vs. momentum of the brand, evangelism…all the things you mentioned.
For my little company…the complete opposite is true. My brand is relatively unknown, yet I can trace DIRECT revenue to my interactions in social media. In fact, those numbers will account for over half of my total revenue for 2009 (thus far).
So, speaking in terms of percentages and “ROI”, My little company is far more “successful” at sales via social media channels than Dell.
I am certainly not diminishing their efforts, far from it…but I agree with you wholeheartedly that the way they are measuring it (if it can even be measured) is off-base.
Rock on, Tim…
Jen
Great post. Reason #2 is especially compelling (and proving incrementality is really hard). It’s also worth noting that any revenue that’s shifted from one channel to another can ignite conflict between channels. I’ve seen channels of the same F500 company engage in price wars with each other – a true circular firing squad.
That said, there are plenty of reasons to congratulate Dell on their achievements here. First and foremost is the simple fact that they’re meeting customers on their terms, serving them through whatever channels (web, phone, social media, retail, reseller) the customers prefer. That’s a huge shift for a company that started as a one-channel direct shop.
Tim, great post! I’ve been wondering when someone will note that Dell’s income from Twitter may not have resulted from new business, but from customers who would have bought elsewhere. It would be interesting to see if any specific area of Dell’s other sites had seen a similar decrease in sales.
I think Dell will find that their relationships and interactions will ultimately prove more valuable than their sales. How this will be measured as “success” is unknown, but I think it will have a greater impact on Dell’s sales in the long run.
-Alyssa
*** “I think Dell will find that their relationships and interactions will ultimately prove more valuable than their sales. How this will be measured as “success” is unknown, but I think it will have a greater impact on Dell’s sales in the long run.” ***
Someone give commenter Alyssa a massive consulting fee; she is precisely correct. :)
Nice post, Tim. I bought a Dell laptop for my teen in large part because I wanted to support a local Round Rock TX comany, and because I wanted to support Richard Binhammer and Lionel Menchaca and their outreach efforts for Dell.
Thanks for all the great comments, folks.
One of the things I’m reacting to is the audience reaction to the $3M number. Dell itself has said smart things — like what I quoted from Binhammer in this post. They get that it’s a layered relationship. And, given the financial discipline in their corporate culture, I’m *sure* they think about things like cannibalization of channels.
But plenty of people who read news like Dell’s seem to think “Three million! Awesome!” — without pausing to consider the real-life business ramifications of that.
[...] focuses on the example of Dell’s @delloutlet account on Twitter, which I discussed at length last week. He’s particularly acute in discussing (1) the low cost of time and effort to make [...]
Spot on! If you can’t measure it, you can’t manage it. As long as everybody only talks about sales without deducting the cost of the products and specific marketing costs we’re still running in a circle.
As long as a marketing campaign can’t deliver above (let’s say) a threshold of 20% ROI it’s a no-go. And I really wonder.
The point is; would the money put in Twitter deliver more return from any other marketing campaign?
To Alyssa and Sheila Scarborough
I’m sorry , but I don’t get your point. Relationships and interactions have no value by themselves. How will they have a greater impact on sales in the long run? Greater then what? How far on the horizon? To me relationships and interactions are just means to an end and that is making a profit out of your business. Every asset of a company is an investment that has to deliver.
Bas — I think Alyssa and Sheila would agree with you that “Every asset of a company is an investment that has to deliver.” I certainly do.
But possibly the greatest single challenge of all business management is balancing the long term against the short term. Social media marketing, from the case studies we’ve seen so far, tends to work better over the longer term. Or, to put it another way, it works better in the vein of building longer-term relationships and brand loyalty than it does in moving mass quantities of product in the short term.
So these relationships and interactions DO have value by themselves, because they’re not somehow separate from the process of selling more goods. It’s just that they’re cultivating more and better sales over a longer term, rather than pushing for the sale right-now-this-instant.
@Tim
Agree that balancing long and shprt term is the game to play. So in order to gauge your investments you need to put a number on them such as NPV, LTV, ROI. In marketing this is about acquiring and retaining profitable customers.
I am really in it for SM to become a huge hit for all of us. But one has to be cautious. Remember the older days of the internet when AOL was more worth on Wall Street then Tme Warner because they had so many relationships. Then the bubble bursted because all these companies with these relationships never delivered.
BTW I would very much like you to show me the case studies that show how SM Marketing works better over the longer term.
My Thoughts on Dell & Twitter and Where This is Going…
It's been a few weeks since @StefanieatDell blogged about @DellOutlet reaching $2 million in sales…