Over the last few years, the perception of Social Media has undergone a dramatic transformation. Long the preserve of the individual, and used solely for social networking amongst friends and family, it is now increasingly being used by business to communicate with their customers. But there are still many businesses that fear social media, who are either nervous about getting involved or that have made a decision to stay away.
This is unfortunate, as Social Media is providing real benefits to business, from sole proprietors to global corporations. These benefits are not just tangible, but also measurable.
Here are two key reasons why you should look to Social Media to help move your business forward.
1. Social Media = Dramatically lower cost-per-lead
Businesses that spend more than 50% of their marketing budget on Inbound marketing activities are spending more than 60% less per lead generated, compared to those that are spending 50% of their budget on outbound marketing. That’s a staggering difference, and shows the cost-effectiveness of using social media, such as blogs, Twitter, Facebook, SEO (Search Engine Optimisation) and PPC (Pay Per Click advertising). Outbound marketing includes direct mail, events and telemarketing.
Let’s look at those numbers. If we invest £25,000 in generating 5000 leads using outbound marketing, we pay £5 per lead. Using the same budget on inbound marketing, in which we would pay £2 per lead, we could expect to generate 12,500 leads (assuming the potential audience is there).
It’s this cost-effectiveness that is pushing marketing spend towards inbound marketing and away from outbound. And if that cost-effectiveness wasn’t enough, the quality of the leads is higher. Inbound marketing engages users, creating warm leads that are more likely to convert. Which brings us on to reason 2.
2. You can generate revenue from Social Media
It’s been a long-held view that Social Media is only really good at generating brand exposure. That’s true, but it’s also a successful route to generating revenue. Of the companies using Facebook, Twitter, LinkedIn or a company blog, approximately 40% have acquired a customer. Dell has been a model for this approach.
After a shaky start, which became known as “Dell Hell”, in which Jeff Jarvis, a prominent blogger, spoke out about the poor customer service he had received, Dell has completely turned things around. They have embraced Social Media as a way of getting closer to its customers, and have used it to drive innovation and sales. In 2009, they generated $6.5 million of sales through their interactions with customers on Twitter alone. Including Facebook into that total brings it up to $9 million (source: Steven Felice, President, Dell SMB).
Sony has also used Twitter as a sales platform, generating £1 million from their Twitter feed directly. They have also used Social Media as an integral part of their Cybershot campaign, which accounted for £12.5 in revenue (source: Nick Sharples, Head of Corporate Communications).
These numbers may be small when compared to the annual sales figures across all retail platforms, but they do show how effective these emerging digital channels can be.
More and more, companies are expected to have a presence in the Social Media space. Consumers have been given a voice, and they are using it. Businesses of all sizes have been given the perfect opportunity to engage with their consumers and build a relationship with them, at a cost that would not have been possible just a few years ago. It requires a different mindset, but those that are able to make the transition are starting realise the benefits; not just in the perception of their brand, but on the bottom line too.
Figures taken from HubSpot’s 2010 ‘State of Inbound Marketing’ report.