There is a common question that comes up in meetings with business owners, especially those who are unfamiliar with social media or who have not used it much.
“How is social media going to help my business make more money?”
New Customer Acquisition
Generating new sales from social media is a complex process, but sales can be broken down into some simple components: lead generation (prospecting) and lead conversion (closing the sale). Social media can be utilized in both of these areas, depending on where the gap lies in your business.
Many businesses operate under the false assumption that they do not have enough sales prospects. In reality, the vast majority of businesses have plenty of opportunity in their existing pipeline and within their professional networks. Social media is a useful tool for capitalizing on that opportunity.
The most common sales application for social media is maintaining top-of-mind awareness with the people who may become your customers now or in the future. This is easier said than done. Unfortunately, many businesses waste this opportunity by utilizing social media to broadcast advertisements about the products and services they are trying to sell. This causes their prospects to lose interest and tune out. By contrast, effective social media selling strategy requires engaging a customer in a way that they want to be engaged.
For an example of an effective social media sales strategy in action, take a look at the BlendTec YouTube channel. The makers of this high-speed blender regularly produce entertaining videos showing different items being pulverized inside one of their blenders. The videos are not only amusing, but effective. They show the power of the BlendTec in action.
Should every business start a YouTube channel in this fashion? No. The challenging part about strategy: you can’t duplicate it. Few strategies transfer from one business to the next. You have to be willing to ask the tough questions about your business and devise an approach that fits your talent, time and budget. This is hard work, and many businesses are not willing to do it. Those are the businesses that fail at social media (and blame social media for not delivering the results they wanted).
Some customers (like Groupon users) love getting a deal. Others want to be first to find out about the hottest fashions. Still others might value the opportunity to win a competition. Some like being in on a secret. To increase your sales revenue from social media, you need to figure out what your customers find interesting or valuable, then continue to offer more of that.
Converting Customers into Advocates
Once you’ve won the first sale from a customer, you’ve done the hard part. Keeping a customer’s business (and winning their referrals) is much easier than winning their business in the first place. Ironically, it is a common phenomenon for businesses to do the hard work of getting a new customer in the door, then failing to invest the effort to keep that customer’s loyalty. The result is a constant struggle to keep the business afloat.
Social media gives you a powerful tool that you can use to convert one-time customers (or prospects) into loyal fans. However, in order for this to happen, your business needs to instill the discipline of consistently over-delivering. For example, Southwest Airlines is well-known for going above and beyond to take care of their employees and their customers.
Social media is one tool in your toolbox. It is not a silver bullet or a quick fix for a broken business. It will amplify the conversation about your business — and that may be a good thing or a bad thing. At the end of the day, building a successful business requires sticking to the fundamental disciplines that lead to success over time. Without a foundation of discipline in place, social media is unlikely to do much for your business — and in fact may make matters worse.
If you’re uncertain of how social media can help your business, you may not be ready to implement a social media plan yet. It may be that you need to ask the tough questions and address more basic fundamental challenges in your business. Have you clearly defined a specific market? Do you know who your major competitors are? Have you outlined a specific strategy for differentiating your company from them?
When to Evaluate Social Media as a Solution
Social media is a powerful tool when utilized as part of a well-thought-out business plan. When evaluating social media (or any other tool or platform), it’s necessary to first analyze the gaps in your business model and identify what is needed to fill the most critical gaps.
Here are the most common critical gaps that social media can potentially address:
- Low customer retention rate
- Not enough repeat business
- Qualified prospects are not converting at a high enough rate (and you aren’t sure why).
- Happy clients are not giving you referrals (and you think they could).
- Happy clients are not spending as much money with you as they could be.
If you feel that you have done everything in your power to address all of the above areas and still do not have enough qualified leads, chances are there are more fundamental issues in your business that need to be addressed.
Social media could potentially be the perfect tool to address the critical gaps in your business, but it requires an effective strategy and a careful implementation.