Social Media ROI: Dell's $3m on Twitter and Four Better Examples
Dell Computers announced last night that it has surpassed $3 million in sales via links from one of its Twitter accounts, making one of the most high profile examples of social media Return on Investment (ROI) all the more juicy.
Telling your reluctant boss that social media is worth using because Dell made $3 million on Twitter, however, runs the risk of encouraging e-commerce broadcast as the model for engagement in conversation. Other, more conversational, examples of ROI make important additions to conversations about Dell and social media. (They also concern a lot more money.)
The @DellOutlet account has more than 600k followers on Twitter and frequently posts links to discounted computer hardware. Revenue from those links is great to be able to point to, but there is a risk of reinforcing traditional business thinking where it is not fully appropriate. New media is a new world and while the ultimate bottom line is important, many participants argue that the greatest benefits of engagement do not draw a straight line to the cash register. Building a strong community of customer advocates, listening to community concerns and discovering new business and product developement opportunities are softer benefits of social media engagement that skeptics often don't see when they presume that old-school methods of pushing calls to buy is what should be done on these new channels.
Hard and soft ROI are matters we focused on extensively in the ReadWriteWeb Guide to Online Community Management, our first premium report for businesses.
Dell itself does a lot of listening and conversation from this same Twitter account. The public benefits of that conversation have been all but lost now that Twitter has changed its policies regarding the visibility of public @replies. Dell followers no longer see public replies sent to other followers they themselves aren't following. That's a major lost opportunity for public education and good will.
As Pandora community manager, Lucia Willow, told us in an interview for the Guide: "I intentionally respond to most customer service messages with private direct messages. If it's a question that a lot of people have, then I answer back publicly with an @ message."
Shhh...those public conversations are now invisible, for Pandora, for Dell and for all the rest of us. Though Dell reports good results from Twitter over the last two years, changed policies over the last two months may require a change in the way the company uses Twitter if it wants to keep seeing those kinds of results.
Four Better Examples of Social Media ROI
That Dell has made $3m from Twitter links is cool, and it's a good arrow to have in your social media advocacy quiver, but here are a number of examples we think better capture both the bottom line and some of the soft benefits of conversation. Joe Cothrel, Chief Community Officer at enterprise online community vendor Lithium, gathered these numbers in 2007 and we included them among other resources in the RWW Community Management Guide.
These examples reference older related forms of online social interaction, but they also concern far greater sums of money than $3m.
- A Cisco study in 2004 found that 43% of visits to online support forum are in lieu of opening up a support case through standard methods.
- Cost per interaction in customer support averages $12 via the contact center versus $0.25 via self-service options. (Forrester, 2006)
- Jupiter Research (now Forrester) reported in 2006 that customers report good experiences in forums more than twice as often as they do via calls or mail.
- Ebay found in 2006 that participants in online communities spend 54% more than non-community users.
Better customer experiences, far lower support costs and more buying activity in the long run. Those are observations that can help provide context to the high-profile example of Dell pushing e-commerce links out over Twitter. Dell is clearly doing a lot of the same kind of customer service via social media that the companies above cite, but watch out for falling into the trap of telling your reluctant boss that Twitter is important because Dell bagged $3 million there.
Thanks to Ben Parr for sharing the Dell Community announcement link.
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Marshall - This is an extremely timely post. The time for structure and business results is now. Keep em coming.
Thanks for sharing some interesting data on cost per interaction in self-service option.
While I like the way Dell measured the sales from their social engagement efforts on Twitter but I am more interested in knowing what is the marketing effectiveness and sales margins for @delloutlet through Twitter channel when compared to other sales channels because Dell has employed many people on their social media efforts and would love to see some data on investment vs return vs customer satisfaction vs feedback management.
IMHO, I feel this data can gives us some insights into the effectiveness of twitter marketing strategy than just looking the sales figure.
Hi Marshall
Great post and thanks for the follow on examples with other businesses. They are excellent.
You are quite correct to state this is only one example of measurement. In fact, I posted about several other measurements Dell uses here:
http://lgbusinesssolutions.typepad.com/solutions_to_grow_your_bu/2008/12/by-dell-richard-binhammer.html
Just wanted to let you know that the revenue generation is only one of many measurements, and think some of my comments on todays news reflect that too ( see for example the post at the New Tork Times)
Vijay, there are very few Dell people who spend all their time doing social media/twitter etc. The more important assumption is really that social media can be/is an important part of anyones and everyones job, especially as it relates to our business model and corporate culture -- valuing direct connections with customers.
As for customer satisfaction and feedback, one indicator I have noted before (and is in the link above), we have seen a 30% decline in negative commentary very early and quickly after we began engaging online over 3 years ago.
Hopefully Dell does not dump too many links in their tweets. It's consider spam by twitter: http://twitter.zendesk.com/forums/26257/entries/18311
The cost per interaction stat for call centers is interesting. I've been comparing Cost per Click for social media and search ad networks to begin to get a better sense of social media ROI. As you say, there are many "softer" benefits to social media, but we're finding that marketers increasingly need this kind of data. This is my blog on CPC for smaller scale campaigns:
http://www.pageonepr.com/blog/2009/06/11/using-cost-per-click-for-social-media-roi/
Social Media ROI: Dell's $3m on Twitter and Four Better Examples http://bit.ly/13IOyG (imho :) [from http://twitter.com/marshallk/statuses/2134340335]
Posted by: Marshall Kirkpatrick
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June 12, 2009 3:00 PM
Great post Marshall with great data points including the loss of @replies.
@RichardatDell, Thanks for your response.
Twitter is like a breath of fresh air on the Social Media scene. I have been on it for just a few weeks now and I have met several interesting people. It is a platform to network with people you would like to meet in real life.
KZ
this software is very labor extensive content Thanks for answers
Another great example of real world using virtual world to expand market reach and increase sales.
Jeff Robinson
http://www.cookee.biz
Dell is doing a smash-up job of reaching a computer-savvy audience. I wonder how well a Zappos outlet would sell on twitter... Hmm thats an idea. :)
Sorry, that escaped too early. My point was that the audience has to be receptive to the message ... you can't sell lipstick to this audience. As always, match the product to the message to the audience, nothing new.
Dell is a great example of building a community around new social media, all the while monetizing it. 3m in sales is impressive.
according to the saying high investment as well as get high income and profit we can say.. as dell invest more and get more profit... so every company must follow this strategy to get more profit...
Will people ever stop pushing version numbers on the web!
http://www.hiphopalemi.net/Sohbet.asp
saadet...
Twitter is losing it's appeal big time!
Twitter should sell up as soon as possible while everyone is interested. It will be dead in two years!
Even though $3 million for dell is peanuts, I'm still surprised so many people actually bought dell products right from twitter. Well worth the effort!
$3 million dollars is a big money though
Just a little update on this. The revolution theme is an awesome theme for this purpose. It isn’t free either, but comes standard with a static front page that is very clean and can be easily customized. It will save quite a bit of work in customizing a static home page.
LOL. I cannot believe they spend 3 million on peanuts!!!
Just a little update on this. The revolution theme is an awesome theme for this purpose. It isn’t free either, but comes standard with a static front page that is very clean and can be easily customized. It will save quite a bit of work in customizing a static home page.
Sorry, that escaped too early. My point was that the audience has to be receptive to the message ... you can't sell lipstick to this audience. As always, match the product to the message to the audience, nothing new.
I guess that's a major lost opportunity for public education and good will.
$3m is a huge money.
Twitter is a communication outlet like all others. If any company has a presenced on there of course they are going to make sales and have numbers to show. However what I am also sure is happening is people are doing their research using every medium possible. And then the Twitter audience may click on a link. It is going to happen. Evolutionary? Yes. Revolutionary. No.
Wht they spend this amount of money?? Dell always has something in the Dark?
Dell followers no longer see public replies sent to other followers they themselves aren't following. I think that's a major lost opportunity for public education and good will.
There is a reason for sure. Dell won't do that for nothing.
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