March 11, 2010

Recently, I ranted about how blogging and tweeting are often incompatible with generating qualified leads or closed sales (“To Tweet or to Sell”).  But if you run a business, how do you know if your tweeting and blogging are making you money?  Or simply enabling the endless chattering among masses who have no need of your services or product, nor means of paying you for anything?
 

When thinking about how social media can lead to profitable growth to write this article, I first had to convince myself it can. Frankly, I’m torn.  So let me cover 3 ways social media can lead to profitable growth – and 3 ways I’m not so sure.

Here are three ways social media can create profitable growth:

1. If you can monetize your audience. Guy Kawasaki  has parlayed his virtual fame and followers into numerous business ventures including his www.alltop.com.  
2. If your niche will pay you to lead them in a community. You can up-sell access to you and your knowledge. Robert Kiyosaki’s “Rich Dad” community is an incredible example of creating and leveraging such a niche.
3. If you can use social media to tease your traditional product, service or content. The Wall Street Journal online does a great job of teasing its articles and blog postings while making readers pay to read full articles.  

Here are three ways social media can’t create profitable growth:

1. If you can’t turn voyeurs into participants. It is very hard to cost-justify most blogs. Beyond your core of loyalists, and despite hiring “retweeters” to push your postings, most of your prospects have little time to read let alone respond to your posts. Many of the tools and tricks of social media are designed to promote blogs but few tools exist to convert readers into qualified prospects for your products or services. Where someone stands often depends on where they sit. Make sure the zealot pitching social media believes in your need to create profitable growth in your business.
2. If you can’t entice your buyers to engage in social networking. While I can’t find a study to prove this, the tone of most bloggers and tweeters is not that of a buyer with time, need, authority and money. I often get the feeling that most of the commentary is coming from those with agendas other than making a purchasing decision. If there could be a way of measuring how your online audience earns their living, this would be quite illuminating.
3. If you can’t convert conversations into qualified sales leads. Time is valuable and all prospects aren’t created equal. Helping interested parties to know, like and trust you must lead to closed business. Make sure you know how much free content is enough -- and when it serves no business purpose. The big players in your competitive space may have the fortitude to build up their audiences but you may be better off blogging on their sites than trying to establish your own space.

Warren Buffett is famous for saying, “I don’t invest in anything I don’t understand.” If you are a business owner struggling to find and close qualified leads, demand a connection between your investment in social media and your returns in profitable growth.

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Andy Birol is also a noted small business coach, consultant and speaker who has been interviewed on CNN, Wall Street Journal, The New York Times, Entrepreneur, and Fortune Small Business. You can follow him on twitter @AndyBirol.

Join the conversation ( 7 )

• Beth Arvin 1 year 10 months and 23 days ago

  

  This is a good article. However, your three points on how social media can create profitable growth seem to discount the value inherent in community building.
  
  Actively participating in social networking sites and providing content of value through blogging are critical to creating a community around your brand and creating opportunities to convert prospects into customers into brand evangelists who do your marketing for you. As such, these practices are not only important to getting customers but to maintaining their trust and earning their continued loyalty.
  
  The Communicator
  www.famefoundry.com

• Robert Oberheide 1 year 10 months and 24 days ago

  

  You need to hold social media to the same standards as any other marketing channel. What is my conversion rate? Am I building my brand? Can I beat my competition to the punch? Followers and friends are great, but you need to ensure that you have actions taking place that are creating value for your business.
  
  Good luck to all with their social endeavors.
  http://www.socialforbusiness.com/
  http://twitter.com/Social_Biz

• Scott Jolly 1 year 10 months and 24 days ago

  

  It is so important for people to have purpose when they use social media for marketing and in their small business. I find so may just floundering out there not knowing what to do and how to do it. Also, you kept it very simple which some find it hard to do.
  
  Thanks for sharing!
  http://www.facebook.com/scottgjolly
  http://www.twitter.com/jollyfamily
  Scott jolly

• Raylene Captain 1 year 10 months and 25 days ago

  

  I agree with your points on how social media can create profitable growth. Many businesses are afraid of using social media because it can open their companies up to negative comment, and they are afraid of losing control.
  
  I believe communicators need to equip themselves by getting to know the various tools available to them. I explore this on my blog - http://rayleneinlondon.blogspot.com/

• Matt Brown 1 year 10 months and 25 days ago

  

  When you have been using sites like twitter or facebook, etc for personal use all these years and then you must use it for business, its tough to break out of the mindset. Once you break it, you will unleash the power of what social media can do for your business! I liked the article, you defiantly hit some key-points.
  
  Matt Brown
  http://www.my-home-business-growth-marketing.com

• Joan Curtis 1 year 10 months and 25 days ago

  

  I agree with some of the things you say and disagree with others. I agree that Tweeting will do the top three things you mention. Where I disagree is with the notion that Tweeting will not generate quality leads. Indeed conversations on Twitter have resulted in quality leads for many salespeople. And from there sales. How might you account for the success Dell has had with Twitter? (6.5 million from its Twitter channel)?
  
  I also agree that companies must take a look at the time spent on Twitter and other social networks in terms of ROI. But, think about the time salespeople spend on many other activities that don't generate direct sales, networking events, cold calling, conferences, lunches with potential clients. The list is endless and much more costly than an hour or two on Twitter.
  
  Personally, I've gotten clients from Twitter I would have never otherwise obtained. I don't use Twitter to generate leads. I use it to gather information and to search for thought leaders. I use it to post interesting information and generate traffic to my site. In essence, Twitter is a very inexpensive place to create visibility. It just plain works!
  
  BTW, I picked up this blog from Twitter.
  

• Amy Trapp 1 year 10 months and 25 days ago

  

  I agree that companies and individuals need to pay attention to the results (ROI) they get from spending time on twitter, and other platforms, and if a company isn't looking at this closely, then they should start doing so, now.
  
  There should be an expected learning curve, just like anything else that is new. The question I have is what is an appropriate amount of "investment" so that a company is not "throwing the baby out with the bath water". I feel that investing extra time and money upfront, can pay dividends on the back-end. And I also feel that the time needed to gain ROI is going to be different from one company to the next-- so it's difficult to quantify anything across the board, IMHO