Your company is going to go broke using social media

This thought has come up in about three different places over the last 24 hours or so, so I figured maybe I should talk to you about it in one place and get it out of my system.

Let me begin by painting for you a rather dire picture (yay!). Are you ready?

It’s one year from now, and your company is having to close and deadbolt the doors. The company is bankrupt. Your heart is broken and your mind is confused. How did this happen? You took in the advice that everyone gave you. You did everything the right way. You worked hard. You tried new things, some of which failed and some of which succeeded beyond your wildest dreams. You used social media the way all of the most expert practitioners told you to use it. You had tons of fans. You had tons of “likes” on your Facebook page. You, the head of your company, were extremely well-respected, maybe even admired, in the online world. In the words of King Theoden from Lord of the Rings, “How did it come to this?”

The answer is staring you in the face. Why is your business closing? You ran out of money. What were you not tracking while you did everything right in the online world?

If you said money just now, you are spot on.

The biggest lie is that social media is free

I still remember when social media as a marketing tool really started to take off. At the time, I was working as a media buyer at our family’s marketing firm, and already the chatter had begun about how this was going to change everything. It wasn’t just the power of this new suite of tools. It was the fact that they were all free. Instantaneously, all agencies, all other forms of marketing, and pretty much everything else were consigned to death. We don’t need you now. We’ve got the Tweeter thing. And it’s free.

Except, as we now know, social media is not really free, just like having a receptionist to answer your phone isn’t free. Having someone to monitor your inbox for you is not free (unless your family has really been brainwashed by you). Somehow, in all of the excitement created by the onslaught of these new tools, we forgot a very simple and basic business concept.

Time = Money

Let’s say that again. Time equals money. You pay people for their time. People pay you for their time. If you are spending time tweeting, it’s still time. If you are spending your time writing a blog post, it’s still time you are spending on the clock. If you are paying someone and they are doing that stuff for you as a social media manager, social media director, or community manager, you are still paying them for your time.

The platforms you use online may be free. Social Media – it’s not free.

I’d like to pay you everything I have. Keep the change.

Now, let’s talk about another pretty basic business principle that seems to have fallen by the wayside. Expenditures matter. You need a way to make sure that what you are spending does not exceed what you are taking in. Centuries of business have proven that this is a good path to follow. It is generally considered best practice to make more money than you are spending (I know, tell that to the US government).

Have you ever tried to sell someone your Twitter followers your business has accrued? How much money have you been offered for the fans of your Facebook page? What about comments on your blog? Ever had any offers to buy those? Did that ever work?

My guess is probably not.

So, your company has been paying someone x number of dollars a year for 2-3 years, let’s say, to run your social media marketing. They are reporting to you that they are engaging really really well with people. They have gotten 60,000 Twitter followers and your Facebook page is up to 5,000 fans. You’ve been really excited about this, but your company is now having to let that person, and everyone else, go. Why? None of those happy shiny metrics were actually putting money in your pocket, right? You were paying that person money and they were giving you multi-colored air in return. That’s not the lifeblood of most businesses. It’s all about the benjamins, as some wise philosopher once said.

Now, had you been aware of this, your situation could have been salvaged. You could have started asking questions like, “OK, but how many of our Twitter followers are buying from us?” “How many leads can we nurture that have their foundation in our Facebook presence so that we can turn those into sales?”

If you weren’t getting any buyers from these channels, if you weren’t making any sales, or only a small percentage of sales as compared to what you were paying your social media maven/jedi/expert/guru, you could have saved your company, just like King Theoden could have saved his people if he hadn’t let Grima Wormtongue and Saruman ruin his mind.

Hey, we all have problems.

There are Gandalfs out there you should listen to

Theoden King was saved in the end, to a large extent, by Gandalf the Wizard. Your company can be saved too, because there are some wizards out there that are telling you how to prevent this kind of catastrophe.

Talk to Marcus Sheridan about how to make sure your blog is helping you drive sales, for example.

Or talk to Olivier Blanchard about how to measure ROI (for social media or other marketing efforts) or read his book (not an affiliate link) if you really want to jump into this.

Let these wizards point you in the right direction. There’s no reason for you to keep losing money on your social media efforts, and there’s every opportunity, in fact, to improve your performance and thus grow. But more Twitter followers and blog comments is not the way.

Think about it?

First Image Credit: http://www.flickr.com/photos/runran/4094527770/ via Creative Commons

Second Image Credit: http://www.flickr.com/photos/williamcromar/5000421162/ via Creative Commons

 

35 comments

  1. I can vouch for Blanchard’s book. It was a great read with a lot of common sense and examples. I read it w/two sets of eyes (there’s a visual for you). 1.) as a person setting up a more cohesive social media strategy for our own company, and 2.) as a provider of a social media monitoring solution. In the first scenario, I know the cobbler has some work to do on our own shoes (metrics and organizationally). In the second case, I wish folks would read Olivier’s book and come beating down our door to start *strategically* monitoring and tying to real metrics besides number of followers/fans/friends!

    1. @dbvickery So…you have four eyes and read with all four. Hmmm!!

      Real metrics. That’s the key. And really understanding what you are investing and what you are getting back. Knowing how to measure and the tools that are available for measuring is just the first step, right?

      Thanks, Brian 🙂

  2. Man, you are on FIRE!

    I fought this same fight in a previous role, where the CEO was so focused on attracting likes, followers, etc. that he basically forgot to: 1) keep working on a product that was basically in late beta stage, 2) actually engage in any meaningful way with those followers, 3) offer actual product support using social media.

    Fast forward only a tiny bit, and I’ve seen him crowing about TechCrunch writeups, adding x number of followers from a big PR push that “added” 10,000 new people to his sphere, and so on. The worst bit is that I can nearly guarantee that those 10,000 people represent exactly $0 in revenue.

    I have to wonder how long his VC backers are going to stand for this. I know I’d send a pretty strong message if I had money invested in that company,

    1. @cynthiaschames Thanks Cynthia 🙂

      Yeah, all I have to do is look at the number of followers I have versus the number of people I follow back, and my account isn’t even on behalf of a business. MOST of my followers are spam bots of some kind or another. How is that exciting? You have robots following you. Is that going to help your business? How?

      Even if you did accept that Twitter followers was a good measurement of success, well, it just plain wouldn’t work, would it?

  4. Few things in business are free. It’s called Social Media and not Free Media or Social Freedia (I just made that up, so if it ever is free I call dibs!). Media costs money, as you know since you were a media buyer. In the history of business, never have I come across a company where the owner did nothing but sat all day counting the money rolling in.

    And the fact is we see plenty of examples of companies throwing out tweets with links to buy their stuff, w/o much attention to the Social part of Social Media. ‘Buy Me’ works well with traditional media. We’ve been trained to accept that as a viable message. Through social networks, we’ve come to expect more engagement. And engagement times time, a real person, money to pay for the person, the monitoring, the pretty and inviting pages, etc.

    This concept of ROI is one of the reasons one of the first departments cut is Marketing – b/c it’s seen as a cost center.

    And besides all this, isn’t the familiar adage “Time is Money” the price tag of being social for a business?

    Another excellent post, Margie! Keep rockin’ the social marketing insight!

    1. @saving4someday Those are some FANTASTIC points, Sara. You have to grab the whole package, right? Understanding social media as a tool is great. Understanding marketing is great. To do both effectively at the same time – well, that’s really the gold today, right?

      The thing is, social media is not radically different from marketing like so many people have framed it to be. You’re still building relationships. That’s not new. It’s just that the timing of it has changed and the technology has changed. It’s still about good products, strong relationships, and well…money.

      Right? 🙂

  6. Love it! I was at first confused coming into this blogging world with people telling me all the time I need to have more comments and followers. I came from a niche money making site that doesn’t even have a commenting feature on it. So I was really confused. There I am not doing hardly any social media and making money and here I am spending hours on SM and making nothing. That has changed now, but not in a way that I can say it is the thing to do.

    Honestly, I think a lot of bloggers are just teaching people how to fail, like comment for hours every day, spend hours and hours on social media which is all a way to -not make any money. Great post, M.

    1. @Brankica you said it there, sister. I think for a long term gathering followers can set a foundation for building sales, but it does not equate to sales right from the get-go. And uh, that could be a super big problem!

      1. @margieclayman okokok! See, here it is. I wouldn’t trade one moment I have spent here, online, learning and implementing, building and learning, getting to know the folks I’ve met and spent so much time badgering and following around. But. I am coming up on our one year anniversary online. I have NOT reached our goal. I can still see it, shining brightly in the distance… but anyone that has spent as much time as I have riding into camp after dark knows, just how far away that fire may be… I still wont trade you all for the goal. I just need to figure out how to get on the right track, this one isn’t …I won’t say “the right one” because all trails lead home, but it certainly isn’t going to within sight anytime soon if I can’t find the right one.

        1. @margieclayman AND. I can’t let those doors close. This isn’t just a business. It is us. We ARE the business. huh. (dead end, see what I mean?!) Now, I’m not crying or stressing anymore than is needed to stay on top of it all, yet, and I DO have some new plans and directions! But. Anytime one of you smarties want an ego boost, come on and tell me what you do and absolutely do NOT (especially those) like. I know I cannot please everyone, nor do I really want to, but I also know that my group (as I with much love refer to you folks) has WAY more experience and expertise on what really fries your shorts. I should fix the biggies, yes?!☺ I really like this post Margie, because I don’t have to WONDER if I “get” it. I love direct talking, and tend to get lost when people beat around the bush with me. I don’t take offense (out here, you get over it really fast!) over “constructive criticism” (what a stupid phrase) and when I do, I smack myself around and get over it. I’ve noticed as well, the many posts that are covering this, just lately, and I wish one of those wizardly humans could twist their minds into the no-such-niche my life revolves around. THEN, I’d be playing with magic!! Loved it and you, as always you teach us all great things, and if I’m not needing to be taught, you remind me of what is really important. Time and again.

        2. @girlygrizzly Hi Amber-Lee,

          So glad you got this comment in finally because I think it’s such an important contribution!

          Here’s the thing about niche businesses. Well, actually, there are two things. First of all, maybe social media isn’t the right answer. That’s another problem that has evolved over the last few years. Lots of people have been preaching that you can just chuck everything away and do your social media thang. Well…that doesn’t work for everybody. We have a lot of clients that I don’t think Twitter would make sense for at all. That being said, there’s nothing wrong with using social media to network as an individual on behalf of your company, which can be a great foundation for things in the future.

          The other thing is that in social media we tend to group together with people who are in our same shoes or who think like us. That means we aren’t tending to hang out with potential customers. There are lots of ways to find your customers if they are online – fancy searching, finding chats, all that kind of stuff. But the people who will buy from you often are not the same people who will be your friends.

          Does that help at all?

        3. @margieclayman Actually, Yes.

          I know. And I actually have come to this same conclusion, just within these last few weeks of evaluating and re-evaluating. (Of the horrid words,”social media isn’t the right answer”)

          I believe it can be with the proper time, care and progress (learning, implementing what is learned). I also believe in your thoughts on networking in behalf of the company. (Nifty.)

          The demographic of our business and the piece of that business that has NEVER advertized the offering, is my boggle at the moment. Because I know those folks are there. I’ve just never been exposed to them so I am not sure of the typical questions we are taught to ask ourselves.

          *Who are they?

          *What age group are they?

          *Where do they hang out?

          *What do they want?

          *How can I help?

          *What are their problems?

          *What do they want to know?

          I am excited, Margie. Not stary-eyed excited, but deep in my gut excited. (You KNOW what they say about a little knowledge, right? LOL) I believe I can do this. I have to believe I can make this work, we haven’t stopped the other, but the passage of time alone is driving us towards extinction. (Not unlike your VHS tapes!)

          Thank you for the post, but really, thank you for taking the time, Margie, to help me understand a little more.

          p.s. I wouldn’t trade one friend I have met and made in the last year for 5 clients. Period. It just takes the time.

    1. @KDillabough Thank you! There never has been a ‘free lunch’ when it comes to marketing and PR. Someone’s paying something whether in time or money.

    2. @KDillabough@saving4someday Social Freedia is pretty amazing. I totally think you should run with that, Sara. Kaarina and I will be behind you and the concept 100% 🙂

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  12. If social is your only platform; yikes. Social is most definitely a time-suck and yes, make no mistake about it, time does equal money.

    I’ve said it before, there has to be a way to harness it because it does have so much opportunity. HOWEVER, for most (99%), it is only ‘fools gold’.

    You really need to know what you are trying to get out of it to decide if it truly is worth the time and effort.

    For me? It’s fame and fortune and I think I’m about half way there; if I could just get some of these damn people to start paying me for my greatness, huh?

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  14. This is a good entry, something that connected with me and resonates with my feelings and efforts over the past several years of SMM (Social Media Mania). As it is with most things in this world, too much of anything is not good. It’s all about having focus, knowing what you want and how you’re going to get it. Then executing, of Performance. Finally, you also have to be highly aware of your personal feelings. Am I happy? Is what I am doing (personally and professionally) nurturing my mind and body?

    Social Media can be Magical (MSMM), and for that to happen, it takes planning, preparation, and effort. Notice which comes first///it’s that dirty word PLANNING.

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