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Wednesday, February 23, 2011

Social Media Marketing: Measure The Payoff For Your Business

According to a recent survey, 70 percent of small businesses reported that they are already using social media for marketing. Indeed, over a third cited creating a profile on a social network as one of the top three most effective marketing methods. Over the last year, there was a 50 percent increase in the number of small businesses using social media, and in that same year more than half of the businesses surveyed claimed they spent less than $2,500 a year on marketing. Hmm, interesting. Let's dig in.

These findings are not really surprising given (a) the cultural takeover of social media in the past two years, and (b) the fact that social media marketing, at least the type most small businesses utilize -- Facebook fan pages and Twitter -- involves far less out-of-pocket costs than TV, print or radio. In fact, I would speculate that most small businesses are now using social media as one of their primary marketing tools and claiming it's effective mainly because it has such a low barrier to entry and little or no up-front costs.

In fact, all that's really happening is that small businesses are doing online what they traditionally did offline for maximizing effectiveness at the lowest cost: word-of-mouth marketing. With small marketing budgets, small businesses have always relied on WOM advertising, so extending that online through social media only makes sense.

However, I would also posit that most small businesses are not including social media as a marketing expense because the tools are free and they don't factor their time investment as "costs." But time is a cost. If you factor the time investment needed to execute an effective social media campaign as a marketing cost, I suspect it would exceed $2,500 a year.

What I would like to see out of these findings is how social media has been truly effective for small businesses? That is, how did your social media activity translate into measurable results? In order to truly know the effectiveness of social media, small businesses need to be able to answer three important questions:

1) What is your goal for using social media?

2) What specific tactics did you use to reach that goal?

3) How did you measure the effectiveness (in terms of results that matter, like revenue, profits, etc.)?

Growing the bottom line is always the end goal with any marketing activity or investment, but there are more strategic goals to think about when it comes to social media. Is your goal to use social media to become a thought leader in your industry? Or to provide better customer service?

A great example is Email Direct. Their goal was to use social media platforms to become an authority on email marketing. They used their blog and Twitter to educate people with tips and best practices, and used Twitter to push content and search for people talking about email marketing to engage with. Now, as a recognized thought leader, they're getting 1-2 good leads per day from social media. Measurable results tied to revenue.

What are the tactics you're using to be effective in reaching your goal? For Buttery Lane, their focus was great customer service, so they used social media platforms like Facebook, Twitter, and Yelp. Yelp allowed them to monitor their reviews and make proper modifications to their service and products. With Twitter and Facebook, they went above and beyond traditional customer service to respond and engage with customers. And because of their dedicated involvement, they developed a following of raving, high-value customers.

So if you've determined that social media is effective for marketing your business, have you determined what specifically has been effective and how? Please share with the community what's worked for you.

For more social media marketing news and information, check out

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