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Social Media Marketing: Why It's Not Paying Off

Putting in too much time for too little return? You're not the only one. Here's what you're doing wrong.
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Here's the third in my series where I choose a topic, pick someone smarter than me--which is a pretty easy task--and we trade emails.

The first regarded the best way to learn to be an entrepreneur, and the second how great leaders inspire followers.

This time it's the power--or, in my opinion, the lack thereof--of small business social media marketing. I went to the opposite end of the opinion spectrum and recruited Dave Kerpen, founder and CEO of Likeable Media and author of the NY Times bestseller Likeable Social Media. (Hey, go big or go home.)

The premise: The average small business owner does not get a sufficient return on social media efforts. Most put in too much time and resources for too little return.

Jeff: In specific instances social media marketing can work for a small business--very specific instances. Most of the time, though, the time spent falls into the "Well, you never know..." category.

It feels good and feels right but there's no quantifiable return. Anything over, say, an hour or so a week is a waste of time... you're better off spending that time on direct sales.

Dave: Let's assume, for a moment, that social media only serves a marketing purpose for a small business. Of course, this isn't true, but I'll get to that in a moment. Would you not have small businesses do marketing at all if it's not quantifying? Millions of businesses spend $3000/year on the Yellow Pages. Millions spend on direct mail, radio, and/or print advertising. A waste as well, Jeff?

Now, the beauty of social media marketing is that unlike those aforementioned linear media, social media is bidirectional and the Internet has a permanent record, which means that in addition to using it for marketing purposes, small businesses can use it to gather marketing intelligence, build their brand, enhance their reputation, efficiently manage customer service, and find new sales leads, just to name a few uses!

But What About the Return?

Jeff: I would say those millions in spending are a waste if they don't generate a measurable return. That's kind of my problem with social media marketing: How do you gauge return? Enhanced reputation is only awesome if it puts more bread on the table.

Dave: Hey, I've got a small business myself, so I'm the first person to agree with you that putting more bread on the table has to be the primary concern. (By the way, our company, ranked #118 on the 2011 Inc. 500 and has grown roughly 5000% in the past five years without any sales force, thanks to leads driven from social media.)

But forget us. Here are three small business social media success case studies, and another six, and another nine for good measure.

You gauge return by increased leads, online and offline traffic, share of online voice, and ultimately, sales. Social media marketing done right, everyday, is helping small businesses enhance their reputation, increase customer loyalty and frequency, and yes, put more bread on the table.

Jeff: Clearly it works for some. But I was at a speaking gig with about 400 small business owners and asked anyone who felt they were getting a reasonable return on their social media investment (time, money, resources, etc.) to raise their hand.

About 90% of them sat on their hands. Based on your examples and my totally unscientific survey, the vast majority of business owners engaged in social media marketing must be getting it wrong.

It Works--You're Just Doing It Wrong

Dave: About that I can totally agree with you. Many small businesses (just like many big businesses!) are still utterly failing at social media, either not spending enough time to bring about meaningful results or spending time doing the wrong things--like trying to sell before they listen.

If small businesses thought about social media as a cocktail party--listening, telling great stories, asking questions and being interested--rather than as a sales and marketing channel, then ironically, they could turn social media into an efficient marketing channel.

Jeff: I like the words "efficient marketing channel." But how do you determine success? If I run a direct traditional advertising campaign I can (roughly) gauge the response to that campaign. If a staffer makes cold calls all day I can easily do a cost-benefit analysis.

But how do I figure out whether my efforts to build a community of sorts are supporting my need to generate revenue or just creating a community of non-spending friends?

Dave: Part of the problem is that you're still thinking of social media marketing and community building as a quick campaign, like three weeks of traditional advertising or a day of cold calling. Too many small businesses that try social media marketing either don't do it right or don't do it long enough, or both, and then give up, thinking it doesn't work.

You can absolutely use social media to drive and track new leads and sales, increased frequency of purchase from current customers, both very hard business metrics, but don't expect this to happen overnight, or over three weeks. Expect to see (and by all means track!) results within six to nine months. Yes, it's risky for a small business to put in that much time and/or money without a guarantee of a return. But that's how social media marketing works.

Jeff: Let's get down to virtual brass tacks. Say I own a bike shop. Give me three concrete things I can do to start building a community that may also generate a return.

Dave: Great example! Here are three concrete things:

1) Start, always, with your current customers. Put up signs in your store offering 10% off to those who like you on Facebook. Your customers' friends will notice and help generate more qualified fans.

2) Buy $100 in Facebook ads targeted to people in your town. Use Facebook's targeting system to reach people who like "biking" or "bikes" or "riding bikes." Drive them to like your page and not to your website.

3) Share great content with your fans: Pictures of people in bikes, a video of a cute kid learning how to ride a bike, a stat about how much healthier bikers are than non-bikers. Better yet, ask your customers and fans to share their best biking photos.

Then watch your leads and sales come in over time, all from just $100 and some of your time invested. Yes, it's that easy--but only if it's done right.

IMAGE: flickr/ Thomas Hawk
Last updated: Jul 3, 2012

JEFF HADEN | Columnist

Jeff Haden learned much of what he knows about business and technology as he worked his way up in the manufacturing industry. Everything else he picks up from ghostwriting books for some of the smartest leaders he knows in business.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.



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