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B2B Companies Using Social Media Make More Money
April 29, 2013 |Estimated reading time: 3 minutes
This week, I take a look at research results and trends that show the positive impact social media use is having for many companies. If your company doesn’t use social media, don’t read this week--you’ll just get depressed.
Let's start with a company called Etratech, an electronics contract manufacturer outside Toronto, Canada. Given a set of aggressive sales targets, the company had to move fast and tackle selling problems with entirely new ways of thinking. This led the company to adopt social media as a significant part of their marketing strategy [1].
We’ll come back to Etratech in a moment, but the company's rationale for using social media is instructive: The old way of thinking wasn’t cutting it. A classic definition of insanity is doing the same thing over and over, but expecting different results. Hmm...a lot of companies I know meet this definition.
The Aberdeen Group, a research and analysis company, found the two most important traits in defining best in class companies using social media were that they identified with these two statements:
- Customers and prospects are communicating using social networks; we need to be there too.
- We need to address the diminishing effectiveness of traditional marketing activities.
A famous Altimeter/WetPaint study (great names for companies, by the way) found companies that engage widely in social media made more sales and profits than those companies that didn’t:
- Aggressive social media adopters saw revenues increase by 18% over the previous 12 months.
- Non-adopters saw revenues decline by 6% in the same period.
If these companies were doctors, the early adopters would be those who saw an MRI machine and said, “How can we use this to diagnose more quickly and accurately and cure our patients?” The laggards would still be using leeches and bloodletting.
These results were backed up by another study from the Aberdeen Group a little less than a year ago (June 2012). They found:
- Companies using a social media-based selling approach had a 64% likelihood of meeting sales targets.
- Companies that didn’t use social media had a 49% likelihood.
The study also found companies using social media had better customer retention rates, more accurate sales forecasts, and a higher percentage of sales reps meeting sales quotas: Sales reps that deployed social selling saw a 16.3% average year-over-year increase in total company revenue ,compared to a 4.1% increase for the industry average, and an 8.7% decrease among laggards.
Let's return to Etratech. Etratech Inc. began using LinkedIn, Twitter, Facebook, Google+, and YouTube to more effectively promote their business. Etratech says its manufacturing facility is one of its most valuable selling points, yet many prospects don’t see it until well into the sales cycle. This is very common in B2B selling cycles. Using YouTube videos to deliver virtual tours of the manufacturing facility helped speed up sales cycles. Etratech says sales cycles that took six to eight months are being compressed to as little as six to eight weeks.
Great companies figure out how to use new technology and new ideas to their advantage. They experiment and adapt. Have a look around your industry: You should be able to see pretty quickly which companies are the leaders and which are the laggards. Although these are B2C examples, the same thought process applies:
In 2002 Blockbuster Video’s sales were 5.5 billion dollars. They did not see the potential in using the Internet and refused to build a subscription based or download store, and passed on the opportunity to buy NetFlix.
Blockbuster is now gone.
In 2002, there were over 1,200 Borders book stores. The company ignored online books.
Borders is now gone.
In 2002, there were 200 Towers Record stores. The company ignored digital music.
Towers is now gone.
These companies all went from wildly successful industry leaders to out of business in 10 years or less. It’s now 2013 and many companies, despite strong evidence, are still ignoring social media.
Will they still be around in 10 years?Reference:1. Louis Columbus, "B2B marketers need to get real about social media and customer engagement,” Forbes online blog, January, 2013.Bruce Johnston is a sales consultant specializing in social media. He has over 25 years' experience in high-tech sales and management, most recently as general manager of a PCB manufacturer. He can be reached through his website www.practicalsmm.com or through his profile on LinkedIn.