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Does social media generate new business? Are the customers buying more because of activity in the channel? Or should we even be asking performance related questions of our social media efforts? Whatever the answers – “social” remains a buzzing topic among marketers.

The case for social media as an engagement tool and customer retention strategy is undeniable; however, many companies question whether or not social media drives new customers to buy. Should marketers invest in the channel, and if so, what amount of budget is the right amount of budget?

This post is part of Impact Radius’ 2012 Marketing Challenges Series. To read previous challenges, click here.

Social media ROI—a lot has changed in a year
In 2010, popular social media guru Scott Stratten delighted audiences with his popular stance that “every time you ask for the ROI of social media, a kitten dies somewhere”.

According to Stratten, social media was about branding, creativity, and being human—an antidote to the hard-sell direct response metrics of search advertising, web analytics, and SEO. Stratten’s argument didn’t get the same “nine-lives” as his kittens.


By 2011, social media thought leaders like Jay Baer championed measurement, ROI, and solid strategy.  Quickly, we were swarmed with dozens of new social media measurement tools, playbooks, and even a social media scientist.

Social media, however, still doesn’t have a clear identity in the marketing mix, nor is it recognized for great ROI. Awareness remains the default metric. Not surprising. Awareness is the easiest to measure. (1000 retweets = lots of awareness = mission accomplished!)

The challenge for 2012 isn’t how to better measure the social reach of your campaigns. It’s establishing the direct correlation between social media and your business goals. This, of course, requires a clear understanding of the role social media plays in moving a customer from awareness to conversion.  And what are the costs vs. the benefits of promoting the brand within the social landscape?

Facebook might not be what you thought
Research by DDB Worldwide and Opinionway Research found that 84% of a typical brand’s Facebook fans are existing customers. In other words, Facebook appears to be a better tool for customer relationship management than a customer-acquisition.

It’s interesting to see social media mature into customer relationship management. The challenge is knowing whether or not this also means it doesn’t fit into the sales cycle.

Are we making the same mistake of not understanding the reason to engage with customers on LinkedIn or Twitter? What role should Google + play? What is the exact contribution of social media to the bottom line—and can it be optimized?

And what are our expectations for social? Do we expect it to bring new customers? Or—are we using it to build loyalty and retention?

Socialize today—sell tomorrow?
In social media, you build relationships.  You don’t aggressively promote your products. Conversations first, the social media experts tell us. You’ll have opportunities to sell later.

While everybody is still talking (and not yet selling), it’s unclear whether social media is a good place to push a “call-to-action.” If we look at the “social media” ecosystem — are some categories (e.g. Games or Location) better suited for call-to-action messaging? Do we have the baseline data to start measuring and testing?  How do certain communities and social websites compare to search and email?  Again, lots of questions but no definitive answers.

Social media does bring new customers
Despite this issue, companies report social media does lead to new customers. According to a survey by office services firm Regus, 43% of businesses successfully used social networks for customer acquisition in 2011. Similarly, HubSpot found that 41% of companies marketing on either Twitter or LinkedIn acquired a customer from the lead generation source. 43% of companies using Facebook acquired a customer and 46% of those using company blogs have acquired a customer from a blog-generated lead.

According to the same HubSpot study: social media especially helps B2C compnies. 51% percent of B2C companies acquired a customer from Twitter, compared to 38% of B2B companies. Facebook is even better for B2C (68% acquired a customer) and slightly worse for B2B with only 33% acquiring a new customer.


But is it the right tactic?
Social can bring customers, but the question is: should it be the default acquisition tactic? Or do other channels such as email, search, and SEO have a higher ROI? Building 10,000 Twitter followers and a highly visited blog isn’t cheap—especially if it is only bringing you 10-15% of new business.

Social media has power, but we may not be doing enough to understand it and optimize the channel. Is social comparably performing to the proven customer acquisition channels? If an inexpensive banner ad campaign brings us more new fans than six months of blogging, then we should re-think a strategy that has us rushing to social media.

A recent eMarketer report, for example, showed that 73% of small businesses used social marketing in April 2011; however, only 54% found that these efforts were effective. Is a similar rush to tactics without a solid strategy happening at larger companies, too?

The same goes for location-based apps. They might be fun. They might seem like a must-have (and certainly there’s an agency out there that will tell you so…) But until you track the exact ROI of location-based features, as well as the effect of product reviews and special offers (on sites such as Yelp and Foursquare) then it’s difficult to determine how these channels impact revenue.

Plus, as mentioned in an earlier post, it might surprise you to know that only 4% of the adult Internet-using population has used any kind of location-based app or service, and a pitiful 1% of all adults regularly check-in to a location. Lots of hype for a statistically minor marketing channel.

What do you think? Have we done enough to understand the role social plays in the buying cycle? Is it a high-performing customer acquisition channel?

Social Media and Customer Acquisition Solutions Coming Soon
Those are the challenges we at Impact Radius are monitoring across the social media space. Subscribe to our RSS feed and stay tuned for our solutions report designed to help you better understand social media ROI and other digital marketing challenges predicted for 2012.

Impact Radius can help you track your social media customer acquisitions using our robust multi-channel attribution solutions. If you just want some free advice, message us on Twitter or drop us a note at

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