There is a lot of buzz around social media at the moment and lots of businesses are trying to get their heads around how they use it.
My early impressions were that it was going to be a nice addition to the marketing tool kit and that businesses would need to have a presence, but it would have little direct impact on the bottom line.
Looking around the web there is plenty of advice on how to use social media for your business but very little analysis on the revenue impact. Now, your marketing people will tell you that not everythng in marketing can be directly linked to revenue, but I disagree – it can and it should be.
We have used social media tools (Facebook, Twitter, blogs etc) in a business to business (B2B) and in a business to consumer (B2C) coffee retail business. The take up in the B2C has been considerably more than that of the B2B. B2B’s can use social media to give the business a more approachable identity but it’s difficult to directly link this to revenue.
With our retail business it’s much easier to analyse the impact of our social media usage. So we did some analysis over a 2 week period in February 2010 and the results are interesting.
The first graph shows the impact of Tweets, blog posts and Facebook updates on website visits. You can see there is a strong relationship between the use of the various social media tools and the visits to the website. This is to be expected since many of the posts are in direct relation to blog posts and therefore point people to the website. This clearly shows if you want to increase the visits to your website then advertising it via Twitter and Facebook works.
The second graph compares the social media use directly to revenue. It shows there is little correlation between Tweets, Facebook updates and revenue. The tool that has the closest correlation with revenue is Twitter.
The third graph shows website visits compared to revenue. There is some correlation between website visits and revenue, but it is not a close or direct one. It does appear to show that either when revenue dips so do website visits, or that when website visits dip so does revenue. It is not clear from the data which is the lead element; either revenue or website visits. If we assume that the website visits are having an influence on revenue and that the use of social media is driving web site visits then you have a link between your use of Twitter and Facebook and revenue.
A two week sample of data is clearly not big enough to draw accurate conclusions, so a further sample will be taken. We surmise that if we track the number of customers per day vs social media we will have a direct correlation. If this is the case we do have a direct relationship between revenue and social media. Watch this space for our next blog post.