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Social Media - What's the Point? PDF  | Print |  E-mail

ROII think it is fair to say, at this point of its short history, that social media is misunderstood. Opinions survive on either side of the spectrum. The crevasse exists between the early and the late adopters; just like it does with any breakthrough in technology. A computer story is illustrated within that is parallel to changes brought by the introduction of the airplane, automobile, and even telephone before that.

The difference of opinion is based on many fears: the longevity and persistence in the market, the usefulness and, not least of all, is the return on investment (ROI) of both time and money.



I am an early adopter and novice at this emerging technology of social media and by all indications it will endure. Maybe not in its present form, certainly the plane, car and phone have changed frequently since their inception.

Let the numbers speak. As of July 10, 2010, the following social media changes occur every 59 seconds:

From Social Media is a like nuclear explosion these days. High speed Internet reach increases everyday and more people use internet. Facebook users increase every day, Twitter registers 18 million new users every year, and Google wave is on the horizon. Everyday bloggers publish about 900,000 blog posts on thousands of blogs around the web, or 700 million photos are uploaded on servers by 75 million users of Flickr. Based on a research carried out by Gary, a social media counter was designed to get a measure of this enormous growth.

Have you ever seen such explosive growth?

I suspect with development and acceptance, the growth of this market is accelerating. In the future, changes viewed in 60 second increments may reveal even higher numbers. Someone is making money at this. Why not you?

A recent study looks at the depth of involvement in social media of the top 100 global brands. The highest ranking company was Starbucks with Dell ranked #2. They believe it will last.

Social media will continue to grow. It is producing new advocates, users and neophytes daily. You are next.


What do I do with social media? How useful is it? If I knew how to use it, I might be able to figure out how to make money at it. Social media is a method to communicate with people. You could say the same for oratory or the telephone. The specific tools like Facebook, Twitter, et al, may fade like dot-coms a decade ago, but the digital technique to communicate with a network of people simultaneously will not go away. Similarly, the Internet did not go away after the dot bomb era.

Social media may continue to maintain the stigma of being playtime. Social does not sound like business. It sounds like “party”. It sounds like fun and NOT work. Granted, the early, early adopters were compelled to broadcast their breakfast menu or other mundane minutiae. The serious ones have moved on. I assure you. They understand the impact of their broad network for friends and followers. They have figured out how to tap their digital pen pals and how to make money at it. Will you?

So, what is it good for?

Social media is an alternative to mass media. If you love junk (e- or snail) mail, pop-up ads on your PC and television commercials, stop reading. This will make no sense to you. Bear in mind, most consumers do not like nor trust mass media.

I have heard it said that social media is a listening device. Consumers are broadcasting, through social media, their likes and dislikes as well as their questions and opinions. Who is listening? Do you hear what your customers are saying? Starbucks and Dell find it useful.

From the article “A penny for your thoughts: When customers don't complain”, published September 27, 2006 in Knowledge@W.P. Carey:

When it comes to consumer contentment, managers and executives should not mistake silence for satisfaction. 

In fact, just the opposite is true: Most unhappy customers never say a word; they just take their business elsewhere.

On average, dissatisfied customers tell 11 other people their bad story and they may not tell you. Two out of ten customers will voice their story in the form of a complaint. Visualize an iceberg. The complaints you hear are just the tip.

On the other hand, the average satisfied customer will tell 3 to 4 other people about their good (to great) experience. And once again, they may not tell you.

So who is listening to your satisfied and dissatisfied customers, if it’s not you? You guessed it, their broad network of friends and followers (F&F) and then their F&F and so on and so on. And the opinion of strangers in their F&F network weighs much more heavily than the pronouncements of mass media. Any great relationship, commercial or otherwise, requires listening first, selling second. I think Dale Carnegie said that.

Marketers have long marveled at the power and impact of word of mouth marketing over traditional mass marketing. WOM, the new acronym for “word of mouth” is the power of social media. THAT’S what it is good for!

Social media can also be compared to a digital billboard or road sign. It can be used to engage your next client and direct them to you for answers. It’s a gentle conversation starter, NOT a close!

Social media is a means and a tool to build your brand, reputation and increase awareness of who you are, what you do, what you stand for, and what you care about; your CORE values.


You may have a marketing budget and know exactly how many people you reach. You can determine the ROI on your current marketing budget. However, you still cannot tell what WOM benefit is gained from that budget. Nor are you aware of the damage to your brand caused by your dissatisfied customers. Remember the iceberg?

If you heard your customers’ complaints, wouldn’t you endeavor to remedy the situation? Of course you would, because you know it costs more to get a new customer than to keep an old one.  How much does all this cost? Have you looked at your statistics? From "Leading on the Edge of Chaos", Emmett C. Murphy and Mark A. Murphy:

  1. Acquiring new customers can cost five times more than satisfying and retaining current customers.
  2. A 2% increase in customer retention has the same effect on profits as cutting costs by 10%.
  3. The average company loses 10% of its customers each year.
  4. A 5% reduction in customer defection rate can increase profits by 25-125%, depending on the industry.
  5. The customer profitability rate tends to increase over the life of a retained customer.

ROI on social media may not even be a fair question. You cannot measure your WOM marketing now.


Social media is not going away, so do something. You don’t have to do it all. But you must start somewhere or you risk being left behind as your customers become more dependent on social media. Learn to use and master one of the many tools.

You cannot out-spend your competition, or out-think them, or out-hire them. Your only advantage is to learn and implement faster than your competition. The famous management consultant Peter Drucker said, “You don’t have to change – survival is optional.”

More Drucker-isms:

"Wherever you see a successful business, someone once made a courageous decision."

The complete text can be found at

Comments (8)
  • Phyllis Pieri  - I agree
    Great points. I am also an early adopter and I think that Social Media is a great opportunity for people to connect. I have seen many people use it very effectively by just asking a question and then getting feedback from their followers.
    Last week I saw a presentation by a futurist and he said that everything in the future is going to be "Up in the Cloud" - as a franchise coach, I am excited to see my franchise partners are doing a great job of adopting social media and also asking lots of questions around it! Oh the branding issue - but that is OK.
  • Pete  - Thank You For Your Comment.
    In the future, social media will be more pervasive that phone calls and email. It may already be so.

    Thank you for your thoughtful comments.


  • Jerry Hempstead  - We all need a hug
    The diferentiator in the future will not be social media. It will be caring, open, attentive personal contact and dialogue.
    The internet is seperating us, not bringing us together.
    the future belongs to the people who get out of ther homes and cubicles and press the flesh.
  • Pete  - Here is a virtual hug from me, buddy.
    As the consummate salesman that you are, you realize that people do business with others they know, like and trust. When it can happen in person, it certainly enhances the relationship. Yet, a lot of business is conducted by faceless bytes. Social media or marketing through that means is not the only tool in the businessman's toolbox. It's only the latest and maybe NOT the greatest. Just one of the many tools.

    In many cases, online dating for instance, serves as a digital introduction before the reality.

    I agree with ALL your points, except "the internet is separating us." Look at our friendship, I have not seen you in over 10 years. However, we have corresponded (by email and this post) since, which, in my opinion, is a blessing we have not lost touch.

    YES! Get out of the house and meet REAL people and press the flesh. Absolutely! In the meantime, while I am in Seattle and you are in the other corner of the country, stay in touch by email or phone or carrier pigeon...
  • Susan Straub-Martin  - Your points are spot on Pete.
    With any new technology it takes time. Time for people to process; is this a good thing for me?

    When the iPad was announced there were many people poo-poing it. Some said it would be a useful tool, and the neigh sayers saying it was just another toy. Upon it's release we saw the early adopters using it for fun and business, and with in the first 3 months we were seeing may businesses using it for sales and marketing.

    In a very short 18 months my experience going from knowing nothing about social media, to working with it in a daily basis has grown the word of moth about me and my business. This very inexpensive marketing tool has been a huge plus.

    The social revolution is here to stay. Like anything it will change along it's journey, some parts will drop off and some will sky rocket, but the reality is it is a new way to business.

  • Pete  - Thank you Susan.
    Social media is not a pet rock or chia pet.

    There are many tools. Some work better than others. You just need to find the one that works well for you and your business. And it is ONE tool in your marketing toolbox. If it works well for you it may be the only one you need . . . for now.

    Things change! OMG and thank God!
  • Darylene Dennon  - I love Technology
    I too believe that like websites when they first came into existence, website developers came out of the woodwork even if they hadn't finished high school and the market eventually was flooded with expert opinions on websites.

    I am in the same mindset. I am using technology, using social media and finding my place in it all. This is true for my business. The world really hasn't changed, we are all social creatures and now we have the technology to be social. For those who are not social, then read only. (but this too is being social). Thanks for sharing.
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