More on business use of Twitter
Dell has often been cited as the poster child for documented sales increases as a result of using Twitter. The figures generally are that over a two year period, Dell achieved two million in sales via Dell Outlet, plus another million they believe attributable to twitter – Total three million.
Sounds like a lot, but let’s put that in perspective. In 2007 Dell had sales of 61,000,000,000 (that’s BILLIONS). As a small business owner, even if you already had a strong brand like Dell had, and even if you spent 2 years before seeing any financial impact (which Dell did), what would it look like?
Well, if my figuring is correct Dell increased (all other things being equal, see below) sales by: 2.4590163934426229508196721311475e-5% which in case you are wondering is a very very small number.
What’s that work out to in real dollars? Let’s say you have a business with sales of 1 million dollars. If you get exactly the same amount of increases sales as Dell did, as a result of Twitter, you would make almost exactly $24 extra. Yes, that’s twenty four dollars.
If your business is more modest, making 100,000 in sales you’d gain about $2.45 as a result of what would be months, or even a year of Twitter work.
Now, there’s a couple of kickers. Dell doesn’t actually know whether the sales attributed to Twitter wouldn’t have occurred anyway, so the numbers are actually worse.
Sounds like a good ROI?
PS. I know this sounds ludicrous. How can this be? Well, YOU crunch these numbers, because maybe I’ve done something wrong. It’s simple. 61 billion in sales per year. Amount related to twitter at best, 3 million over TWO years / 1.5 million per year.
Now, ask yourself: If these numbers are correct, and Dell is one of the successes, and the success isn’t a success at all, why are so many people making outlandish claims? How badly will you fair given that Dell has a HUGE brand name?
#1 by Rick Presley on July 28, 2009 - 8:58 am
Robert,
You err on the side of scale.
How about if I put it this way:
If Robert Bacall invests 20 minutes a day on Twitter he will increase his revenue by $24 that year.
If Dell spends 1,440 minutes a day (24 hour * 60 minutes)and earns $2,739.73 that day ($1MM/365 days) with an overhead of $10/hr. employee salary for a total of $240 plus another $100 or so in incidentals, so let’s say (just to make the math easy, $339.73 a day in expenses)the ROI is $2,400 a day.
Seems like a winning proposition to me, even though that is a drop in the bucket for Dell. And drops add up, no matter what: http://www.despair.com/ir.html thinks.
rick
#2 by Robert Bacal on July 28, 2009 - 9:55 am
Thanks Rick. I’ll paste my trdev-l response below. I hope I’m understanding your point.
On 28 Jul 2009 at 10:05, Rick Presley wrote:
> I posted this to Robert’s site, but thought I would include it here for
> those who didn’t click his URL:
Thanks for doing so. I know this is arcane. I’m not sure I follow your numbers — I find as I get older my faculties get weaker.
>
> Robert,
>
> You err on the side of scale.
>
> How about if I put it this way:
>
> If Robert Bacall invests 20 minutes a day on Twitter he will increase his
> revenue by $24 that year. You will make about $0.07 a day for your effort.
I’m not sure where you get the 20 minutes. If you are saying that the “input cost” (time spent to earn the money) is critical to the equation, you are absolutely right. However, we don’t have that number. Dell talks about how little time it took to maintain the twitter account once it was established, BUT they also talk about it talking over a year of hard work to get it to that point.
>
> If Dell spends 1,440 minutes a day (24 hour * 60 minutes which is the
> biggest figure I could come up with) and earns $2,739.73 that day ($1MM/365
> days) with an overhead of $10/hr. employee salary for a total of $240 plus
> another $100 or so in incidentals, so let’s say (just to make the math easy,
> $339.73) a day in expenses, the ROI is $2,400 a day.
If you have a source for the 1440 minutes, I’d be interested since I can’t find anything on that except what I shared above.
Are you saying the Dell spends 24 hrs in person-hours a day on Twitter? (Incidentals and benefits would need to be multiplied byt he number of actual people working on the project, since obviously one person isn’t working 24 hrs a day on it but it would still be profitable by your numbers.
But anyway, here’s the point. It doesn’t SCALE backwards. yes, Dell clearly (if we believe the numbers) made money. Absent information about the cost to Dell for getting to the point (which they admit tooks over a year), if:
A small business was AS successful as Dell, proportionately, and if they started with sales of 1 million dollars a year, they would increase sales by $24 the next year via twitter.
That’s not taking into account ANY overhead or costs at all. Let’s say the owner did all the work him/herself. The numbers only look good at the large company level. When you take this “success” and scale it down to the small business level, the profit almost completely disappears.
So, I’m going to Twitter for $24 this year (assuming I run a million dollar business)?
Even if I can do it in ONE minute a day, I ain’t doin ANYTHING for $24 a year. I don’t even get out of bed for that.
If I’m Dell, I’d continue on Twitter unless I found something better. If I’m Robert or Rick, small business person, I’m not. WHich is my point.
#3 by Robert Bacal on August 6, 2009 - 9:59 am
Additions: Dell actually has THIRTY FOUR different accounts http://www.dell.com/Twitter with apparently more than 24 employees heading the accounts. http://digitalseachange.blogspot.com/2009/06/dell-sells-litter-via-twitter-but-at.html
Also, although Dell has said it spends virtually nothing in terms of its twitter accounts NOW, it also says (nobody ever mentions this) that it involved HUGE effort and time for the first 1.5 years, to get followers.
Which means that you have to invest to get the attention of people before you gain anything, and it took Dell at least 18 months. What will it take you?