Do you remember when you finally realized that Facebook (and social media in general) was more than just a flash in the plan? Was it when you starting receiving daily friend requests from people you hadn’t heard from in years? Or, when you literally couldn’t avoid reading about Facebook in seemingly every news outlet on the planet? Perhaps it was more recently, when the reports started circulating that Facebook was valued at a cool $50 billion on the private equity market?
The Facebook story is now well etched in our culture and common consciousness. Today, with more than 600 million active users, and an estimated $2 billion in annual revenues (mostly through advertising), Facebook is a ubiquitous fact of everyday life for moms keeping in touch with neighborhood friends and business people looking to network.
I want to make it very clear that I am not obsessed with Facebook, or any other hot social networking property. Even though I have spent the majority of my career in software and technology, I still maintain a healthy reserve of skepticism about Facebook and the explosive growth of social media’s other celebrity brands. (Don’t even get me started on LinkedIn’s huge recent IPO, hurtling the company to a $9 billion-plus market valuation!)
At the same time, I would argue that one cannot over-estimate the huge impact that social media have had – and will continue to have – on business. In particular, the social media movement has quite literally catalyzed a sea change in the buying/selling process, what we call the Revenue Cycle.
How Social Media Impacts the Revenue Cycle
The following are the key elements of how and why social media are driving such far-reaching changes in the revenue driving business of sales and marketing:
- Control Shifts to Buyers – These days we talk a lot about who actually is in control of the buying/selling process. As I have commented previously, there is no question that social media have fundamentally shifted the balance of power in the direction of the buyer. Buyers now have access to a growing universe of expert bloggers, colleagues, friends, and thought leaders, all of whom offer reviews, opinions, and valuable input on the products and services they are considering. Information is power, and with so much information just a search away, the buyer now has the ability to engage the sales process on his/her own terms and timelines.
- Transparency and Openness – As the seller was forced to put increasingly more information out on the web, the old corporate “Black Box” was dismantled in favor of greater sunlight shining on the sales process. Social media have further increased this level of transparency and openness by creating channels and networks for buyers to engage with trusted sources and gain real-world feedback. It’s hard for a company to hide anything when the good, the bad, and the ugly are shared ad infinitum on all manner of social networking sites. Greater transparency has helped to level the playing field between buyer and seller. Equally important, it creates greater business competition, leading to better products and more value for all concerned. Transparency is one of the most beneficial and enduring byproducts of social media.
- One-to-One vs. Mass Marketing – The days of “push-oriented” mass marketing are waning fast, if not already over. Again, we’ve got digital technologies like the Internet and now social media to thank for this major marketing shift. Digital communications have enabled sellers to target their communications at exactly the right prospects, which has greatly increased efficiency and results. Social media have further intensified this trend by creating the opportunity for true engagement between the seller and buyer. Indeed, social media demands it. Companies can now initiate, as well as participate in, one-to-one conversations on social networks and through blogs. Through advanced analysis of where prospects are in the buying cycle, companies can deliver compelling, targeted content to exactly the right person, at the right time. This has led to a much greater focus on “pulling” target prospects and stakeholders into your message and value proposition, rather than pushing stuff out to them. The new world of marketing is about “telling” not just “selling.”
- Trust Reigns Supreme – Probably the biggest change engendered by social media is the increased importance of trust in the sales and marketing process. This is largely a function of the greater transparency that I discussed earlier. With more sunshine illuminating the process, the parties tend to operate in a more open and truthful way, thus enhancing the level of trust in the buying/selling transaction. More trust also emerges from the process of the buyer seeking out trusted sources through social networks, blogs, and other social sharing sites to obtain product reviews and referrals. The social web has made it increasingly difficult – if not impossible – for companies easily to hide their warts, or paper over problems. Reputations are today built (and lost) based on how well companies handle this vital trust element. Social media can impart hugely valuable trust, but it can also take it away.
The business impact of social media goes way beyond the scope of your Facebook and Twitter marketing/communications strategies, as undeniably important as they are (this is a subject for a future post). Due to the growing impact of social media, and digital technologies overall, the practice of sales and marketing will never be the same.
Social media have enabled a more open, transparent, and targeted approach to the revenue process. The question now is: Have you adjusted your sales and marketing strategies to reflect this sea change?