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Social Media Business Model - Lead Generation?

Monday, March 1, 2010

Every once in awhile I have an ‘ahha’ moment. That’s one of the fun aspects of working in an emerging discipline where we are still figuring things out. A few months ago it was the realization that we don’t need to use awareness—in the traditional media sense—as a social media objective. Why spend money on marketing research to measure creation of awareness when we can offer people reasons to act? Is it possible for a person to take action, even a simple click-through, without having some minimal level of awareness? I don’t see how. We can manage the results of behavior to take them a step further, perhaps following the steps of the traditional hierarchy of awareness, but we can use behavior to measure each step, not marketing research. Here’s one related post.

That line of thinking probably led to the ‘ah ha’ I had last week. Almost all social media marketing is the first step in a conversion process. There are several possible scenarios:
• Most marketers are not going to sell things directly on social networks, at least for some time to come. Threadless is one of the few successful businesses doing so. Others like Zappos use social media as an integral part of their online communications but sell from their website. That’s the typical model today.
• Whether you are using social media to drive people to websites or to retail stores, there is clearly a ‘next step’ behavior you want them to take. It is possible that you link to a product page on your website or to a retail coupon, and the ‘next step’ is taken immediately. If so, you have metrics, and you can track the referral back to the social media site. However, research shows this is often not the case; purchases are often not made as a result of a first visit to a website. That requires the marketer to build a complex tracking process to match a later purchase with first exposure. That is part of conversion marketing metrics.
• Social media is often part of a relationship building strategy. Getting people to friend our Facebook page or getting them to register for our enewsletter represent two good examples. There are all sorts of reasons why people may not purchase right away. There are an equal number of good reasons why marketers should be in touch while they move through the purchase cycle.

All except the immediate click-through and purchase represent the need for formal conversion marketing strategies. I don’t have any data, but my guess is that the second and third bullets represent the bulk of social media-initiated contacts with customers. The second scenario requires creating a conversion path through the website. The third requires a conversion strategy that’s based in a set of communications steps. Both are conversion marketing!

That begs a simple definition of conversion. Consider the possibilities. For the social marketer, “conversion” can be a referral from the social network to the website. For the online marketer it can be registering for brand communications. For the brand marketer it is likely to be the purchase. It’s a process, the traditional conversion funnel. Today there are even more marketing actors involved in the process. That’s complex from the perspective of the marketing organization. It has to be seamless from the perspective of the customer.

So does this statement make sense? Most social media marketing is the first step in converting someone from a spectator to a customer.
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