Dell on Twitter, understanding the revenue

Understanding DELL success on Twitter aka: what does it takes to make $1million in revenue

When Dell announced their revenues generated by Twitter, social media experts found an extra point for their sales-pitch, and companies a point to be interested on social media. $1ML $3ML dec 2008 jul 2009

Altought $1.000.000 is $1.000.000 (i.e. great!), this goal from Dell cannot be replicated by just tweeting on. There are potential traps for everyone that take @DellOutlet as the reason to be in. I strongly doubt that generating sales from Twitter is just a matter of tweets and followers. As every business requires, there are other numbers to look at first.

The numbers that are underneath 18 months To “hit” the 1million goal or, if you that: prefer, 1 year and a half 1 2200 orders At an average price tag of $450 million 18% profit margin Gross profit margin (Source, MSN money), $180K of profit. and that everyone seem to 1 (at least) full time person And (s)he does not look to me like underestimate a guy in a working experience

18% proﬁt margin - why this is important I am going to bust your bubble. It’s very unlikely that you will have $1million in your pocket by tweeting around. The profit is still good, and it is still ok if we count some soft and hard cost. If your profit margin is very low (like: affiliate programs) you will need an awful lot of orders to have some decent revenue. $180K Far from 1 million, but still in 18 months great! is an estimation of Dell Outlet revenue from Twitter. Even by detracting $50K (a rough estimation) for tools and workforce, they have a ROI. Because Twitter does not charge you for using it, it does not mean that there are not other costs.

2200 orders - why this is important On average, Dell Outlet products are around $450 (more or less). Dividing the revenue by this, I know how many orders Dell Outlet had. How many orders do you need? If you sell high margin goods you just need few orders (see slide before) and the other way around. So, set yourself a realistic goal and keep track of the records on a timeline. This will help you build a projection of sales to see if you will hit your goal, by how much and when you will hit it.

18 months - why this is important Think carefully: you nearly thing to build all from scratch. You cannot throw some cash to an affiliate program by every lead/sale made. And it takes time to build everything. Dell hit $1ml in 18 months. Before crying at ROI after the first month of work, you should allow yourself: 12 months (with quartely review) You could hit break even in 12 months, maybe less if you are doing a very good job. But for every social and emerging media campaign, results will came after some time.

18 months - this is actually very important On social media there is no vendor that can tell you “300 estimated clicks with an estimated conversion rate of 4%”. By allowing yourself 1 year (few weeks of attemps are, actually, useless) you can build historical data that can help you: - track your sales - track your work, costs and efforts - understand the growth (or fall) - understand when you will have a return on your investment.

this is the ﬁrst release For any questions or comments you can reach me at: [m] denis@frozenfrogs.it If you would like to connect: http://twitter.com/denisr http://linkedin.com/in/denisr

Dell on Twitter, understanding the revenue

by Denis on Aug 05, 2009

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