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