Dell Outlet sales through Twitter are a bigger deal than I thought

A few weeks back I wrote a blog post questioning the significance of $3 million in Dell Outlet sales attributed to Twitter (Twitter has made money for Dell Outlet — is it just a big yawn?).  After all, $3 million is just a drop in the bucket of Dell’s total turnover.

On a recent episode of the podcast For Immediate Release, Neville Hobson interviewed Richard Binhammer, who manages Dell’s social media efforts.  Richard mentioned two things that place Dell Outlet’s use of Twitter in context and strengthen the case for Twitter as a marketing tool in this specific instance.

First, Dell Outlet is a small division and doesn’t have much of a marketing budget.  The cost of marketing via Twitter costs virtually nothing.  (Pun intended!)

Second, Dell Outlet has a business model that makes Twitter the perfect communications tool.  It sells discounted computer products and systems that have been used and refurbished, or were left over from canceled orders, or are the equivalents of “seconds,” that is, hardware that has some kind of cosmetic fault that doesn’t affect its performance.

Apparently the business model doesn’t allow for holding on to inventory.  When stuff  gets returned, even if it’s as few as 5 laptops, Dell Outlet has to move product fast.  They can’t afford to have excess inventory clogging up the system.  “I can’t think of any other venue in which we can do that,” Richard says.  Even relatively short newspaper lead times take too much time.  (Oh yes, and newspaper advertising costs money.)

This case raises an important point.  Everyone keeps asking the question, can Twitter and other social media communities be used effectively for business.  The answer is, “It depends.”  It depends on the business model.  It depends on the product.  It depends on the community, why that community has come together, what each individual hopes to get from being there.

Dell Outlet on Twitter is just one of many ways Dell uses, and continues to pioneer, social media for business.  For other Dell activities on Twitter and links to other Dell social media endeavors, go to this page.

The latest station in Charlene Li’s crusade to prove the business value of social media

Sometimes I get the feeling that Charlene Li is on a crusade — a crusade to prove with hard data that social media can have real value for business.  First there was Groundswell, co-authored with Josh Bernoff, which highlighted an array of companies leveraging social media successfully to achieve business objectives.  Now there’s a new study from Charlene’s company, Altimeter Group, and Wetpaint, that shows a correlation between social media engagement and financial performance.

The ENGAGEMENTdb Report looks at the top 100 performing global brands according to the BusinessWeek/Interbrand “Best Global Brands 2008” ranking and measures and ranks their engagement in a range of social media channels for both depth and breadth.  The analysis shows a clear correlation between social media engagement and financial performance.

While correlation is not the same thing as cause and effect, the data is impressive.  And as Mark Pack points out in a blog post, if one assumes that the world’s top performing companies are run by the world’s most capable managers, it’s noteworthy that these business leaders appear to endorse a deep and committed engagement in social media.

The report concludes with a useful assessment of the best practices of four of the most socially engaged brands — Starbucks, Toyota, SAP and Dell.  It’s interesting that the way companies engage in the space can vary greatly.  For example, while Starbucks only permits a small group of designated employees to speak for the company in social channels, SAP has 1500 employee bloggers.

There are a few details missing from the report that I would like to have seen.  Each company was rated on 40 engagement attributes, but the report doesn’t provide the specific attributes.  What’s more, while it lists the specific social media channels analyzed, there is no analysis of which, or in what depth, each company engaged with the individual channels.  This might have helped to better understand while Apple, a company that doesn’t receive particularly high marks from me for online social engagement, made it to the top third of the ranking.

So, what will be the next station in Charlene Li’s crusade to prove the business value of social media?  I wouldn’t be surprised if she’s already working on the next quantitative study, the one that show not only a correlation, but an actual cause-and-effect relationship between social media engagement and business results.

Some crusades are good.

Twitter has made money for Dell Outlet — is it just a big yawn?

I was interested to hear that Dell has attributed $3 million in sales to its Twitter feed @DellOutlet.  Dell Outlet sells discounted computer products and systems that have been used and refurbished, or were left over from canceled orders, or are the equivalents of “seconds,” that is, hardware that has some kind of cosmetic fault that doesn’t affect its performance.

I just looked at Tweetcounter, which currently places @DellOutlet at rank 75 for Twitter users.  @DellOutlet has 779 thousand followers.

Three million is a sliver of overall Dell sales, but the assertion by Dell that Twitter has actually helped the company make any money at all has been celebrated by some in the blogosphere as validation of the business viability of Twitter. But some critical voices have been raised as well.  They say that the use of Twitter as a sales promotion channel will adversely increase traffic, spam and “fail whales” on the site.  They ask why Dell, and other companies using Twitter to generate leads, announce promotions, etc., don’t limit this kind of stuff to their own online turf.  In other words, “Don’t do your dirty work here, guys!”

A few obvious answers come time mind.  If there’s an online channel that a seller can use free of charge to contact potential customers, why wouldn’t he use it?  Then, of course, there’s the fact that Twitter is so immediately searchable and socially spreadable.  Anyone interested in a 2nd-hand computer system can find a whole range of potential sellers in one place, and can follow all of them easily, and in real time, using Tweet-deck or other applications that allow the user to group and aggregate tweets.  Many Twitter users who hear of a good deal will happily post their finds on their own Twitter feeds spreading the word beyond the seller’s direct followers.

It does beg one question though.  If Twitter starts charging companies to use the service commercially, will those companies still come?  Apparently Twitter and Dell are talking about compensation models.  It will be interesting to see where they end up.