“Does Joining a Social Network Bring You New Business?”

That’s the question a friend posted on a Facebook discussion board. Because I just recently got involved in “social networking” and I’m evaluating if it could become an effective – and profitable - long term marketing strategy, I think my insights might be helpful to anyone spending hours of their time on any of the social networking sites springing up all over the place…

So here is what I learned from my first week on Facebook.

Utill about a week ago I’ve been a FaceBook retard. As a matter of fact, for the past couple of years I’ve been openly criticizing social networking as a viable way to grow a business.

But a few weeks ago, at one of my seminars I stated to a group of my students that “social marketing sucks and is a waste of time”. Two people in that group – Denise Wakeman and Patsi Krakoff of http://www.blogsquad.biz/ – “strongly disagreed” with me. And they are largely a reason I’m now on Facebook and even writing this post on Sunday morning

I’m learning as fast as I can - and everything that I can - about this media. And the big question is can an average Joe Entrepreneur get a good payoff on time and money invested into social networking.

Frankly, for me personally, the jury is still out. Let me explain…

Lot’s of social networking gurus make great points:

• Don’t stop at announcing your presence on FB to your list,
• Don’t sell but be a resource,
• Build relationship first,
• Give it plenty of time…  

All of these are pure gold! And not just in terms of online networking, but in regards to many marketing strategies in general.

However, what’s missing from most of these gurus “good advice” is the answer this big question:

“How do all the social networking activities fit into your overall business growth strategy, and can you get a decent return on your investment of time?”

Let me share with you my personal criteria for answering these questions. And then you be the judge if social networking is for you…

Personally - as an entrepreneur, and with my clients – as a business development consultant, I look at many criteria before deciding a strategy is viable and should be engaged in.

Here are just three criteria against which I’m scoring my “Social Networking on FaceBook Test”:

1. Target Market Reach - ability to find and easily connect with a specific group of potential customers
2. Leverage – potential to transform an investment of time, money, and effort into a significant payoff
3. Scalability – possibility to measure, systemize, and automate the strategy and use it to rapidly expend my business

So let me share with you what I’m thinking so far (and I welcome your comments on this)

1. TARGET MARKET REACH.

Still not sure. I probably don’t know enough about FB (and I definitely don’t know enough about many other social networking sites out there) to make a conclusive statement.

What I observed so far (in only a few days) is that FB will work great for some but largely be a waste of time for others. While you can quickly make lots of friends, most of them are probably NOT very interested in what you might have to offer in terms of products and services for sale.

I noticed those who have something of interest to general population (i.e. grow you business using FB, make money using FB, make money online, start a business, etc.) do well.

So it appears that the strategy of social networking is great if you are a B2C type of business with a product that has a mass appeal. You might also do well if you want to find an audience of professionals and very small businesses who want to make more money but aren’t sure how to do this.  

But I don’t think this strategy is so hot when it comes to growing a B2B biz which targets larger companies as its customers. Again, this is just my initial observation.

For the most part, I think most people who connect with each other on FB are not what I would consider a super well targeted audience – at least not in the “direct marketing” sense. 

I also haven’t tested forming any “special interest group” yet, which might help in better targeting who connects with you on Facebook. But I have already received plenty of invitations to join other groups and I learned something from it. It’s this: Most of these invitations are just another version of spam!

So again, if you want to do this right, this is NOT a strategy that will build your list of prospects overnight!

2. LEVERAGE.

Overall this criteria scores low except for one of its components – BUILDING A HIGH-LEVEL NETWORK AND RELATIONSHIPS.

While it might be somewhat hard to measure the payoff from great relationships, I personally learned NOT to ignore it.

And in just a few days on Facebook I managed to connect or re-connect with a couple of dozen of people that I’ve been trying to get a hold of for a while now. More important, these relationships seem to quickly progress to a “higher” level. This actually surprised me (in a positive way).

In addition, over 200 more folks who have heard of me somewhere before connected with me and we became “friends”.

I have to admit, noticing this amazing ability to quickly connect and build relationships with others is probably what made me give social networking a try in the first place. It’s definitely what makes me stick around (for now ;-))

But in terms of payoff on my time I have to say so far I think FB will score rather low. And I would argue this to be true for most people here – with the exception for those who are selling something appealing to general audience like I listed earlier.

Because if it would probably take you hours and hours of participating in FB activities to generate one client at a time – that’s just not good business! And because this activity can’t be systemized and duplicated, the payoff on your effort is just too low…

For example, let’s say a business coach is building their FB presence and networks here to grow their biz. It seems like it’s a low-cost - or even free - way to promote their services. But it’s really not true. Just because it doesn’t cost money it doesn’t mean it’s free!

If it takes 10 hours to get one TRUE lead and only one in three leads becomes a client – that’s an investment of 30 hours. Assuming that most professionals should be putting at least a $100/hr value on their time, that’s a cost of $3,000 to get one client.

Personally, I can think of a lot of other ways where I can pay a lot less and acquire a new client – with a lot less effort and much faster.

Of course, the numbers I just quoted are made up – but I think anyone can easily see where I’m going with it.

One exception to this that makes me stick around is - again - the RELATIONSHIPS.

For example, sticking with the same number I quoted above, if I invest 30 hours of my time to “working the FB” and I make one REAL connection with a super-powerful strategic partner, and we end up working together and creating a cross-promotion for each other which results in just 25 new clients - each valued at $1,000 to $10,000 in the first 12 months – that would qualify as a good investment of my time.

OK, enough about leverage. Let’s move to criteria #3.

3. SCALABILITY.

This is where I think social networking really sucks. You see, because personally I’m interested in growing my business in ways that can be quickly duplicated and expended, and do not require my personal effort on ongoing basis – social networking can’t do this (at least I can’s how yet.)

Just in case the concept of scalability isn’t clear, let me explain this.

You see, each business must find a way to reach it’s potential clients, make the first sale, and then continue making subsequent sales to the same customer in order to be profitable and grow.

Most business fail because they can’t find a systematic way to do this and eventually run out of money, enthusiasm, energy, etc., and realize they work too hard to make a living. So they call it quits. You already know this.

Now, one of the keys to a successful business is finding such ways to generate the first sale that can be expended quickly with the use of more money.

For example, let’s say I spend $20 a day on pay-per-click traffic and test several keywords, ads, landing pages, back end offers, and so on.

After a month of testing I arrive at three combinations that end up immediately generating between $80 to $130 for each $20 I spend on that traffic. Now, instead of $20 a day I invest $40 – if my results hold, I go to $80. If the payoff remain the same – which in most cases it does, I start spending as much as I can each day – because the more I spend on this keyword the more I make. And this is NOT LIMITED BY MY TIME AND EFFORT – that’s a scalable marketing strategies.

As you can see, a strategy to be scalable it must be measurable and it must not be limited by my personal time and effort. This is where social networking falls short! And if you don’t believe me, notice the obvious lack of presence of really large companies here – except for their ads (which would be a scalable advertising strategy.)

Now, I already noticed a few big name gurus who somewhat openly have their FB lives managed by their assistants. It’s certainly one way that doesn’t require their personal time and effort (and could be considered somwhat scalable). But it misses out on the KEY BENEFIT – the close relationships developed through repeated connection with others.

So if that’s someone’s approach - what’s the point of being here at all? To build a list of fans who never buy? Again, I can think of a few other ways my assistant could help me do this faster and with less effort!

OK, I just realized that this post has tuned into a mini PhD dissertation on FB and social networking so it’s time to bring to an end.

So WHAT’S THE BOTTOM LINE?

Personally, I’ll proceed with caution!

I’ve built two seven figure businesses by learning to leverage relationships. Because FB appears to be a powerful platform for facilitating the process of building powerful relationships – I think I will keep playing (at least for now.)

But, beyond the time I invested initially to figure things out, I think I’ll be super careful with my investment of time and energy that goes into this and would strongly recommend the same for others. 

Discover My New Secret Identity

In the last few days I went from a “social networking skeptic” to a “social networking junkie”.

I’m now playing on Facebook and letting people know what I’m up to through twitter - every day! If want in on my new secret identity, they are revealed:

Facebook —> http://profile.to/adamurbanski
Twitter —> http://twitter.com/AdamUrbanski
 

Now it’s your turn - I’d love to hear your views on social networking and using it to grow your business. Just enter your comments below

This entry was posted on Wednesday, April 23rd, 2008 at 4:48 pm and is filed under Information Marketing. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.