Dell Outlet Demonstrates Social Media is a Legitimate Marketing Channel

Mashable today posted an update on the financial performance of the @DellOutlet program which I blogged about previously. You can read it here: http://mashable.com/2009/06/11/delloutlet-two-million/.

This is a major consumer brand driving real sales in a relatively short time via a new experimental platform. It took them two years to grow their follower base to over 620,000, but the payoff has been tremendous. They reported that they have surpassed $2M in sales through their Twitter channel.

This brings me to a topic that I have begun to think about in the past few weeks. Is social media going to become a new marketing discipline? Should your company be hiring a social media strategist who is an expert in Twitter and Facebook to manage social digital direct response marketing programs? In the short-run considering the weak economic climate and that there may not be a subject matter expert in your organization I recommend you lean on your existing online marketing teams who may manage email, site marketing, affiliate programs, SEM and SEO. If they are resource constrained you could also hire a Summer Intern, or contract some of the work to a social media consultant.

Regardless of who manages the work they should be setting up processes and procedures that are repeatable and scalable and that integrate with those already in place to manage your other direct channels. This is important because in the long-run Twitter, Facebook, and other social media platforms will simply become another direct marketing channel. The social media channel will differ from traditional email, direct mail, and catalog channels in three ways:

1. They are networks for distributing customer communications in real-time at scale to a highly engaged audience who has raised their hand and asked to participate in a relationship with your brand. The messages this audience receives are then spread throughout the networks of each of these customers which increases the reach of your original message.
2. They enable brands to listen and understand what customers think about their product or service. When was the last time you received a promotional email from your favorite specialty retailer that invited you to reply with your thoughts, post it on your blog, tweet it to your Twitter followers or to Digg it? In my experience, never. In fact these 1-way email communications state very clearly in their messaging, "Do not reply."
3. They are a relationship management platform that humanizes brands and allows marketers to engage in real-time 2-way conversations with their valuable customers.

So my advice is don't sit on the sidelines and wait for your corporate strategy, CRM or IT department to determine the impact of social media on your enterprise and how marketing should be leveraging this channel to drive sales. Instead innovate, get in the game, follow the lead of companies like Dell, test, learn and adapt. If nothing else, you'll have fun and who says work can't be enjoyable?

What do Dell Outlet and Kogi's BBQ have in common?

Twitter allows individuals to freely and immediately communicate through the exchange of “tweets,” frequent answers to one simple question: What are you doing?

A recent poll of 3600 LinkedIn users asked: "What is the most important new platform for brands to master." Respondents could choose one of the following online member communities: Twitter, Facebook, the iPhone, Digg and LinkedIn. The number one platform was Twitter, chosen by 30% of respondents. Find a thorough analysis of this poll on ReadWriteWeb: http://bit.ly/9Vgnj.

Twitter may not have a business model, but businesses are quickly developing winning models to leverage the company's open platform to build their brands and nurture customer relationships. Some, including DellOutlet and Kogi's BBQ are using it to successfully drive sales.

These are both great retail cases. I’ll focus on Dell Outlet since Kogi’s case involves hyperlocal targeting, a topic worthy of its own post.

Retail inventory management is probably one of the most complex of all inventory problems to solve, and successful companies like Dell find innovative ways to turn product at the highest margin possible. Returns can be especially challenging and so when Dell Outlet receives an excess number of returns of a particular model it will consider a direct e-mail campaign to promote that particular system, generate incremental demand, and eliminate the excess inventory “bubble.” However, when the bubble is smaller, the major lever to stimulate sales has been to lower the price of the overstocked item.

In March 2007 Dell Outlet recognized that the Twitter platform could be an efficient channel to promote featured products. Its Twitter program now has nearly 600,000 followers. Stefanie Nelson who heads up the Twitter efforts for Del Outlet has two objectives for the program:

1. Increase demand for products for which Dell Outlet has excess inventory by offering Twitter exclusive deals.
2. Become a resource for Dell customers looking for tips and tricks and assistance with products.

The strategy revolves around posting Twitter-only offers to its followers. When a new tweet is posted, it generally provides followers a coupon code to obtain a discount on that particular model in the Dell Outlet. Typically, this coupon is exclusive to Twitter, so they are able to measure the redemptions and know that it was due to being posted on Twitter. Twitter followers may share coupons easily by "retweeting" the Dell Outlet messages to their Twitter friends in a viral fashion.

For Dell, Twitter represented a new way to reach customers and by tracking coupon redemption, in the first year utilizing Twitter as a promotional tool, Dell Outlet generated over $500,000 in revenue in sales of refurbished systems. Dell has proven time and again their ability to innovate in sales and channel management and I predict other brands will follow.

A May 2009 “Top Ten Twitter Trends” study of Internet, mobile and social networking users (n=1,850, twitter users, n=665) conducted by Thinktank Research found that 40% of Twitter users regularly search for products or services online via Twitter. About 20% follow at least one product or service, and 12% note they’ve chosen a service or bought a product online because of information they got on Twitter. To request a copy of the report you can email Robin Boyar info@thinktank8.com.

It will be interesting to watch the evolution of Twitter as it continues to gain momentum as the leading conversational marketing platform for brands.