Social Media Doesn’t Make the Cash Register Ring

As with many of you, we have a presence on Facebook for the First Friday Book Synopsis.  Many of you are members of the group that we established.  It is fun to interact with you through that group every day.

It is important to remember that Social Media has limits as to what it can produce.  It is what it is – it is “social,” and its intent is to share information, reactions, opinions, and presence.   Many have tried to use Social Media for other purposes, and in fact, seminars are plentiful that purport to show you how to build business by maximizing and tweaking your presence with the various tools.

Click here  for access to a full article published on February 21 in the Dallas Morning News about business results from Facebook.  They are not impressive, and the trends below may surprise you, as they run counter to common-sense publicity about social media.  Here is an excerpt from the article:

“Last April, Gamestop Corp. opened a store on Facebookto generate sales among the 3.5 million-plus customers who’d declared themselves “fans” of the video game retailer. Six months later, the store was quietly shuttered.  Grapevine-based Gamestop has company. Over the past year, Gap Inc. , Plano-based J.C. Penney Co. and Nordstrom Inc. have all opened and closed storefronts on Facebook Inc.’s social networking site.  Facebook, which this month filed for an initial public offering, has sought to be a top shopping destination for its 845 million members.  The stores’ quick failure shows that the Menlo Park, Calif.-based social network doesn’t drive commerce and casts doubt on its value for retailers, said Sucharita Mulpuru, an analyst at Forrester Research in Cambridge, Mass.  “There was a lot of anticipation that Facebook would turn into a new destination, a store, a place where people would shop,” Mulpuru said. “But it was like trying to sell stuff to people while they’re hanging out with their friends at the bar.”

These  results do not surprise me.  If you count on Social Media to build sales, that is neither its intent, nor a probable outcome. 

Don’t get me wrong.  I like Social Media.  I access Facebook and Twitter several times a day.  In fact, my MBA class on research methods at the University of Dallas is studying it during this term. 

But, I am aware of what it is supposed to do, and what it can do.   It is what it is.  It raises awareness, but it doesn’t make the cash register ring.  Don’t be disappointed when it doesn’t do something it is not.

What do you think?  Let’s talk about this really soon.

A business model based on trusting the customer

Anna Bernasek

Anna Bernasek is the author of The Economics of Integrity: From Darwin to Toyota, How Wealth Is Based on Trust & What That Means for Our Future, published in 2010 by harperstudio, an imprint of Harper Collins.

At the conclusion of Chapter Six, she shares a number of valuable insights when supporting the concept of a business model based on trusting the customer.

“Business models that demonstrate trust in the customer have an exciting potential for growth. Most businesses today tend to ignore the issue or take it for granted. Of course, to actively trust the customer, a company first must make sure its own house is in order. You can’t sell faulty or unreliable products or services and then expect the customer to treat you fairly. But when you do your best on behalf of the customers and then trust the customers to do their best on behalf of you, you can create something lasting and valuable. People have a deep need to be trusted. They value the trust of others, and in general what people value they will pay for. It boils down to what Dale Carnegie advised long ago: give the other person a fine reputation to live up to. On that simple principle a commercial empire can be built.”

It is no coincidence that the same companies that are annually ranked highest in terms of being the most trustworthy are also annually ranked highest among those that are most profitable: L.L. Bean, Overstock.com, Zappos, Amazon, Lands’ End, Newegg, J.C. Penney, QVC, Coldwater Creek, and Nordstrom.