Social media hasn’t delivered on sales for the Inc. 500, according to the 8th Annual Benchmarking Study conducted by the University of Massachusetts, the Center for Marketing Research.
Forty-four percent of respondents believe that sales from social commerce are limited to less than 1%. And only 4% estimated that more than 10% of their annual sales come from Facebook, Twitter and Pinterest.
No Planning or Measuring
Even that estimate is suspect because the vast majority of companies have no formal social media plan in place nor are they measuring actual sales from social media, says Dr. Nora Ganim Barnes, who led the study.
“When you ask them how they measure their success, they point to hits, comments, fans and followers and that becomes their definition of measurement. They can track hits but not sales,” she said.
“We consistently ask how measurement is integrated into a larger plan and we find they’re not dealing with these issues.” To illustrate, the study disclosed that 29% of companies have no plan in place, up from 20% last year. Only 7% now have stand-alone social media policies.
While security breaches have been big news in the past year, fewer than half the companies have a strategy in place in the event of an online crisis (negative attack online). In 2012, 54% of executives reported having such a strategy in place. In 2013, that number dropped to 39%. It has continued to decline to 34% this year.
In a conversation with Dr. Barnes, she posited that we are poised to enter the third stage of social usage:
- Stage One. In this stage marketers are setting up the tools and platforms. Deciding which tools they should invest in is the focus.
- Stage Two. Marketers are placing great faith in hits, comments, fans and followers as a measure of engagement. But they are not making the case that these social signals lead to sales. Engagement is the focus and attempts are being made to quantify it using online analytics.
- Stage Three. Companies will elevate social media to a higher strategic level with a thoughtful plan of where social media fits into the company if it fits at all. In this stage companies consider the social media function to be an integral component of any strategic plan. Its development and growth are primary along with policies and plans to protect the company.
Discussions about payment plans and social commerce make them optimistic and hopeful that social media can become a full distribution outlet for them. But they are not there yet.
For more details about the study, and comparisons of social media usage with the Fortune 500, visit Annual Benchmarking Study. The study was co-authored by Dr. Nora Ganim Barnes, Chancellor Professor of Marketing and Director of the Center for Marketing Research at the University of Massachusetts Dartmouth, and Ava M. Lescault, MBA, Senior Research Associate and Associate Director of the Center for Marketing Research.