Why Dell Beats the Hell Out of Threadless
I apologize for the outlandish headline, but I don’t really think it’s any more outlandish than crowning Threadless as the sales guru of Twitter. I’m sure you’ve read some recent press in the media bragging about Threadless being the company to emulate when it comes to monetizing on Twitter. (Read one article from Inc here) I simply can’t disagree more. I have nothing against Threadless and admire the company for many reasons. For example, they are the King of crowd sourcing- why not give them a crown for that? But monetizing Twitter? No. They made money on Twitter by creating an entire product line exclusively FOR Twitter, not by utilizing it as a sales vehicle for promoting their own existing product. Of course the product sold well, it was made specifically for Twitter!
So how do you monetize social media without creating a product line specifically for it? Dell figured it out. They are a great example of a company who actually engaged on Twitter and sold millions of dollars worth of computers as a direct result of those efforts. (Dell article from Entrepreneur here) I think their success was two-fold and actually quite basic. First, they correctly targeted their customer and simply provided them with useful information. Next, they implemented systems to monitor, measure, and manage customer service interactions.
(Great tips for handling customer service here.) These are great starting points and should serve as the foundation for any small business looking to incorporate social media in their marketing efforts.
While those are great steps for getting started in social media, it’s important that companies don’t stop there. The real key to your success lies in your ability to actively engage that target demographic. I urge you to roll up your sleeves a little and try some new strategies this year to finally get some ROI from social media. To get you started, I’ve brainstormed a couple ideas below.
- Include a playful and creative flyer in outgoing packages encouraging participation and possibly offering a reward… “Be a sweetie! (attach some candy to the card) Post a pic of you wearing this t-shirt on our Fan Page and we’ll send you a $5 gift card.”
- Create a survey on Facebook or poll on Twitter (twtpoll) asking “friends” to vote on which new products to sell/create…the winning product will be offered to survey participants first, and at a discount. (See how Modcloth does this here)
- Track down recent customers on Facebook and “friend” them with your companies Facebook page (who doesn’t want more “friends”?)
- Spend money to make money…hire a Community Manager that will actually have the time to effectively target and engage new customers and strengthen your online branding. (Not sure what a Community Manager does? Read this by Chris Brogan.)
I truly believe social media is the future for small business marketing and I hope you can find at least one of these ideas helpful in your efforts to engage online. Always be on the lookout for innovative new ideas to reach your customers and don’t be shy. A sincere, heartfelt, and playful “hello” to your customers will be appreciated more times than not. Just make sure you have the infrastructure in place to monitor, measure, and manage all those new customer interactions.
Need help with your social media campaign? Contact me directly here!
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January 14th, 2010 at 12:10 am
[...] StartupNation Blog » Blog Archive » Why Dell Beats the Hell Out of … [...]
January 14th, 2010 at 2:07 am
I encourage you to reconsider your assessment. While I know nothing about Threadless, the ability for an obscure startup to build a Twitter business is a far more relevant case study for entrepreneurs than a global brand moving into that channel.
Additionally, if you look closely, Dell’s Twitter strategy isn’t even helping the business.
If Dell were primarily a computer discounter/liquidator, their Twitter channel would be a clear indicator of success and momentum, but their bread and butter is selling pristine, full-price new systems online and through retailers.
So while it makes a great social media story, is their current Twitter model really a home run for Dell?
•Cannibalism – Dell Outlet sells returned and refurbished items, which likely eats into new system sales. If you look at today’s news, while sales at chief competitors picked up 20%-30% in the last quarter, Dell posted a meager 5% uptick in new system sales.
•Margin erosion – Add in the costs of refurbishing, repackaging, etc. and already slim PC margins get even thinner.
•Channel conflict – How well are online affiliates taking all this fabulous disintermediation news.
•Freezing demand for new systems – Why buy the latest and greatest right away when you can wait a little longer for either 1) the price to drop on Dell.com or 2) the returns to start showing up at the Dell Outlet.
•Pulling focus from Dell.com - When the choice is between the labrynthine click path and full prices of the online mother ship and simple, streamlined bargain hunting through the Twitter-Dell Outlet nexus, which experience will customers gravitate toward?
Again, Dell’s business model is not predicated on selling factory seconds, but what happens if that becomes what customers want most from Dell? Could social media success be undermining profitability? Even Dell.com?. Further, is it really a great idea to aggressively market Twitter’s fast lane to the Dell discount mall in new and emerging markets when the flagship online operation and offline retail profile aren’t well-established there?
Dell has made a lot of money through Twitter, racked up some positive headlines and burnished its social media reputation, but at what cost?
January 14th, 2010 at 4:31 am
[...] StartupNation Blog » Blog Archive » Why Dell Beats the Hell Out of … [...]
January 14th, 2010 at 8:39 am
Hey Heather, I have to agree with Stone; the proof is in the pudding. An obscure startup (and there are a TON of Internet t-short companies out there to obscure them) building both a Twitter and a Facebook business is noteworthy.
From my own experience, I’ve bought t-shirts from Threadless only because I became aware of them through social media. I’ve never bought a Dell, in spite of their social media efforts.
Regardless, thanks for your article and keep fighting the good fight!
January 14th, 2010 at 8:47 am
I.F. Stone,
I appreciate the comment. I would like to emphasize however, this post isn’t about evaluating business models or points of distribution. It is simply a comparison between the two companies regarding their attempts to monetize Twitter.
For that reason alone, I disagree that they should serve as a case study for selling on Twitter. Being a “sales guru” on Twitter should be about utilizing it as a platform to move product, not proving that we need to make an entirely new product line each time we want to explore a new marketing method.
As a little guy myself, I understand the desire to root for the underdog, however, I think its unwise to advise entrepreneurs to create new product lines strictly for Twitter.
January 15th, 2010 at 11:35 am
Cam from Threadless here. Completely agree with your conclusion. Playfulness wins. Twitter is a perfect platform for us to connect with tee lovers and our followers as friends (”customers”?! no one wants to be treated as a customer/unit of consumption on such a personal channel). We drove a really significant chunk of revenue for a small company on Twitter last year, excluding the Twitter Tees site. I’m sure Dell is kicking our ass in total revenue from Twitter, but I bet we’re making more people smile every day
January 21st, 2010 at 1:08 pm
Hi Cam!
You’re a class act! (with a great brand monitoring strategy in place ;)) Threadless has done an amazing job reinforcing its brand on Twitter and communicating with “friends” …kudos to you! And yes, you are making people smile…you even made me smile reading your comment!
All the Best,
Heather
January 24th, 2010 at 9:37 pm
FYI to all previous posters… yes, Threadless is a start-up, but keep in mind that it was well established BEFORE Twitter entered the picture.