If you still think social networks are strictly for navel gazers, it’s time to take another look at the numbers: By the end of 2008, more than 300 million users had flocked to Facebook, 50 million to LinkedIn, and 18 million to Twitter. By the end of 2009, those numbers looked paltry. The allure of social media across all demographics is inescapable and has enormous implications for the future of sales. While it’s true that there are more than a few ways to waste time on social networks, fundamentally, social networks are designed to do what any good sales rep does: build and nurture relationships. Welcome to the new world order, where cold calls are social calls, friends are followers, and the professional is the personal.

It’s not the user numbers alone that boggle; it’s the rate at which they’re multiplying. It took Facebook, founded in 2004, just two years to reach 50 million users. Twitter, the quirky network that restricts its real-time updates – or “tweets” – to 140 characters or fewer, expected a 200 percent growth increase by the end of 2009, to 26 million users.

Staggering stats, to be sure, but what do they mean for the future? Is it even possible to use social networking to increase business and bolster your bottom line? Increasingly, the answer is a measurable yes.

Just a few years ago the business world considered Facebook as little more than an online party for college kids. In the summer of 2007, Clara Shih, a marketing and alliance executive at salesforce.com, began to devote her evenings and weekends to working on a new software that would integrate Facebook profiles with Salesforce CRM. As a member of a generation eager to find ways to connect online, Shih believed the power of Facebook’s popularity as a purely social connector could be leveraged for business purposes.

“I was really interested in the big picture,” says Shih, who had also worked as a software developer for Microsoft and then in corporate strategy at Google. Her creation, Faceconnector, originally called Faceforce, made it possible for Salesforce users to pull all sorts of personal information about contacts into their existing CRM accounts – information those contacts wouldn’t necessarily share on a professional networking site such as LinkedIn. That includes anything from photos of pet hamsters to videos of their kids’ Little League games to birthday announcements.

“It’s almost like a personal CRM database,” says Shih, who has since written a book, The Facebook Era: Tapping Online Social Networks to Build Better Products, Reach New Audiences, and Sell More Stuff (Prentice Hall PTR, 2009), which has been used as a text in MBA classes at both Harvard and Stanford since its release in April 2009, and cofounded her own company, Hearsay Labs. “Those are all opportunities to go in and congratulate people and engage them.”

In other words, the right information can make a generic conversation a relevant one. A relevant conversation can build mutual trust. And mutual trust can lead to a sale.
   
THE END OF SMILE AND DIAL

The most basic aspect of a social network is what is known as the “social graph,” a representation of our collective and interconnected online relationships. A site like Facebook allows you to see that you and prospect A have friend B in common, for example, or that friend C knows friend D, who knows prospect E. Suddenly you have a name you can drop or a potential way to gain an introduction.

“We’re now using relationships and referrals to get in the door,” says Nigel Edelshain, CEO of Sales 2.0 LLC. “A lot of times the first conversation a salesperson gets is, ‘Sorry, I’m in a meeting! Bye!’ An actual conversation is one in which you get information about the client’s needs and where they are. Most of the time salespeople are shut out of that completely.”

Sales methodologies – solution selling, spin selling, etc. – are all well and good, but they take for granted the tricky business of gaining an audience. Social networks have changed the paradigm.

“It’s easier to get in the door because of the trust factor,” Edelshain says. “The moment I know who knows whom, I’m not cold calling anymore. Joe in the middle will say, ‘I know Nigel. He’s a decent guy. Can you speak to him?’ Before LinkedIn and Facebook, you couldn’t easily tell what the social graph looked like. You couldn’t shine a light on it and easily see that Harry knows Joe and Joe knows Jane and Joe works over there.”

It’s an approach that works. Edelshain has found that the sales success rate for leads generated via social networks is around 10 times higher than for those generated by conventional cold calling. Not too surprising – a warm lead has always been better than a cold call, after all – but there’s another element at work here: Tweets, profile pages, and status updates represent far more than points of entry; they’re repositories of valuable information about what the customer thinks and how he or she feels. The Sales 2.0 customer naturally assumes that a salesperson will have done enough research on his or her wants and needs to tailor an authentic, relevant message.

“Many of the traditional discovery questions can be answered by poking around on the prospect’s social-networking profile, such as his or her tenure at the company, key responsibilities and accomplishments, and past experiences with solutions in your space,” Shih explains in The Facebook Era.

Phone Works founder Anneke Seley, who started her career building high-profit sales teams at Oracle, agrees. “We would call that social calling, or ‘Cold Calling 2.0.’ It’s not just a generic pitch anymore. You really understand what’s going on in that account. You know who the people are, and you know that they have a need for your product. It’s very much centered around the buyers and what they’re trying to accomplish.”
   
THE NEW CRM SOLUTION

That’s part of what makes social networking so appealing; it gives the customer a voice, a public space in which to air his or her likes and dislikes, worries and concerns, accomplishments and activities. Shih says that the next generation of CRM software will allow salespeople to both monitor and respond to customer needs in greater depth.

“It’s evolving to much more personalized and tailored capabilities,” she explains. “We actually think people need to start from scratch with their CRM, because social media fundamentally changes the model that companies use for effective customer relationships. That’s a big part of why I developed CRM for Facebook and founded my own company.”

James Lundy, managing vice president and distinguished analyst for the social software and collaboration team in Gartner Research, says the social-software landscape is moving toward a “much more interconnected set of relationships” in which information can be created, shared, managed, and broadcast internally among sales teams, as well as externally for customers and prospects.

“One of the trends is moving toward instant messaging with a colleague inside an actual document so that you don’t have to jump out of the document, type an email, and send it off when you’re trying to collaborate,” Lundy says. “Down the road you’re going to be seeing the real-time aspects of Facebook and Twitter being used to create a greater awareness and consideration among members of a community.”

Bantam Live is an example of a CRM service enhanced by social-networking tools designed specifically for sales.  It incorporates a real-time function with traditional contact and project-management capabilities.

“If I want to find people looking for, say, solar panels, I enter those search terms on Twitter within Bantam,” says Bantam Networks founder John Rourke. “It’s a great lead-generation selling tool.”

Like Lundy, Rourke sees a future in which social networking dissolves the walls between, not just seller and buyer, but departments and co-workers. “The inside/outside element is what I think management needs to think about. A real-time stream allows people in an office to have an ambient awareness of what’s going on. Sales managers can stay on top of deal flow, administrative assistants can see the work of their bosses, and if salespeople see customers clamoring for certain features, they can pull that in to share with their teams. It’s this wonderful new way of collaborating.”

SHOW ME THE MONEY

The collaborative online environment has forced companies to think about how to engage customers in entirely new ways. “Customer preferences are changing,” says Seley. “People don’t necessarily want to go out and play a round of golf or have a three-martini lunch. They’re interested in more effective and efficient ways of buying and selling.”

Her book, Sales 2.0: Improve Business Results Using Innovative Sales Practices and Technology (Wiley, 2008), was based on her 10 years of experience doing just that at Oracle, where she worked her way up from a customer-service position to the head of multimillion-dollar, inside sales teams.  “I had to think differently about selling because Oracle made a switch from very large, very high-priced software systems to Oracle Direct, which was all engagement by phone and Web. What it did was emphasize strategy. So if I’ve got the right sales team in place and the team has all these tools for reaching out to prospective customers, I’m kind of like the CEO of my territory. I get to figure out what is the most effective means of reaching prospects. With CRM and analytics, we can now track the sales-cycle steps and see what the result of those outreaches is.”

In the beginning, the world of social networking was all about brand awareness and measurements that were obvious – how many fans flocked to your Facebook page, for example, or how many people commented on a particular blog post – but somewhat nebulous in terms of actual ROI. At this point, analytics are widely available to track how much of your site traffic comes via external links, and companies are comparing those numbers with upticks in product sales and other metrics.

When she speaks to groups about the value of Sales 2.0 tools [see Sales 2.0 ROI], Seley often mentions the success Dell Outlet has had in leveraging its Twitter account to drive profits. “Dell Outlet’s attracted more than a million followers, and by tracking its data, it’s seen that following translate to two million dollars in revenue in just eighteen months. Dell Outlet has also generated an additional million [dollars] in main Dell.com products, because those people came in through Twitter.”

Individual sales reps and managers have also found ways to use social networks to generate qualified leads and revenue. Seley tells the story of Dan Harding, a regional sales director at ConnectAndSell, who claims that a full 80 percent of his leads have come from using social media to stay connected with clients. Not only does he monitor, for example, job changes on key prospects through LinkedIn, he also engages in “social calls” by reading his customers’ blogs or blogs popular in his targeted industries.

“Reading those blogs, which are certainly among what I’d consider social media, gives him insight as to who his prospect or customer is,” says Seley, who adds that she was originally introduced to one of her own company’s largest clients through Facebook.

“All of this information could help make a connection and a relationship. Same thing with Twitter. Same with Facebook and LinkedIn. What are people posting as status updates? Are they talking about hobbies? Reading certain things? Asking about a project? If you see someone needs help, then you have an opportunity to become a trusted source and someone a customer might ultimately want to do business with.” •