The Connection between Social Selling and Revenue [Research Analysis]
You’ve seen the stats. You know that salespeople who use social media for work outperform those who don’t.
But what does that mean for revenue? Is there a connection between revenue and social selling? We were curious to find the answer, so we dug deeper into the research. Here’s what we unearthed.
Year-on-Year Growth Rates of Top-Notch Companies
Much of the research about social selling comes from a report written by the Aberdeen Group in 2013, which you can read in full here:
It’s tempting to look at the first page of the research report, see the chart comparing social sellers to non-social sellers, and stop reading. Be warned: If you glance only at the first page, you’ll miss all the good stuff – like the connection between revenue and social selling.
When you read further into the report, you’ll see that the Aberdeen Group notes a correlation between revenue and social selling. It’s subtle. But it’s there. So, let’s suss it out.
In its study, the analyst firm divided companies into three groups:
- Best-in-class companies, which experienced a 16.3% year-over-year increase in total revenue
- Average companies, which had only a 4.1% year-over-year increase in total revenue
- Lagging companies, which actually saw a decrease of 8.7% in revenue
Note: For the mathematically challenged (like myself), there’s a slight problem with those numbers. It’s hard to translate those percentages into dollars. Clearly, 16.3% year-over-year growth is better than 4.1% year-over-year growth. But just how much more is a 16.3% increase in revenue – as compared to a 4.1% increase in revenue?
Here’s a scenario that can help us.
Charting the Revenue Gap
Let’s imagine that we’re looking at three companies. One is best-in-class. Another is mediocre. And the third one is losing money (a laggard).
Now, let’s imagine that all three companies bring in $50 million dollars in revenue in 2015. Based on the Aberdeen Group’s research on year-over-year growth, how much revenue will each company make in 2019? (You never thought that you’d have to do another mathematical word problem, did you?)
Click here to enlarge the image.
In 2019 (i.e. Year 5 in the chart), the best-in-class company would bring in almost $91.5 million.
That’s roughly $32.7 million more than the average company and roughly $56.7 million than a lagging company.
Needless to say, that’s a significant revenue gap, which makes you wonder what the best-in-class companies do differently. Thankfully, the Aberdeen Group looked into that question for us.
What Contributed to The Revenue Gap?
You and I could brainstorm quite a long list of things that the best sales teams do differently. They may have more revenue to invest in training. They may have better sales and marketing alignment. They may be more attuned to their buyers’ needs.
Here are the top three things that the Aberdeen Group identified in their study on social selling:
- 73% of best-in-class companies expanded their lead generation through social media marketing. (44% of average companies did, while 47% of laggard companies did.)
- 70% of best-in-class companies educated their sales team on how to use social media tools. (50% of average companies provided that kind of training, while 30% of laggards provided that kind of training.)
- 67% of best-in-class companies had a social media platform in place that enabled them to communicate with customers. (40% of average companies did, while 29% of laggards did.)
In other words, best-in-class companies were more likely to:
- Have a strategy for social selling – with measurable objectives in place (e.g. generate more leads)
- Provide training to their sales team on how to use social media tools
- Invest in technology to support their sales teams’ efforts on social media
What Does This Mean for You?
Whenever we look at research studies, it’s important to remember our high school math teacher’s favorite phrase: correlation does not equal causation. In other words, having a social selling team does not guarantee revenue.
For example, you can build a team that’s full of social selling rock stars, but unless your company has product-market fit, your company will not experience 16.3% increase in revenue year-over-year. Why? Because, without product-market fit, no one is going to buy your product.
With that caveat out of the way, it’s clear that companies with significant top line growth are doing things differently, and one of those things is social selling.
As the report illustrates, the most lucrative of companies are far more likely to embrace social selling. On the flip side, the companies that lackadaisically use social selling aren’t bringing in as much revenue. ($56.7 million less in our example above! Ouch!)
So, ask yourself, Where do you see your organization?
If you want to transform your company into a top-notch company, perhaps you should embrace social selling and set up a top-notch program. Take the time to think about your strategy and train your employees. Oh, and don’t forget; invest in technology, as well.
Learn More about How Trapit Can Help
Give your salespeople the tools and content they need to be best-in-class social sellers. Contact us to find out more about how Trapit works.