Dell makes $3 million on Twitter. What can we learn?

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dell_logo_new-147x150Image by Alex\ via Flickr

There’s been a lot of talk about Twitter so far this year - starting with the incredible growth in number of Twitter users to more recent discussions about a Harvard Business Review report that 10% of Twitter users generate 90% of activity. In all these discussions there is a significant debate about how to monetise Twitter - how they can make money from it. Most agree that Twitter is currently not monetised, at least not by Twitter itself. But Dell tell a different story. This week they revealed that they have made a total of $2 million in sales thanks directly to @DellOutlet, and a further $1 million in sales that started on Twitter but were completed elsewhere.

So at least somebody is monetising Twitter, and quite successfully too. How is Dell doing it? What is the secret to their success?

Dell sells refurbished computers through @DellOutlet and has about 600,000 followers. And whilst $3 million revenue is a relatively small proportion of Dell’s overall sales, this does mean that they have taken an average or $5 for every follower they have on Twitter. A pretty impressive amount. If @aplusk could realise this kind of revenue per follower, he would make over $10 million. Even my few thousand followers at @mattrhodes would earn me almost $15,000 if I could realise revenue from Twitter in the same way that Dell can.

So how does Dell do it? The way it uses @DellOutlet is, like many of the the best ideas online, simple. They message their followers with deals, special offers and discounts. This is a form of real-time coupons - Dell can alert people to offers and discounts as they arise. And change the offers immediately when they sell out.

People love a bargain, they love feeling that they are the first to know something, and they love a personal connection and interaction. It is the combination of all three of these in @DellOutlet that makes it so successful.

  • Dell’s approach to Twitter fosters a personal connection - rather than have a single corporate Twitter account, they segment their followers by having different accounts for different customers with different needs and interests. Those following are interested in what that particular Twitter account has to offer and will feel that it is meeting their needs.
  • The use of a real-time update system like Twitter allows for offers to be promoted when they occur. It offers an immediate notification of any offer or discount and as such those who follow @DellOutlet are the first to know about deals.
  • Through @DellOutlet, people can find out about genuinely good deals.

It is these three things together that make for Dell’s successful monetisation of Twitter. It’s a relatively simple formula that many businesses could adopt. Perhaps the more interesting aspect of this story is that whilst Dell uses Twitter to generate $3 million in revenue from its followers, Twitter itself asks for none of this revenue.

  • Twitter is Not Your Average Social Network (mashable.com)
  • What the Dell? Twitter Followers Get Bonuses (montysmegamarketing.com)
  • Twitter to offer Facebook Page-like features for companies (or what)? (venturebeat.com)
  • Dell Provides Exclusive Deal Offers on Twitter (shoppingblog.com)
  • Dell joins those who ‘get’ Twitter marketing - who’s next? [VIDEO] (inquisitr.com)
  • Dell Starts Offering Exclusive Discounts Through Twitter (techcrunch.com)
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9 Comments

  1. Chris Hanlon:

    Good stuff, It always just comes back to the basics. The question is how do you implement the basics with the new media?

    Connecting with the customer and making limited time-dependent orders with an inherent call to action seems to be the basics that Dell have used here.

    Good on them!

  2. Matt Rhodes:

    Hi Chris,

    I find that some people assume that because we’re talking about ‘new media’ the basics no longer (or perhaps can’t) apply. This is just not true. When you’re thinking about your customers and how to engage them technology should be invisible. Think about the experience you want them to have and when you’ve fixed that think about technology (and how much easier this now makes it to give them that experience

    Matt

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  7. Andrew Ballenthin:

    Can anyone add to the data: Dell grosses over 10 billion per quarter in revenue and the $3 million from twitter sales was earned over an 18 month period (please correct me if I’m wrong).

    Twitter sales accounted for a maximum of 0.00005% of their revenues over 6 quarters.

    A question with the greatest sincerity, what lesson does this realistically extrapolate into for the average business?

  8. Kit:

    @andrew : an interesting analysis you have done there. well, 0.00005% of gross revenue may seem really modest, possibly too trivial.

    But it’s not really about the amount, rather, the potential of twitter in fostering relationships with customers. this opens a trend for smaller businesses to rethink how they can use twitter to build revenue.

  9. Contradirony:

    Interesting article, but I’m wondering whether there is a touch of novelty in the play here.

    Like, when we first subscribe to mailing lists the resulting emails are interesting at first, but then quickly loses its appeal over time. Then, as a crude extrapolation, would it end up as another box to ‘uncheck’ when you register with a corporate website?

    And along a similar vein to andrew, (I’m assuming the ‘or’ is meant to be ‘of’ ;) ) quoting:

    “an average or $5 for every follower they have on Twitter”,

    Assuming (with yet another crude assumption of) an avg. of $500 per product sold by Dell, this means that Dell has sold 3,000,000/500 = 6000 products from its 600,000 followers, i.e. 1%.

    I’m curious as to how this statistic compares to other, traditional or otherwise, methods of marketing in terms of how many consumers are contacted vs successful ones (i.e. ones that end up buying the product)?

    At the end of the day I suppose Twitter does have potential in that it is a very easy/’lazy’ way to reach consumers (think automated scripts!), which result in low costs/revenue not being as much of an issue.