Twitter Really Works: Makes $6.5 Million in Sales for Dell

dell twitter

All you doubting Thomases can shut up now: Lifecasting/social net Twitter really does work as a marketing tool, as confirmed by PC retail leviathan Dell.

Dell started Tweeting about two years ago, when the system was pretty new. They don't get into how exactly they traced sales directly back to Tweets, but they're committed to the correlation. So given what they say are $6.5 million in Twitter-driven sales, the company's yearly return from Tweets is around $3.25 million. Dell also notes that its follower list has risen 23% in the last three months alone--which will likely correspond to a hefty skew in the number of PC units sold this year. Dell's Tweets also reach followers in 12 countries, and sales are happening in places that might be a surprise: $800,000 in sales over the last eight months alone came from Brazil.

But with Dell's turnover ticking upwards of $61 billion dollars in 2008, isn't this figure just an insignificant drop in Dell's ocean? Yes, if you're talking pure dead numbers. But according to Manish Mehta, VP of Dell Online, Dell apparently sees Twitter as a "very vibrant channel" partly due to its aggressive growth and partly due to the potential global reach, on a per-second basis, of a single Tweet.

And Mehta's point is made with good reason: How little did it cost Dell to send out those Tweets? It's got 100 employees Twittering in total, over 35 different Dell user identities. We can imagine that these guys are busily involved in Dell's greater PR effort, so they don't spend 40 hours a week Twittering. Imagining they spend 20% of their time writing Tweets, and factoring in a bit of basic math about wages etc, we can guess it cost Dell about $500,000 in man-hours per year to address its Twitter audience (and man-hours are about the only cost associated with using Twitter). That equates to a 1,300% return on investment when you look at the sales the effort has generated--a staggering figure. Assuming Twitter's popularity continues to rise dramatically, and knowing Dell's costs of Tweeting aren't going to rise as fast, that number is only likely to get better and better.

Obviously it's not all easy, and there are pitfalls associated with using Twitter as a PR tool. One of which is being careful not to over-saturate the system with advertising: Twitter users will quickly be turned off the social net if all they see is PR fluff. But that's also the joy of Twitter as far as sellers like Dell are concerned--it's a consumer opt-in PR mechanism, and you only see Dell's Tweets if you follow the company's feeds or do a search. That means its a highly targeted channel and a means of garnering customer feedback too.

[Via Bloomberg]

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9 Comments

  • Dave Riehl

    Wouldn't you say spending $500,000 to generate $6.5 million in revenue is a fairly expensive markeing campaign? You also state that their yearly return is $3.25 million, but I am not sure where you get that number unless Dell's gross margin has recently tripled? Sorry but I taste snake oil.

  • Kit Eaton

    @Everyone, great to see your enthusiasm for Twitter. I think it's got a curious staying power as a system, and won't suffer gold rush booms and busts---it's already upset nearly everyone's predictions on how it'll work, be used, and who'll use it :)
    @Corvida. You're welcome. And yes...the important point about this Andrew is that Twitter's a new *tool* and it's not partaking in the ad revenue game itself. $500,000 was a guesstimate, and probably a high one too as it really doesn't take that long ti send out a Tweet.

  • Corvida Raven

    Andrew please keep in mind that despite the title Twitter doesn't make the money. Twitter drives the sales. It's up to Dell to convert those leads into profits by using social media platforms like Twitter properly.

    Kit thanks for the case study. Dell is definitely a star example of companies using social media effectively.

  • Andrew Grange

    Give me a break! Dell has posted annual revenue of 61.1 billion USD each year for the last two years (http://www.wikinvest.com/stock.... This is a colossal real world company. Twitter may be disrupting the web, in a positive and powerful way, but let's put this in perspective.

    Dell are effectively declaring that 0.0001065% of their revenue was sourced via Twitter. There are probably ads in popular magazines that run for ONE WEEK that account for a larger portion of annual revenue directly influenced by the advertisement.

    Let's say I had a company with annual revenues of $1 million dollars. Based on Dell's ratio, we could safely assume being active on Twitter may increase revenue by $106.50 per year... um.. yeah, well - there you have it.

    $500,000 for $6 million dollars in revenue is a lot of money for little revenue. Dell Online may say that Twitter is a good channel... yes, in the sense that Twitter is a killer online app, people use PCs to access Twitter, Dell sells PCs and Netbooks, ergo people using Twitter, and Twitter having a high profile is good for Dell - but not in the way people may think.

  • Gregg Demario

    After reading this, I concluded that these are the reasons why Twitter became the number 1 social media site today!

    Nice Piece!

  • Toby Marshall

    Kit, love to see case studies like this, as it is often hard to persuade our clients that Twitter is for anyone other than twits!

    One qualification: as a lot more businesses start tweeting, the field will get more crowded for marketers. My company is bringing 7 of our clients onto Twitter in the next 4 weeks. So while Dell will have early adopter benefits, and will adapt to the competition, I don't think their ROI will improve.

    It is like the gold rush at the moment, as is LinkedIn for business. The surface and near to the surface gold will be gone in 12 to 18 months.

    Cheers,
    Toby
    www.tobymarshall.com

  • Pinoy Phil

    Twitter as of this time, is the most powerful social networking, and yes, direct and targeted advertising network. Facebook comes second.

    It's just, how well you use it and also, right timing and pitch is essential unto twitter marketing success.

    Dell, evidently, manage to come up with ideal strategy via using twitter into their own advantage.

    Sikat Ang Pinoy