Pareto’s Principle: Market-Oriented and Sales-Oriented in Social

The Pareto principle (also known as the 80-20 rule, or the law of the vital few/principle of factor sparsity) states that for many events, roughly 80 percent of the effects come from 20 percent of the causes.

In social media, we say to engage with the masses and get response from them. If applied to the field, how does that effect market-oriented and sales-oriented teams? Which is the better landscape? Is it a balance of the two?

Market oriented: Company focus primarily on customers needs and wants based on reliable data.

Sales oriented: The main objective is sales and customer’s needs/wants take the backseat. Tactics on the sales side are usually a bit more aggressive.

Social media is a market-oriented landscape that depends on the feedback and engagement of a community. Yes, money is the bottom line – and many of your clients/corporations are sales-oriented. Market-oriented also isn’t always the best approach, as sometimes listening solely to your market takes away from functionality of product.

So for the 20 percent that is accomplishing 80 percent of the effects:

Good sales teams have market oriented personalities in a sales oriented environment.
In public relations and marketing, you should be communicating with the sales team. Chances are, they won’t want to talk to you – many believe it hurts their commission and lack of sales knowledge won’t get you in the door. Educate yourself and learn about sales cycle and strategy. Encourage them to look at data you have collected on the consumer. Those that are a good sales team discuss feedback with marketing and utilize it to compromise on what the company and the market want.

Good market-oriented companies: Those that grasp social media and utilize it to engage + create what the market wants + drive sales.
We all know that you have to listen to the community. But how does that balance with the bottom line of driving sales? Your clients and company want to make money. Social media is a tool that can accomplish that. You are bringing awareness, utilize customer service and show that the market is being listened to. By giving them “input” on product and discussion, it can help drive sales. One must use knowledge/research of market to encourage buy-in.

Doesn’t a true market-oriented company not need to push sales for buy-in?
Companies should have brand ambassadors as foundation – not all consumers are brand loyalists or have base knowledge of the product. If you only focus on those talking about your client/product currently, you miss the advantage of educating others and getting buy-in. By using knowledge and research of market to encourage buy-in, you have to alert them through the drive and focus of your efforts.

What do you think?

*Photo copyright of ehow.com.

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Tim Jahn

I think "social media" helps companies sell to the right crowd easier. Rather than using a billboard to advertise shoes to every commuter every morning, a company can use "social media" tools to communicate directly with folks that have expressed interest in shoes, or even that company's shoes.

At the end of the day, sales is still the driving force. "Social media" is just another tool to increase sales and build awareness of the company, but it's a tool that makes this a bit easier for many companies.
Nick D

Think of Social Media like you would a normal conversation. If you were standing around talking with a bunch of people, would you want someone running up and saying, "We have 2 red widgets for the price of 1 going on right now!"? No, that's obnoxious. It's the same thing with Social Media.

Social Media is great for W.O.M. advertising and it starts with your Brand Loyalists. These are the people who more often than not, seek you out. The goal is to open lines of communications with them, educate them and give them the tools they need to advertise for you. If you build up a big enough following doing this, you will have a great group of people for focus groups, product testing, etc. These are people who are actively engaged with your brand. Let them spread the word of how good your goods or services are. Make them feel like they are part of your organization.

Social Media is also obviously good for customer retention and customer service. These are next areas where Social Media is essential. Sales as a direct result of Social Media should not be figured into any equation unless you are somebody like Dell where people follow to get great deals. Your focus should be growing your group of loyalists and hoping that sales will increase as result of your engaging these people.
laurenfernandez

No, but in a normal conversation I would listen to a friend if they told me about the fabulous shoes they bought from Steve Madden. Brands catch my attention - so brand ambassadors are where it's at. That's a true brand loyalist - whether they know it or not.

Sales should have a say in social media. I am of the mindset that sales and marketing are very similar, and the companies that work together? Those are the ones succeeding in this space. It's a foundation type deal - marketing builds on the foundation of brand loyalists which educates others and helps them think about a sale.

Great insight Nick.
bethharte

Hi Lauren,

Excellent post! We can also look at Pareto as 80% of revenues come from 20% of customers. That's how most companies operate. It's easier, in most cases, for market-oriented companies to tap in, listen to and make sure that those top-tier customers get the products/services they need (as long as corporate goals are also satisfied). Why? Because they are usually loyal (wouldn't you be if you are getting what you need?) and if not are easily replaced by customers in the 21-25%. (i.e. if a top customer leaves, the next percentile just moves up.)

If we look at a sales-oriented company that decides "THIS is what we will make and market" we can see why they are always scrambling to create that 20% over and over with short-term products and services...and revenues. As well, they spend a TON of marketing budget to achieve the revenue levels.

When it comes to social media, most sales teams in a sales-oriented market typically don't want folks tapping into their customers AND income (commissions). In a market-oriented company it doesn't really matter because customer satisfaction is Job #1.

I would say for a market-oriented company having customer service, sales, marketing teams engaged in marketing would save a lot of money in product/service development (get it right the first time for a market that wants to buy), marketing budget and customer service. All that leads to higher sales, customer satisfaction and a beefed-up bottom line.

Beth Harte
Community Manager, MarketingProfs
@bethharte
laurenfernandez

So are sales-oriented companies more after guaranteed, quick results? Is this why corporations are struggling still with social media buy-in? I guess, as in any marketing, it's difficult to have buy-in for the principle and platforms.

It irritates me that some sales believe it will cut into their commission by evaluating the customer. I figure they would feel appreciated.

Successful market-oriented companies do have those teams in place - or they have the specific qualities needed to execute.

Thanks for inspiring the post , Beth, and for a great comment! Lots to think on.
bethharte

Like I said, it has nothing to do with sales vs. marketing. It has to do with the culture or mindset of product/service development.

A sales oriented company (think Ford's Model T... "You can have any color as long as it's black.") develops and produces what THEY want and then they create a marketplace for those products/services. That's why they spend a TON on promotion, advertising, etc. It's why they continually struggle for the "next best thing" and waste a lot of time, money and cycles trying to create that thing (instead of just going outside to learn what it might be). And it's also why sales teams are highly commissioned (vs. a large base salary) because the company is using commissions to get them to sell, sell, sell! Also a reason why sales tends to get a bad rap for having an aggressive, used-car sales mentality.

A market-oriented company (think Dell's multiple color laptops and Mini's and how you can custom order the setup) develops what there is a market for. They tap into existing customers or do research to find out where there are needs (and perhaps a gap to fill them) and then create products/services. That's why a company like Dell has been successful with social media (Twitter, IdeaStorm, etc). That said, Dell learned the hard way to be market-oriented (Dell Hell, etc.). Sales people who work in a market-oriented company are still commissioned, but their base tends to be higher because they focus on relationships for the long-term. And in some cases, the sales cycle is long and complicated, esp. in B2B, so it's important to have those relationships in place.

In a market-oriented company, social media is a natural fit because it can potentially save money in other areas... Marketing communications, research, product development, shortened sales cycles, customer service, etc. Why? Because they are already selling what their market wants. The challenge then becomes to provide the best customer service, next product/service that satisfies the market's needs/wants, etc.

Thanks Lauren!
laurenfernandez

Always have me thinking, Beth..... :)

I guess I can see how the culture or mindset of product development would pit sales against marketing at some level - and in some companies. Don't many marketing oriented companies spend a lot of money on advertising as well? I see Zappos, Southwest, etc ads all the time. Maybe it's a different platform, but they are still advertising. Traditional is going out the door.

I liked your point about base being higher so that commission isn't as important - but where's the line on that? I think you can still have a sales-oriented type of company with a higher base. Some companies just won't get it.

I love how you always make me think. Thanks for another well thought out comment!
bethharte

We need to keep in mind that both Zappos (a distributor, not a producer) and Southwest are selling commodities. They aren't listening to the market and creating products based on feedback from those markets. Have they enhanced around the service they provide, sure! That makes it easier for them to both use social media very well. But look at Southwest's recent debacle with Kevin Smith... Social media wouldn't have saved them from it because folks outside of the social media team made the mistakes. They profiled him and made assumptions they shouldn't have as well they aren't consistent with their policies regarding 'people of size.' The market feedback might just make them reconsider their weaknesses in some of their customer service and in-flight service areas.

I think if organizations are going to be "social," they need to take a good, hard look at all of their internal policies, procedures, etc. and investigate how those might just put a wrench in the works.

Now you have me thinking! ;-) Is this even possible? I don't think many organizations are there yet...
laurenfernandez

I don't have anything other to add - except that we always have great conversations! I'm glad to know someone like you B!
jasonpkeith

Lauren,

I would actually argue that the 80/20 rule is perfectly suited for social media and by extension, social media marketing/sales. The rule implies that you focus 20% of your efforts on a certain segment, that will then bring in 80% return. In a lot of cases for companies, that means that 20% of their customers drive 80% of their sales. That's why sales teams work so hard to make sure that that very important 20% is always happy.

This rule can very easily be applied to social media, and specifically brand advocates. In fact, if a company were to identify, craft, and give a lot of time and attention to a very loyal small segment of their following (say, 20%) then that group would then drive a lot of brand awareness, indirect marketing, and word of mouth, potentially getting a company 80% (or better) of return in those areas, as well as dollars. Because in essence the 20% that are brand advocates are doing the work of an entire sales or marketing staff. By spraying the message everywhere and sort of hoping that it hits the right people, you're potentially wasting your efforts. You argue that you're missing out if you focus on only those talking about your product, but in fact by focusing on a very loyal and core 20%, you're hoping that THEY spread the message and encourage buy in. Not only will they work for you, but they can be more effective in getting buy in, because they're not company employees.

By focusing on a core group of people that can have a big impact in the long term and giving that group benefits and insight that others don't have, you're giving them the tools and the knowledge to go out and carry your message for you. From there, your message will grow, but so will your group of brand advocates. Hopefully, that core group will grow as your company does.

In fact, take a look at your own blog as an example of the rule. I would bet that 20% of your followers drive over 80% of your traffic. They're loyal to you, they comment, share, and read your posts and promote your blog for you. It's to the point now where you have your own brand advocates out there working for you, and that's fantastic. And I'm assuming that, without realizing it or not, you've really worked with and focused on keeping relationships with that top 20%, which is obviously paying dividends for you.

The rule is actually a great one to follow, for marketing, sales, and almost anything else.
Jerod Morris

Terrific insight: "By focusing on a core group of people that can have a big impact in the long term and giving that group benefits and insight that others don't have, you're giving them the tools and the knowledge to go out and carry your message for you. From there, your message will grow, but so will your group of brand advocates. Hopefully, that core group will grow as your company does."

I agree wholeheartedly and have definitely found that out with blogs I manage (even though the subject of this post is obviously much more broad than just blogs).
laurenfernandez

I like your view of the principle better. Could that loyal segment be viewed as a the brand ambassadors? Your example of my blog gave me something to chew on - I do have those that are loyal and constantly RT or comment on my blog. They are the ones that spread the word and help encourage buy-in.

Your point here: "Because in essence the 20% that are brand advocates are doing the work of an entire sales or marketing staff." is spot on. Thanks for the great post!
Jerod Morris

Well done post Lauren. I am especially intrigued by the last point regarding brand ambassadors and encouraging buy-in (and how it relates to the point before regarding social media). I hope to see you someday expound on it in a full post.

It seems to me that a challenge for all social media marketers is "pushing" a message or brand out there in front people who are not already talking about it and doing it in a way that is not intrusive or salesy. As someone who looks to help clients do this very thing, I'd be interested in what you think are 4-5 solid strategies for doing this.

I know that when I am in the role of consumer, I am not very receptive to having brands "pushed" on me. I prefer to discover new things organically through my experiences, research, and online social circles. With more and more of the Internet become centered (at least from an individual standpoint) around our niches and social circles, how will that change how a brand ambassador looks to create buy-in from those unaware of the brand?
laurenfernandez

Its in the works for next week - buy-in is an interesting topic because it can expound upon many different facets - and many different viewpoints.

Organic marketing (and viral marketing, for that matter) don't work unless the knowledge is there. If you don't have ambassadors pushing for you? You can't get anywhere. Sometimes their audiences aren't hearing about the brand, so with engagement comes the driving of information and value. Some call it inbound marketing, but I don't really like the term that much.

I tend to trust my niche more than anyone else, so I think we will see the model shift.