2 Essential Keys To Social Media Success

Over the last year, with the meteoric rise in Social Media entrepreneurship, volumes have been written about the keys to success.

Recommended strategies, tactics, execution and management approaches — along with Social Media engagement principles, product refinements, competition analyses, planning tools, sales methodologies and profitability metrics — have all been set forth in exhaustive detail.

As important as the above considerations certainly are, in many instances we may have been missing the point.

We may have been overlooking two essential keys to Social Media success.

Let me set the the stage for this discussion:

• An excited, talented and tireless entrepreneur has chosen Social Media as the marketing medium of choice for his company.
• He has read every book on the subject, haunted Twitter streams, lists, blogs and professional websites searching for the perfect success formulas.
• He has investigated the competition, developed a stand-out product, and planned carefully.
• He has exactly identified what he wants to accomplish and understands how to measure results.
• He has forecasted profits with the skill of a spreadsheet Wizard.
• He has even generated interest within the Venture Capital community.
• In short, he has done everything possible to energize his business and achieve his objectives.

As a result, the entrepreneur firmly believes he is carrying the key to success on his shoulder — and that the door to success is standing before him, waiting to be unlocked.

Why then are his sales much less than anticipated — and his profits unimpressive?

The answers may be found in two key areas he didn’t fully consider: 

1. An obscured point-of-view, and
2. An excessive burn rate.  

Avoiding these pitfalls, are two essential keys to Social Media success.

POINT-OF-VIEW:  SEEING THE WORLD THROUGH A FRESH SET OF EYES.

Albert Einstein, a genius by anyone’s definition, was successful for innumerable reasons — not the least of which was his ability to view the world through a new, fresh set of eyes.

Einstein once explained:  “The horizon of many people is a circle with zero radius which they call their point of view.”

On occasion, this zero-radius circle becomes a translucent barrier that cuts the entrepreneur off from his intended customers, and obscures his view. As we shall see, that often makes all the difference.

Background

Marketing principles have not really changed in decades. Traditional business people have been using largely unchanged practices since the conclusion of the Industrial Revolution.

Developing a killer-product, pricing it at or below the competition and mass selling to the largest market possible, have been the key ideas.

With the onset of the new Social Media world, these traditional business people have drawn a tight, zero radius circle around their product strategies and distribution systems, refusing to expand their point-of-view beyond the successful status quo.

Without realizing it, they have created a translucent barrier that cuts them off from their intended customers, and obscures their view.

In short, they are ignoring what the new, Social Media customer wants and needs — concentrating instead on their old products, services and sales approaches.  They have a strong reaction when confronted with the need to change, and they resist it mightily.

This often creates a serious disconnect between buyer and seller, dramatically reducing anticipated results and immobilizing an otherwise successful sales operation.  This often overlooked nuance is often fatal to newly established businesses.

The solution is simple, according to the Harvard Business Review: 

“When you have a strong reaction to something, take a deep breath and ask yourself a single question: what’s going on for the other person? Then, based on your answer, ask yourself one more question: What can I do or say that will help them?  In other words, don’t start from where you are, start from where they are.”

EXCESSIVE BURN RATE:  THE FATAL FINANCIAL MISTAKE IN MANY BUSINESSES.

According to Wikipedia, burn rate is a synonymous term for negative cash flow. It is a measure for how fast a company will use up its shareholder capital. If the shareholder capital is exhausted, the company will either have to start making a profit, find additional funding, or close down.

The term came into common use during the dot-com era when many start-up companies went through several stages of funding before emerging into profitability and positive cash flows and thus becoming self-sustainable (or, as for the majority, failing to find additional funding and sustainable business models and thus going bankrupt).

A common flaw in many entrepreneurial businesses springs from the optimism of the entrepreneur himself.  If initial sales are encouraging, the natural response is to expand operations immediately.  Positions are filled, new locations are established and a dangerous assumption is made:  If profits of X result from sales of Y, then it follows that profits of 10X will result from sales of 10Y.  Sadly and disastrously, this is not always correct.

The wants and needs of the customer can change at the speed of thought in Social Media.  Rumors of a recession, sudden changes in employment figures, increased energy costs, or invasive government regulations can propagate through Social Media channels with breathtaking speed.  If the perils of excessive burn rate are allowed, the seemingly profitable company can be bankrupt overnight.

To complicate this matter even further, the opposite can also be true.  According to the website Investopedia:

If companies burn cash too slowly, they risk falling behind in the competition to innovate, expand and gain market share.”

Avoiding these opposite burn rate pitfalls is also essential to Social Media success.

The solution again is simple:

Resist the urge to grow until predictable profits are realized over time.  Stay small and agile.  Plan for contingencies.  Manage cash well, which ever way the market is heading. Watch the trends in the Venture Capital market closely.  And govern your burn rate as if it were a potential deal-killer, because it is.

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