Social Media BuzzSocial media is hot.  Everywhere you turn, it seems like some expert or another is touting a new social media venue and warning you that failure to incorporate it into your marketing plan will spell disaster for your business and relegate it to the dark ages.  Opinions and anecdotal evidence can seem persuasive, but as a small business owner you need real facts to make decisions about how to spend your precious marketing time and budget.

A new study from Custoria puts the social media craze in its place.  Published in June, 2013 the E-Commerce Customer Acquisition Snapshot report looked at data from 72 million customers from 86 U.S. retailers across 14 industries between 2009 and 2013.  It found that organic search is the most effective channel to use for customer acquisition, accounting for 16% of acquired customers in 2013, followed by Cost Per Click (CPC) ads at 10% and plain vanilla email at 7%.  It also found that email-generated customer acquisition quadrupled over the study period.

Social media outlets fared far less well.  Facebook accounted for just 0.17% of customer acquisitions in 2013 and Twitter less than .01%.  And even worse news for social media as an acquisition channel, the study found that the life time value of customers acquired through those channels is comparatively low. (Lifetime value is defined as the future profit a company expects to generate from a single customer throughout their relationship with the business.) Facebook-acquired customers have an about average lifetime value, while Twitter acquired customers are worth 23% LESS than average.  Compare that to organic search acquired customers rated at 54% better than average, CPC acquired customers at 37% better than average, customers acquired via referrals at 26% better than average, and customers acquired via email at 12% better than average.

Of course this doesn’t mean that social media can’t or shouldn’t play a role in your marketing efforts.  It is certainly a great way to connect with your existing customers and to promote awareness of your small business and your brand.  But when it comes to actually acquiring new customers who will provide long-term recurring revenue for your business, this study finds that it may not be the best use of your resources.

Want the details?  Read the full study here.  Along with statistics on customer acquisition channels, it also provides information about the most profitable U.S. states for e-commerce sales.

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Image Credit:
Social Media Buzz by ivanpw, on Flickr

Lisa Hephner

Lisa Hephner

My name is Lisa, and I'm the Vice President of Knowledge, responsible for the management of corporate, product, competitor, marketplace, legal, and regulatory knowledge, and creation and dissemination of knowledge tools using these assets to PaySimple prospects, customers, employees, and partners.

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