Social Media For Free?

Eric Fulwiler contributed to this article both in spirit and tone. The last section is his addition, quoted verbatim. He blogs at Opinion at Large, and is really wicked smart. Follow him on Twitter, and read his blog. He’s my new hero.

What if I told you that you could have my services for free? What if I told you that there was absolutely zero-risk to bringing in a social media consultant, someone who had experience training businesses in social media, worked with them to integrate and synchronize their marketing efforts to include social media marketing? What if I told you that instead of charging you X thousands of dollars a month you could keep your cash and only pay me if I increased your business. Would you rather have a 10% of something or 100% of nothing?

I am in the services business. I have knowledge and insight that I am willing to trade you for money. To be honest, I feel too much like a lawyer. I get paid whether my services help you or not. I think this is emblematic of a broken way of doing business. Personally, I’d rather have my pay tied to my performance. I’d rather my interests and the interests of the business I am working with be intertwined. This incentivization scheme is more positive.

Let’s see how this might work:

1. Instead of paying me two thousand dollars a month to train your staff, rebuild or redesign your website, market your business (traditionally and digitally), you offer me a percentage of any business that I generate. Let’s say the number is 20 percent.
2. We take a snap shot of your business from the last month, the last quarter and the last year and agree on exactly what income you have as your baseline. Any business going forward, for a specific amount of time, call it 6 months or a year, I get 10 percent of.
3. Let’s say your net income before “hiring” me, is $15,000 a month. In month 1 of our interaction there is no change. Therefore I get paid nothing. Integrating social media marketing takes time, and requires the bandwidth for businesses and marketers to spend time blogging, twittering, figuring out how to market with new tools like Foursquare and Groupon. These tools take time to take effect. So fine, first month, your business is where it was, and I get paid nothing
4. Second month you see a 30 percent bump in your business. We ran a Groupon special and had 500 check-ins on Foursquare, of which 35 took advantage of the “Mayor Special” we had integrated. So now there is $4500 dollars that goes into the shared pool. I get 20% of that which is $900.  You have $3600 more dollars.

Would you make this deal?

The following is from Eric:

There is something wrong with the social media consulting industry. There is too much risk, and not enough proven reward. Not to mention the market is completely over-saturated with experts and thought leaders. But the industry will evolve. It’s just a question of whether you will be in front of or behind that trend.

Business is an equation. Return/investment. The problem with the current social media consulting model is that the return is uncertain and sometimes unproven, while the investment is usually fixed and definite. A business pays 5,000 dollars a month for a consultant who they hope will increase their business. In this situation, the equation looks like this: ???/5000. Not too appealing to a business owner.

What is appealing to a business owner (or anybody) is a no risk investment. A business pays only if there is a proven ROI on the social media consulting. The equation becomes something like: x/.2x. A business pays 1000 to a consultant at the end of one month because it earned an additional 5000 in revenue over that period. In this equation there is no question mark, and R will always be greater than I. If return is always greater than investment, there is no risk for the investor.