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Summary:

As more businesses switch on to the possibilities of social media, a battle is brewing between the tools that help them do it best. Faced with stiff competition, Chicago-based Sprout Social has a simple strategy: fight back by building great products.

Brussels sprouts, under CC license by Flickr user baha1210

Brussels sprouts, under CC license by Flickr user baha1210Whether Malcolm Gladwell likes it or not, social media just keeps getting bigger and bigger. But while the gravity is with a handful of networks, there are still plenty of unsolved problems out there. One of them? Helping businesses understand, manage and improve their online presence — that’s precisely what Sprout Social, the Chicago-based social media monitoring service, hopes to do.

The company, which just released its Google Analytics integration, is aimed squarely at small businesses, with a paid service that provides a single dashboard for managing your company’s social media presence. It hooks into Facebook, Twitter, LinkedIn, Foursquare, and other networks, allowing users to see precisely what’s going on across their spread of communities and deal with it through a single interface.

It’s a very smart and usable service, but it’s a very difficult space to get right. I asked CEO Justyn Howard how he’s going to solve some of the big problems — for a start, getting small businesses to understand why they’d need the product in the first place. Although Sprout’s prices aren’t steep ($9 per month for the standard account, $49 per month for an option that lets you manage many more identities), the problem for many companies is that measuring the return on investment of social media is nearly impossible.

“ROI is mysterious…but your business is gaining or losing customers already, you just don’t know it,” Howard says.

“In fact, ROI is something that, for a lot of our customer base, is very difficult to measure in general — not just for social media,” he says. “What we’re doing for now is trying to embrace the concept that ROI is secondary. Let’s spend less time trying to calculate that, and concentrate on the things you can measure: whether people are talking about you more today than yesterday, for example, what’s your response rate and so on.”

That’s a different approach than companies such as Klout and PeerIndex, for example, which are trying to create more straightforward ranking systems. Howard thinks that there will not be a single metric to rule them all, however.

“Klout’s doing some great stuff, but I think the mistake is that the businesses who are just getting their feet wet in social media think that it’s best practice,” he says. “Something like Klout encourages people to only engage with the most influential customers, but not all customers are influential. Would you only sell your product to the richest customers?”

Since social media monitoring is one of the hot spaces right now, there are plenty of competition out there. At the free end, there are lots of powerful clients, and for more direct competition in the business space, Howard points to companies such as Postling at one end of the spectrum or Radian 6 from the big business end. Isn’t the problem with a small-business focus that you’re always going to be attacked from both sides? After all, free consumer tools end up pushing into the premium business to make cash, while large corporate providers can always open up to smaller customers and kill off rivals.

Howard suggests that the answer is simple: great products. In recent months they’ve added dozens of new features, including message scheduling, monitoring and measurement. It’s early days, but there’s plenty more coming up, including better team-based capabilities and other features that users have asked for.

And it’s got money in the bank to help it achieve that, too. Earlier this year, the company closed a $10 million Series B round from New Enterprise Associates, which came on top of earlier funding from Lightbank (the investment fund from Eric Lefkofsky and Brad Keywell, two of the founders of Groupon). With that war chest, the company hopes it can make a serious dent and step up a gear when it upgrades the platform later this year.

“You’re right when you say we could get pinched from both sides — but we’re going to pinch back,” says Howard. “We’re going to start introducing things that peel people away from those bigger guys.”

Image used under Creative Commons license with permission of Flickr user Baha1210

  1. Anything that moves in the direction of integrating the various disparate social networks will certainly help independent and small business entities to more effectively connect with customers and get their message out. I have not tried Sprout yet, but an initial look at their site shows what appears to be a decent product.

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    1. Hi Gary,

      You’ve hit the nail on the head in term of what we hope to accomplish. I encourage you to sign up for our free 30 day trial and give us a whirl. Let me know if you’ve any questions or feedback as you are starting up!

      Cheers,

      Tessa Auza
      Community Manager at Sprout Social

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  2. Great post Bobbie – gives a good perspective on the space. I think your point on Klout is worth commenting on. (Disclosure: Postling shares investors with Klout.)

    While Justyn’s analogy of “only sell[ing] your product to the richest customers” is one point of view, I’d like to take the other side. While it’s true that a customer is a customer, no matter their background or net worth, it’s also true that the greatest driver of new customers for most small businesses is word of mouth. Given the thousands of people who may come across a business on Facebook or Twitter, it may not be practical for a business to reach out to every single one. Needing to prioritize, it makes sense to reach out to the most influential people, as they are the ones who can have the most impact if they post or tweet about their positive interaction with your business.

    If I were to make an analogy, I’d say that it’s like choosing to get a testimonial from the most popular girl in town and not the hermit who lives in a cave.

    Best,
    David Lifson
    CEO
    Postling.com

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    1. While I agree that influencers have the most potential to spread your message through a tweet (for example), this only addresses one side of the social media equation.

      The ultimate goal for our customers is to turn social connections into loyal customers. If we look at the composition of a customer for the majority of businesses, the number of those who would be deemed ‘influential’ is very small.

      Using an online business or blog as an example, where page views and readership are the goal, Influencers can be very helpful. If your business is a local retailer, I would argue that someone within proximity to your business, who could actually walk in and make a purchase, and who has 10 friends nearby who also have the potential to be customers, has much more importance to that business than a high-profile social media user with followers across the globe.

      If we aren’t careful in how we present and approach the concept of influence, we run the risk of misinforming small businesses getting started with social media to train their eye towards influencers, when the reality is very few of their actual customers fall into that category.

      Klout is a fantastic tool. Joe’s doing a great job and it’s been put to use in a lot of good ways. My job is to help our customers understand that the people putting money in their registers have ultimate clout :)

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      1. marketmesuite Tuesday, May 17, 2011

        ” My job is to help our customers understand that the people putting money in their registers have ultimate clout :)”

        Too true. Klout is fantastic for measuring a person’s own growth on social media. In fact, PeerIndex is another great tool for that, but Small Businesses need to ultimately turn followers into customers! Right on Justyn.

        ~Tammy, CEO @MarketMeSuite

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  3. Hi Tessa,

    Although I haven’t tried it yet from my initial comparison I think sprout social is a winner. The secret to your success next would be how you scale it up – a franchise model isn’t too bad either to deal with SMB market around the world!

    Let’s talk!
    Kaushal (twitter: Kaushal_vyas)

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    1. Yes, let’s chat! You can reach me at either tessa at sproutsocial.com or @sproutsupport.

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  4. marketmesuite Tuesday, May 17, 2011

    Great article. Sprout Social is definitely an up and coming monitoring app and we wish them the best of luck! Being in the small business space ourselves (we focus more on marketing), I can attest to the fact that the small business users on social media growing, and growing fast. A social media presence has become a ‘must have’ for SMEs. A blog or a website is no longer enough!

    ~Tammy, CEO @MarketMeSuite

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  5. Hi Bobbie,

    When someone tells me ROI is secondary, it’s like alarm bells go off in my head, it’s kind of reminiscent of the old Internet boom and bust.

    I’m not saying tools like Sprout Social are not important, they do have have their place. It’s important to listen and observe what your customers and potential new customers are doing on the social web. However, I think for long term sustenance of any social media program, one needs to map business objectives to social initiatives and activities (even an activity such as listening/monitoring). The challenge which most people face is how to do that, I’ve penned a few thoughts explaining how one can do it. http://bit.ly/MapBiz2Social Additionally, I feel people need to adopt a framework for engaging via social channels and with communities, and part of that is where different tools fit in.

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  6. Social Media metric war: #game-on http://t.co/9rbNX1C3

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  7. Can Sprout Social Win the Social Media Monitoring War? http://t.co/01MBqnPF

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