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PREFACE: Social Media superstar Chris Brogan (@ChrisBrogan) wrote a great book called “Trust Agents.” The main point Brogan makes is that Social Media can be used to create relationships, and that relationships can translate into business…and that all this hangs on a single, fundamental factor: TRUST. Inherent in this concept is the flip side of this idea, which is that you can LOSE business if you violate that trust.

I’ve been thinking a lot about the benefits…and the costs…of Social Media.

From a personal perspective, I think it’s the best thing to come along since the internet itself. Almost all of the positive business opportunities I have in my life can be traced directly back to Twitter. As I love to say, Twitter is the Chamber of Commerce meeting that runs 24/7/365. I can connect with someone new any time I want, any day of the year, and I can even research the people in advance to give me a head start on that relationship. It’s a networker’s dream come true.

That’s the good part of Social Media.

But there is another side.

And that side is fraught with peril and risk.

It’s the yin to the yang…the other side of the Social Media coin.

It’s what happens when someone does something to violate the trust necessary to build or to maintain relationships. When someone harms their own interests – and the interests of potentially everyone with whom they are affiliated – and tarnishes their brand because of a foolish mistake.

You might be thinking, “Big deal, how bad could this really be? How much could such a mistake really impact a company’s bottom line?”

And it is PRECISELY that question that caused me to sit down with a sharpie and a calculator and start throwing some numbers around using some simple, common sense assumptions.

Bear with me as I walk you through this…the down side…THE DARK SIDE…of the Social Media moon….

So, hypothetically speaking, let’s assume a major-brand company with solid market share commits a serious Social Media blunder.

Let’s say they make representations on matters of fact that that turn out to be erroneous.

…and let’s assume it happens on Twitter, since that’s the Social Media forum I know best.

…and let’s assume that it happens in my industry – real estate – because that’s also the business I know best.

…and let’s assume that this blunder is noted, publicized and Tweeted about by a number of people who are well respected and who have a large number of followers on Twitter.

…and maybe even someone writes a blog post about this mistake.

…and this blog post amplifies and broadcasts this blunder on an even larger scale.

…and that kicks off another round…or two…or three…of people Tweeting about this blog that talks about this big Social Media faux pas.

…and maybe a major news portal in the real estate industry – again, this is all hypothetical – picks up the story and repeats it.

…and finally, let’s assume – by the time the whole unfortunate incident plays out – that 100,000 people are aware of the mistake (and that number could be dramatically higher, actually, depending on who gets involved in the conversation and how many Tweets are written and re-Tweeted).

In the hyper-competitive world of real estate sales, that single unfavorable incident – that seemingly minor violation of trust – could be the difference between all of those “exposed people” using – or not using – any agent, broker or office affiliated with that company.

So, let’s complete the math using some assumptions that I think are at least remotely reasonable:

• 
  
  Total number of people who became aware of incident: 100,000
• (Times) % of people whose opinion of the brand in question were negatively impacted: 50%
• (Equals) Total people whose opinion of the brand in question were negatively impacted: 50,000
• (Times) % of people who would have used brand in question absent the incident: 10%
• (Equals) Total number of “lost” clients: 5,000
• (Times) Average number of real estate transactions those people will do over remainder of their life: 2
• (Equals) Total “lost” transactions: 10,000
• (Times) Estimated average sales price of home in America: $150,000 (Note: The latest NAR “Profile of Home Buyers and Sellers” shows averages in all four areas of the United States as being greater than this estimate)
• (Equals) Total gross sales “lost:” $1,500,000,000 (that’s $1.5 BILLION)
• THE BOTTOM LINE: Total gross commissions “lost” assuming a 3% commission rate: $45,000,000

That’s $45 MILLION in potentially lost revenue.

Ridiculous, you say? Perhaps it is.

So, let’s assume this illustration is exaggerated by tenfold.

At that point, it becomes a $4.5 Million mistake.

Still think this is out of proportion?

OK, let’s assume the analysis is over-baked by a HUNDREDFOLD.

That’s STILL a $450,000 hit to someone’s bottom line.

And HERE’S the worst part: you, as an agent or broker, might not even be aware of the fact that you lost out on a sale – or maybe even MULTIPLE sales – because of the careless mistake of whomever manages the Twitter account or the FaceBook Fan Page for your brand.

And this doesn’t even consider all the agents who may never join that brand because they also saw and remember the incident.

The costs can be many. And they can be material.

Here are the takeaways:

• Have a formal corporate Social Media policy.
• If you have a corporate Twitter or FaceBook account, make sure that the person running these accounts is (1) the right person for the job, and (2) completely understands your Social Media policy and philosophy.
• On ANYTHING that relates to a matter of fact or record, DOUBLE, TRIPLE and QUADRUPLE check your facts and your sources. Once the horse is out of the barn, it ain’t comin’ back.
• People actually READ and TAKE VERY SERIOUSLY things that are written in Social Media.
• One carelessly written Tweet or FaceBook post can erase the goodwill created by a thousand trust-building Tweets or posts.
• Social Media scales. Large. And fast. And negative news travels far faster than positive news (sad, but true).
• If you make a mistake and people start to react negatively, ADMIT THE MISTAKE and CORRECT THE RECORD. And do it FAST.
• The worst thing you can do: pretend you didn’t make the mistake or compound the mistake by being defensive, combative or – God forbid – throwing out more untruths in an attempt to cover the first mistake. I think people are very willing to forgive and forget – unless you take too long to set the record straight, or you never admit the full measure of the mistake. Then I think people have LONG memories.
• Social Media mistakes can be VERY costly, in terms of image, reputation and brand dilution. And those things absolutely affect the financial bottom line.