Do small businesses really need social media?

By on December 2, 2010 in Everything Social Media

With 400 million users on Facebook alone, social networking promises an unrivalled source of potential sales all under one big internet roof. A marketeer’s dream database of thousands of potential new customers at their fingertips.

But ask any small or medium business seduced into investing time and effort on Twitter, Facebook or any other of the dozens of social media sites around the internet, what they have to show for their investment and the answer may well not reflect this potential.

In fact, a survey by the Forum of Private Business (FPB) found that 52 per cent of SMEs now using social networking sites such as Twitter and Facebook are unsatisfied with their return on investment. They found that the investment in time and resources compared to the potential payback for most small businesses just does not equate.

Certainly the statistics are impressive and easily persuasive as to why companies from all sectors and of all sizes should be playing the social networking game. Take Facebook, if it hasn’t already it will soon likely overtake Google as the world’s most popular website. Of its 400 million registered users, 50% of them log on in any given day. The average time on site is 55 minutes. More than 100 million users access the site regularly access through mobile phone.

That’s an awful lot of potential customers in the one place for a long time. Surely it’s something every company should be finding out more about how to exploit?

But the first clue as to why social networking may not be the marketing dream that it first seems is the average time spent on the site. Nearly one hour per day is the average  investment required to be taken seriously as a social networker. How many small or medium sized businesses have the spare resource to have someone spend an hour a day uploading and interacting online?

But two distinctive groups do; the very big and the very small.

Large companies can afford to employ people to blog full time, update Facebook and Twitter and keep up to date with myriad of other social sites that are springing up. For them it is becoming an ever more important way of building brand, finding out what customers are interested in and creating good will for the company.

At the other end of the spectrum is the single consultant or self employed, working in creative or IT industries perhaps. For them it is an essential marketing tool, a way of promoting their businesses in an innovative way. This grouping would think it ridiculous not to be socially networked.

Between them these two groups account for around 50,000 of the 260,000 or so registered companies in Scotland.

For the other 210,000 employing between 1-49 people however, it is a space they just shouldn’t be in at the moment. For networking and the creation of goodwill does not easily equate to what these companies rely on for survival , sales.

People do not visit social networking sites to buy products or services or to be marketed to, they go there to catch up with friends and find out what’s going on. People engaging in this type of activity are a long, long way from buying a product or service.

And sales are ultimately what keeps small and medium sized companies living on limited cash flow afloat.

Three questions any managing director of a small company should ask themselves before embarking on a journey into social media for business purposes.

•    Do I update my website with either a blog or company news every week?
•    Do I send out a regular web or print newsletter to my existing contacts and customers keeping them up to date with company news?
•    Do I have someone within the company who actively manages communications with customers and clients through a contacts database?

If the answer to any of these questions is no, the company is not going to benefit from devoting time and resources to social media. Small businesses are far better concentrating on getting the tried and tested marketing techniques right before dipping their toe into anything new just because it appears ‘everyone else is’.

Using optimisation tools to drive traffic to the company website, keeping a managed up-to-date list of contacts in a Customer Relationship Management database, regular personal customer or client contact with relevant business information and sector news, keeping a blog about what is going on in your business or sector, spend some resource building a media profile for the business.

All these marketing techniques will be more effective in driving sales than social networking will. Getting these right will be time and money well spent.

In marketing speak social networking is four or five steps away from a sale. Until small businesses already have these four or five steps leading up to social networking 100% covered, then it shouldn’t even be on the radar.

If it is done well and resourced properly, social networking can work. Dell for instance is just one of countless large organisations who use Twitter and other platforms very effectively as a shop front for their products and for individuals it’s a great way marketing skills and experience to potential clients.

But Dell and their like have whole teams working on social networking full time, they commit huge resource to it, that’s why it works for them. Any small business that thinks dabbling in social networking will help them sell products in the short term is wrong. So for the majority of the Scottish business base it is not for them – yet.

As applications and technologies improve it will no doubt in some way evolve into a resource to be used across the business spectrum.

Until then small businesses need to think about getting their basic marketing techniques fine tuned before dreaming of tweeting their way to record sales.

About Craig Cowbrough

Craig Cowbrough is a communications professional with more than 15 year’s experience working in the UK and overseas and is a visiting media lecturer and the Universities of Edinburgh and Stirling. You can visit Craigs website at www.cowbrough.co.uk
View all posts by Craig Cowbrough →

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  • http://www.lizmelville.co.uk Liz Melville

    I totally agree. Small businesses should not use social media….if they are doing so to generate sales. This is not the point or purpose of social media. Very few social media campaigns would even include sales as a measure of ROI.

    In fact, to discount it because it is ‘four or five steps away from a sale’ or as some kind of alternative to traditional marketing methods is to show a distinct lack of understanding of how it should, and can, be used. Regardless of business size. For those sharing that expectation of sales – stay away from it. For you will be disappointed in the short term.

    Social media should always be used as an integrated part of an overall marketing plan. It should not be used in isolation – it won’t work. It is simply a very useful tool to have as a complement to a sound marketing strategy.

    But to dismiss social media offhand is also to ignore a sea change in how society communicates, thinks, interacts – and does business. A dangerous standpoint for any business who wishes to survive long term.

    To the 210,000 businesses you suggest should ignore social media, I would ask this one question: ‘Do you know what your customers are saying about you?’. There are over 500 million people on Facebook alone, and you can bet they’re updating their statuses with tales of companies who p@@@ed them off, or recommending those they thought were great. Being able to track those comments, react to them, manage customer expectations, and generate an outstanding reputation for customer service and engagement are only some of the benefits of using social media. Put simply, social media allows you to communicate with your customers. In a 2-way conversation. Not the traditional one way traffic of traditional marketing methods. It is what 21st century businesses are focussing on, as they begin to realise that how they engage with their customers will make or break their businesses. Ignore the negative comments at your peril. They can destroy a business without you even knowing why. And all your other efforts to secure sales will be wasted.

    Social media is indeed four or five steps away from a sale. But it has huge potential to organically attract a hugely loyal customer base. Who feel wanted and valued, because you have communicated with them, and not just talked at them. Who will therefore be more likely to do business with you.

    Want to dismiss social media offhand? Better hope your competitors have too!

  • http://www.cowbrough.co.uk Craig Cowbrough

    Liz I think your points are all valid. I wasn’t trying to trash social media as a tool just pointing that it might not be the right tool for certain small businesses at the moment who might not have the resources to do the basics right. You just have to do a simple search on the web to find small businesses who start a blog or a facebook page that just sits on their site unpopulated bacause they can’t resource it. That’s the worst of all worlds.

  • http://www.active-x.co.uk/blog Gavin Routledge

    We use social media mainly as a way to stay in touch with current clients and customers. It is a great way to ensure they always think about us when they need the services we offer.

    It has also helped us attract attention from new clients from our current clients. Friends of friends!

    As with everything you need to pick and choose where time is spent and on what but for our company it has been a great way to build a presence so more people know we are out there.

  • http://www.lizmelville.co.uk Liz Melville

    Craig, I think we’re on the same page. Totally agree that any business getting into social media really does need to get the basics right. Too many set up accounts, tweet for a few weeks, then give up because there are no instant results in the sales figures. And it does take a bit of time to do it properly. However, it’s lovely to read comments like Gavin’s, which show it can be done well with just a bit of effort.

  • http://4tm-guide.com David Sim

    I agree that social media needs to be treated carefully – just as forking out week after week on an ad in the local press does. I don’t accept either a) that it requires an hour a day (if you’re using the correct tools) or b) that it’s not for very small businesses.

    It’s not old fashioned sales – it’s something more powerful – engagement. One of our clients is a tour guide. He spends very little time updating – using his ancient mobile phone to send out updates in moments of down-time. Yet he has thought about the information those clients want – not traditional yawn-inducing adverts but real, on the ground information of value to past, present and future customers like weather conditions, animal sightings, logistical problems, humorous stories and so on. And this does turn into sales, becoming the automatic choice of people as and when they’re ready to buy.

    The main reason it doesn’t work for many businesses is typically because they see sharing useful information as giving something for nothing, or because of a desire for instant returns.

    Social media is just part of the marketing mix – we use traditional email marketing too. Liz’s comments are spot on. We know that newspaper readership is falling. Google and website is being replaced by time spent on social sites like Facebook and YouTube. Mobile use of social networks is increasing exponentially – the first time we have been able to reach people on the move – and make them a sales proposition – effectively.

    It is a complex area – it’s not all about Facebook – but worth investing some time learning. Thanks for starting the debate.

  • http://4tm-guide.com David Sim

    P.S. I connected with the Scottish Business Blog today because I stumbled across your post on Twitter. I guess that says something.

  • http://underconstruction Louise Graham

    I work as a marketing consultant and have recently started up my own marketing business. As one of the many ‘small business’ who are seduced into investing time and effort on Twitter, Facebook’, I can honestly say that such sites not only have the potential, but are successful in driving forth and putting businesses on the map.

    As Liz said, social media is not about driving sales and should not be used in isolation. However, sales of any kind are not just conjured up out of thin air. People are driven towards a certain business’ or encouraged to spend their money on a certain product or event through the magic and power of positive PR. I recently ran an event for the release of Sex and the City 2. This event was advertised and marketed 95% via social media sites e.g. facebook and twitter and 5% by other forms of marketing and PR. All 500 tickets were sold out in 3 weeks. Surely this example alone demonstrates how powerful social media sites can be if used and managed correctly and effectively.

    Also, small businesses are clever enough to know and understand that facebook, twitter and other social media platforms are great learning tools for business. They are not solely a selling platform. The online visibility of competitors and the sites of other followers demonstrate the protocol of social media. Businesses can see for themselves how to use social media sites and how other small businesses are engaging with their markets. There are also hundreds of Blogs, video tutorials and articles outlining how Twitter can be an effective marketing tool for SME’s.

    The content of Social media pages should be formed from an overall marketing and pr strategy. This highlights what is stated in the blog, that business should spend more time on their media profile. The question is; how do small businesses become aware of how to do this, without gaining the intelligence from social media sites such as twitter and facebook?

    As a consultant, I manage my client’s social media platforms; create status updates and social media conversations all with a marketing strategy in mind. I also have a commercial understanding of my clients business and target market. Managing social media sites can be done fairly cost effectively and efficiently. Personally, I feel that small businesses waste more money spending it in the wrong places with the wrong people due to a lack of knowledge. It is tempting to overlook social network sites and jump feet first into traditional marketing tactics. This could be a dangerous move if a business has little knowledge of their chosen platform or target market. By following and keeping abreast of their market online, businesses can observe what platforms are likely to engage their audience and as a result deliver returns!

    In terms of identifying target market and raising awareness, you can’t find a better platform than social media. Through the twitter search function and through platforms such as back-type, businesses can search for mentions of their company, keywords associated with their industry and the viral community who are talking about them.
    If you are a small business looking to gain insight into your industry, your target market, and want to establish yourself within a competitive industry, then using social media is time well spent. There is no better way to engage and communicate with your market, create a company/brand personality, and measure response than via social media platforms.

    Social media can deliver fast results in real time and offer up opportunity that business would not necessarily have been aware of. For example, STV’s The Hour Show sent out a tweet asking followers how they were keeping warm. This was a perfect opportunity for small business to introduce their product, knowledge or service and gain some pr and awareness.

    Finally, I would ask, if time spent by small businesses on social media is ‘time wasted’, then does the same not apply to time spent networking at events? social media should not be classed as ‘time wasted’, but as time very well spent.

  • Orrymain

    I do believe there is a place for using social media places, but it shouldn’t be the main drive of a marketing campaign. Facebook, Twitter, and the like are good ways of getting the word out, but I don’t believe it’s a long lasting effect.

  • Danielle

    I dont think social networks really should be used for buisness too much.For instance when im on facebook im not there to sign up or buy someones sells pitch im there simply to talk and engage with friends.Im sure alot of people dont pay to much attention.Unless you have the right circle chances are you wont be able to reach the customer base you want.

  • http://www.twintangibles.co.uk Tim Wright

    Craig – an interesting article but I would disagree with some of your points.

    Social Media is a powerful opportunity for SMEs and has the potential to play a role in a range of areas. It is a mistake to see it as a purely from a marketing perspective. It has value for innovation; crowd funding, intellectual asset management, CSR, KM to name but a few.

    I am also personally aware of a number of occasions where SM has increased sales for SMEs.

    However the points about doing it well, integrating it strategically and operationally, and seeing it as part of a larger initiative and not a “nice to have” add on are all correct.

    With regard to not having time to do it. It is a common challenge for many SMEs to find the time to both fully understand the opportunity and having the resource to actually operationalise a SM campaign.

    But help is at hand with companies like twintangibles where you can outsource that social media effort to. I work for them and we go beyond just advice on Social Media we can be the outsource partner and extra pair of hands you need.

  • http://www.ogbit.com Ogbit

    I think this raises some really good points. It’s certainly clear that Twitter use often doesn’t translate into sales for many small business users.

    But does this mean it’s useless? I think not. There’s an education process here – many small business owners aren’t reaping the benefits of social media because they’re not really clued up on how to use these tools properly.