SCHWARTZ CROSSROADS

Small Businesses Use Social Media to Connect with Customers

Over the past couple of years, I've watched and wondered as many self-appointed social media gurus have worked to convince technology industry executives that they can market on the cheap, if not for free, using social media.

The idea is so appealing. Entrepreneurial companies are working with limited budgets, their marketing people are being asked to quantify ROI pretty quickly, and if the "I" is supposedly nothing and the "R" is greater than zero, they're in good shape, right? And let's be honest--social media is the newest thing and just sounds like more fun than the options.

What's becoming apparent is that using social media effectively requires a fair amount of knowledge about the industry at hand and more than a few minutes a day of time. In other words, the "I" can be substantial. The fact that many of the tools are free is great, but this doesn't obviate the fact that execs' time is, in fact, money and the people they might hire to use the tools charge for their time and expertise. And then there's the critical question of tangible returns and how they stack up versus returns from other marketing or customer support activities.

Late last week blogger Tony Faustino suggested, in "Successful Social Media Marketing Is Neither Free Nor Easy," that small business owners need to understand that there's not likely to be fast pay-off for using social media. Think several years, not a few months, he says. (I'd personally suggest that there's benefit to be had after several months of consistent use, but understand Mr. Faustino's point.)

He was reacting to a mid-March Wall Street Journal article, "Entrepreneurs Question Value of Social Media," which said, well, you can guess what it said. Here's an excerpt:

"Last year, social-media adoption by businesses with fewer than 100 employees doubled to 24% from 12%, says a survey released in January of 2,000 U.S. entrepreneurs from the University of Maryland's Smith School of Business and Network Solutions LLC, a Web-services provider in Herndon, Va.

"Meanwhile, a separate survey of 500 U.S. small-business owners from the same sponsors found that just 22% made a profit last year from promoting their firms on social media, while 53% said they broke even. What's more, 19% said they actually lost money due to their social-media initiatives."

The article offers a few anecdotes of success and frustration. What I'd have liked it to suss out, however, is whether the companies that have met with some success with social media employed some strategy other than "interact with customers." I'd also be interested in learning how the small business owners are balancing social media with other forms of marketing and customer support. I assume social media isn't the only tool they're using.

At Schwartz, we generally advise companies that are starting to use social media that they need to work with it consistently for about six months before really starting to judge what it's doing for them. The next step is figuring out, based on early results, how much time and effort should go to social media compared to other customer outreach and support programs.

I suspect that the self-styled gurus are learning along with entrepreneurs and communicators that social media isn't free, that you can measure returns only if you defined a goal at the outset, and that those returns have to be stacked up against those of other marketing programs.

Posted by Laura Kempke on April 5, 2010 at 12:02 PM