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July 17, 2009

By the Numbers: Social Media and Small Business

By the Numbers: Social Media and Small Business

Adam Ostrow

Editor-in-Chief, Mashable

Summary

Are you wondering about how use of social media in your small business stacks up against your peers?  A recent study by Sage Software and AM

Are you wondering about how use of social media in your small business stacks up against your peers?  A recent study by Sage Software and AMI-Partners shares not only the total number of small businesses that are using social media tools, but also what types of tools are being employed and how they’re being used.  

In all, the study estimates that there are currently 240,000 small businesses in the US and Canada that use social media in some way.  Although that’s a tiny percentage of the total number of small businesses, the trend is likely only at the beginning.  Social media marketing on the whole is estimated to grow from $716 million in 2009 to $935 million next year, according to Forrester Research.  By 2014, this number will swell to more than $3 billion, the report projects.

Getting back to the small business numbers, some forms of social media are more popular than others.  Not surprisingly, simply using professional social networks like LinkedIn is the top activity, with 51 percent of respondents in the Sage/AMI study indicating they use them.  That makes some sense, as getting started on a site like LinkedIn is relatively easy, and unlike other activities, doesn’t require constant upkeep.  

Along those lines, only 28 percent of small businesses in the study are using blogging and microblogging tools like Twitter.  Of course, unlike simply setting up a profile on a social network, these activities require constant attention to be effective.  A company blog needs to be updated fairly regularly to both keep readers engaged and not give a perception of inactivity, while setting up and ignoring a service like Twitter could lead to customer questions and feedback going unanswered.  

And when digging into the numbers beyond what tools small businesses are using and looking at how they’re using them, responding to customer questions is at the top of the list.  64 percent of small businesses that use social media are doing so for this purpose, making it more popular than other activities like networking, messaging, or advertising. 

Although that might be surprising at first glance, it makes sense for a number of reasons, most notably, that your customers are already using these tools, and increasingly, expecting the businesses they rely on – large or small – to be available there.  The alternative, for the customer, is to search for your business and then figure out how to contact you and await a reply.  Compared to the prospect of getting answers in near real-time, it’s easy to see why social media tools are winning out as a means for answering simple customer support inquiries.  

Once you’ve established your business in social media as being a valuable resource for customers, it then becomes more appropriate to begin using the tool for marketing as well, which, only 33 percent of small businesses engaged in the medium are doing so far.  The key is to not rush into it as simply a sales tactic, but rather, provide utility and let the goodwill and sales follow.  And the numbers would indicate this is what we’re seeing – small businesses first adopting social media simply to meet customer expectations, and then beginning to employ them as a means to improve the bottom line.

Keep in mind, most projections indicate that we’re still very early into the social media movement, especially as far as small businesses are concerned.  Thus, even if you’ve only implemented a couple of the tools mentioned in these reports, you’re still ahead of the curve.  And even if you haven’t, getting started now still puts you ahead of the vast sea of small businesses.  Just don’t wait too long, because every friend, follower, or blog reader that a competitor gets could be a future customer lost.  


Image courtesy of iStockphoto, Norebbo