Small businesses (SMBs) are consider the engine of economic growth and a laboratory for experimenting with new business methods and communication formats to extend reach and reduce costs. Social media is perfectly suited to meet these small business needs.
Small business defined
The UMass Dartmouth research focuses on the Inc 500, the fastest growing companies in the US. Since small business (aka SMBs) can vary significantly, here’s the composition of the respondent set.
34% of the Inc 500 (or 170 firms) participated in this research, making it statistically valid at +/- 6% margin of error
Annual revenues of the companies surveyed ranged from $1 million to $300+ million; of these, 42% had sales between $3 million and $10 million.
78% of these firms were founded after 2005.
Over two-thirds of these companies have fifty or less employees.
Since 2010, there’s been an increase in companies providing Government Services that are less likely to use social media tools.
Social media use prevalent among small businesses
Social media use has penetrated smaller companies at rapid speed. In part this is attributable to the fact that social media (once considered “free”) doesn’t require expensive media investment.
Over 90% of the Inc 500 use at least one major social media platform.
81% of the Inc 500 use Linkedin. It’s the top-used social media site by this group. Based on the research, this may be attributable to LinkedIn’s ability to reduce recruitment costs rather than for sales lead generation. Don’t underestimate the power of sharing content on LinkedIn (as well as using Slideshare which it owns.)
67% of the Inc 500 use Facebook, a decline of 7 percentage points from 2011. While having a Facebook presence is needed for many small businesses, having dedicated resources continually engaged demands resources with little direct accountability.
67% of the Inc 500 use Twitter. Like Facebook, Twitter can be employee intensive. Unless your customer service staff can handle Twitter, use this platform to promote your content marketing and engage with prospects, customers and the public.
30% of the Inc 500 use YouTube, a decline of 15 percentage points. This is also surprising since scrappy startups Blendtec and Orabrush build their brands through the use of low budget videos that went viral. Further, YouTube is the number two search engine.
Actionable Marketing Take-away: Small businesses should consider the fully loaded costs of each social media platform relative to its ability to drive measurable business goals, especially branding, attracting prospects, closing sales and retaining customers.
Social media supports business growth but requires investment!
Two thirds of small companies view social media as necessary to their growth.
Actionable Marketing Take-away: Since it’s critical to use social media effectively for your business, determine which activities drive measurable results. Of course, you must use a social media call-to-action and a tailored landing page.
Fueling social media has a cost in terms of resources.
65% of businesses use internal resources to handle social media. They either repositioned an existing employee’s job or distributed social media responsibilities among existing employees.
9% of businesses hired a new employee specifically to handle social media.
Actionable Marketing Take-away: Small businesses leverage the power of their employees on social media. This is important for any business since they understand your offering best!
Social media investment has reached an inflection point for small businesses. They’re moving from increasing their social media budget to maintaining it.
41% of respondents plan to maintain their social media budget, a significant increase of 25% from 2011.
44% of businesses plan to increase their social media investment, down from 71% in 2011. Hidden in this number may be the social media hires and redistributed job functions. Further, it underscores change from implementing to maintaining.
Actionable Marketing Take-away: Small businesses were early investors in social media, often through the use of sweat equity (i.e.-the owner’s time.) Expect most social media investments in the future to come as a tradeoff with other priorities.
One third of the Inc 500 can determine an ROI for their social media efforts. Of these, almost one fifth realized spending cuts attributable to social media, mainly due to lower new employee recruiting expenses.
Actionable Marketing Take-away: To ensure you can track your social media results, incorporate a call-to-action, tracking code and tailored landing page.
About two-thirds of small businesses monitor social media while over half have a strategy in place to deal with an online crisis.
Actionable Marketing Take-away: Even if you don’t participate in the conversation, monitor what’s being said and know when to respond. You want to have an Oreos Super Bowl moment not a Marco Rubio Post State of the Union water bottle moment.
Small businesses have social media plans for the future.
Social media is here to stay for most businesses. The question is how they plan for the future.
59% of the Inc 500 integrate social media into their marketing/ business plan. This is aligned with the move to redistribute social media across existing personnel.
12% of the Inc 500 have a standalone social media plan.
22% of the Inc 500 don’t have any social media plan. This makes sense since about a third of businesses view social media as unimportant to their future. Further, almost three out of five businesses don’t have any financial return on social media.
Actionable Marketing Take-away: Since small businesses have limited resources to distribute across their organization, they’re integrating social media into their existing marketing to maximize its effectiveness. This makes sense since it ensures that social media efforts are incremental, not duplicative.
While small businesses have expanded their use of social media platforms to support their marketing cost effectively, many are still challenged to drive measurable revenue. This will require further work to better align their goals, social media use and results.
If you’re a small business, what has your experience been using social media? What are the strengths and what are the weaknesses?