IMPLICATION AND RELEVANCE OF INTRODUCING SOCIAL MEDIA IN SMALL AND MEDIUM SIZED COMPANIES (SME´S)

Daiga Skagale

1. IMPLICATION OF SOCIAL MEDIA IN SMALL AND MEDIUM-SIZED ENTERPRISES (SMEs)

Implication of social media in B2B sector worldwide

In a study held by the research institute Persuadable Research in April 2011 more than 100 business-to-business (B2B) executives confirmed significantly increased use of social media. So Twitter is the most popular B2B communication channel worldwide and Facebook in Western Europe.

“Companies in Western Europe use social media primarily as a source to generate new contacts and business,” says Antonia Contato, the program director of the Worldcom B2B Practice Group and the account director at HBI Helga Bailey GmbH in Germany. “Companies in the U.S., however, follow a different approach and promote thought leadership via social media to attract new customers.”

It  is also reflected by differences when choosing social media platforms. In North America 91% of respondents are registered and use Twitter in some extent, in Western Europe only 62% of respondents. In North America Twitter is the most used platform (31%), followed by Facebook (25%) and LinkedIn (19%). In Western Europe the most used platform is Facebook (31%), followed by Twitter (25%) and corporate blogs (25%).

Through social media experience companies expect creating new business activities. More than 80% of respondents of the research use social media for maintaining communication with potential customers. The most important benefit is found to be thought leadership communication – 26%, communication with customers –  23%, and contacts with potential customers – 20%. In addition, social media platforms are used to form a community to complement the company’s website – 60%,  to maintain contact with the press – 58%, as well as to communicate with potential employees or students – 50%.

Nearly 80% of small-sized companies and 88% of large companies use social media for more than a year. Only 57% of medium-sized companies are in social media, and 34% of them less than six months. Medium-sized companies still are trying to figure out what role social media have in corporate communications and business development. So in 2011 only 46% of medium-sized companies will increase their investments related with social media, for comparing – 68% of small-sized companies. (Cf. Christian Schmitt, B2B-Umfrage, 2011) 

Implication in Social Media in Germany`s SMEs

The results of the survey “SMEs and advertising” done in August/September 2010 by AG psyma / GfK show that SMEs in Germany have great demands in terms of digital marketing. German SMEs invest an average of 1000-5000 Euros per year for marketing. However, the majority of funds flow in printed advertising such as yellow pages, local newspapers and advertising papers.

Figure No.1 „ Advertising of German SMEs“ (Cf. Netz Reputation, Social Media, 2011)

While the SMEs are still on the traditional print media, German consumers search for  information and contact details of companies and service providers mainly in Internet. 44% of roughly 1.3 billion searches annually takes place on the web today. To this more surprising that almost half of the SMEs surveyed still don’t have a company’s website.

The use of Facebook and Twitter for marketing and communication purposes in German SMEs is still not widespread. (Cf. Netz Reputation, Social Media, 2011) There are registered only 26% of surveyed SMEs and 70% of them use the networks privately.  (Cf. Telegate AG Unternehmen, Studie “Mittelstand, 2010) It is not because of the lack of awareness of the social networks. So for 79% of SMEs Facebook and for 61% Twitter is well know, and at least 30% of companies have heard about Xing. The high level of awareness on the one hand and the small number of users on the other hand, suggest that German SMEs do not succeed to integrate their own business in the new global offers.  (Cf. Netz Reputation, Social Media, 2011)

2. RELEVANCE OF SOCIAL MEDIA TO SMEs

Relevance of social media to SMEs

Social media platforms build buzz, boost business and serve small businesses as low-cost or no-cost marketing tools. (Lorrie Thomas, Social Media, 2009)  Social Media enables to connect with other businesses and customers in ways that traditional Internet portals (web pages, Google search, etc.) simply do not permit. There both a company and a customer learn more about each other, can more quickly come to a decision if there is a fit and if it makes sense to proceed in a business transaction. That is appealing to both consumers and companies. (Jerome M. Wendt, Businesses See, 2011)

Web 2.0 and social media are definitely not a short-term hype, but among the most important developments of the recent times. The reasons for use in the context of corporate communication are as diverse as the existing channels. The classical one-way advertising and brand communications work only partly. More and more customers and companies are looking for a dialogue with each other. Customer opinions and recommendations is important content in social media. With a sophisticated corporate image in the Web 2.0 can be relatively inexpensively and efficiently increase of the customer base and company’s own online reputation can be improved. (Cf. Netz Reputation, Social Media, 2011)

Ten most common perspectives of using social media

  1. Marketing. Active participation and communication in social media and networks is a fast and easy way to make others aware of some project and has potential to steer number of visitors to SME’s own internet home page. Customers will take positively given possibility to be involved in the networks of their own choice, for example by giving comments, votes or other helpful information.
  2. Brand building. A company can build its brand by providing information and having a clear manner of communication. Achievements, values  and personality makes a big part of branding and perception in the target group. The personality is the best unique selling proposition company can have.
  3. Traffic. Increasing traffic of SME`s own website is certainly one of the main motives for participating in social media. All the blog articles, videos, pictures, etc. will eventually be read. Having clear strategy and providing the right content gives an opportunity to reach a large audience in a short time.
  4. SEO. Although links from social media often have no direct effect on the SEO’s ranking, still more and more pages from social networks appear in search results.
  5. Crowdsourcing. Social media is ideally suited for integrating SME’s target group in different processes of the company so finding out what problems and needs has the target audience. That helps to develop improved products and services while having direct interaction with customers.
  6. Information. Social media is a two way street when it comes to distributing a content. For a company various media, blogs and networks found in social media is an excellent source of information and inspiration. Many topics given by the company can have high value by other users and distributed within communities.
  7. Networking. Participating in social media is not only about spreading information or consuming it but more important about  building relationships like in the real life. Social aspect is paramount therefore social competence of SME’s is especially important at this time.
  8. Market research. Social media is a good source of information for market research as it delivers a lot of valuable information beyond mere numbers. If an SME is a keen observer it can gain a lot of answers to such questions as: What opinion prevails about SME`s industry or the SME  itself? What topics are the most interesting for people? What products and marketing campaigns are successful?
  9. Community. Building a community around company`s brand has not much to do with numbers of visitors and traffic. That is involving its customers or visitors in ongoing interactive process that in the long term builds a community that provides valuable feedback.
  10. Share. Through social media the market share of SMEs can greatly increase. At this point, globalization gives a tool for small and creative companies to make a micro-enterprise businesses worldwide. (Cf. Norbert, Einsatzmöglichkeiten für, 2011)

Planning usage of social media for SMEs

To implement strategically the multitude of social media marketing tools and to choose the ones that work best for each unique organization at the first most important is to understand how exactly they serve for communication, collaboration, and entertainment. (Cf. Lorrie Thomas, Social Media, 2009)

Therefore for an SME a good start is first to take the position of an observer. To observe what happens on different platforms, on which topics there is an exchange, and where the audience can be found. Then achievable targets have to be defined for the valuable participation on the Web 2.0. Finally the decision should fall in favor of using two to three platforms. It is important that these platforms are suitable for achieving the goals and can be linked. Based on these targets should be a social media strategy developed that must necessarily be coherent on corporate strategy. (Cf. Netz Reputation, Social Media, 2011) Using so-called PR Media Kit helps (Figure No. 2) for strategic implementation of the content, for example, press releases, websites, videos, podcasts, e-books and RSS feeds, online seminars, feed posts, presentations or white papers. (PR Gateway, Soziale Netzwerke, 2011) The last but not the lest step  is measuring the success of activities. It requires patience and a realistic time framework, usually it means carrying out not earlier than after six months or even a year.  (Cf. Netz Reputation, Social Media, 2011)

The key thing SMEs need to remember is that their efforts have to give value to the content, community, and execution to get people engaged. Social media doesn’t sell things – people sell things. Engaging in social media starts the relationship-building process. It usually starts as small and then creates a snowball effect, however it takes understanding, passion, effort, and commitment to make it happen. Therefore SMEs have to create an authentic voice and have to have a commitment to provide value. Then that will be a smart start. (Cf. Lorrie Thomas, Social Media, 2009)

Three basic values that ensure that social media works

  1. Communication. Marketing is all about building relationships and that starts with communication. New web tools like blogging, micro-blogging (Twitter), social networking (Google+, Facebook, LinkedIn, Ning), podcasting (BlogTalkRadio), video distribution (YouTube), event coordination tools (Meetup), wikis (Wikipedia), photo sharing (Flickr, Photobucket), and product review sites (epinions.com) allow small companies to communicate, educate and share information directly with their current and prospective customers. Content in the form of blog posts, audio, video, comparison/review sites, tweets and social network messages helps to share information in a less-formal way and builds the knowlike and trust factors that influence decision making. Content is no longer just text. Small companies can use audio or visual content for a “show me” and  tell me” to make communications a pack more interactive punch. Social media’s direct communication distinction serves and supports small companies as it brings the people they want to attract directly to them and so makes direct communication possible. Social Media makes communication a conversation so SMEs can share, receive feedback and connect on equal ground with their target markets.
    Figure No. 2 – PR Media Planning. (PR Gateway, Soziale Netzwerke, 2011)
  2. Collaboration. Small companies make their target consumers to feel powerful by empowering them. When the target market feels powerful, it trusts the company, buys from the company, and stays with the company. Social media collaboration transforms consumers into prosumers. In an era of social media prosumers are people (not companies) who make, shape, or break purchase patterns. Small companies can ignite collaboration for marketing by creating their own communities and/or joining communities. There companies can listen and connect to the target customers, and build a free forum to bring their market together. Collaboration is Marketing Acceleration. Social media collaboration tools like review sites, video sharing sites, blogs, wikis and more allow users to self-serve, collaborate, and potentially serve as an endorser for small companies. Social media works because people are more likely to trust peers rather than companies. The power of mass collaboration serves and supports small companies in a distinct way. Tapping and creating valuable collaborative options can bring people together to share ideas, exchange information, and to help each other, so supporting relationship growth.
  3. Entertainment. The most important reason that social media works as a marketing tool is simple – because  it’s fun. People want to go where they feel they belong to, have a voice, are listened to, and enjoy themselves. Small companies need to be where their target markets are. These days the masses are on Facebook, Ning, Twitter, Linkedin, Photobucket, YouTube and other social media, mainly because it has entertainment value. Sites like Facebook and LinkedIn are becoming the “new databases” because they are fast, easy, and fun. People are more likely to update their Facebook and LinkedIn information than a sterile address book.  Small companies use social media’s entertainment factor to build their online database of contacts and connections, be visible to prospective customers, and get the word out in creative ways like YouTube videos, blog posts, images, podcasts to make people smile and spread the word. (Cf. Lorrie Thomas, Social Media, 2009)
  4. Risks and their preventative solutionsCompanies need to know also the risks of social media.  According to a study based on IT governance groups, there are five most common risks associated with Twitter, Facebook, and other popular social networking sites.
    1. Viruses and malware – data leakage or theft. For prevention it is important to make sure that antivirus and anti-malware controls are installed and updated daily. In addition needs to create updating policies, standards, and training.
    2. Brand hijacking – customers gets exposed to hijacked and fraudulent presence. Needs to update customers with information about potential fraud.
    3. Lack of control over corporate content  – happens when employees post wrong or improper information on social media sites. Needs to establish clear policies that explains what can and cannot be shared. In addition it is useful to create capability to capture and log all communications.
    4. Unrealistic expectations of customer service at Internet-speed. To prevent it need to make sure staff can handle traffic associated with social media presence and create a notice with clear timeline for responses.
    5. Mismanagement of electronic communications may be impacted by retention regulations or e-discovery. For prevention needs to be established policies and processes that ensure all communications are tracked. (Social Times, 5 Social Media, 2010)

    According to a survey released by Panda Security more than a third of SMEs involved in social media already have identified it as the entry point for a virus or Trojan horse infecting their corporate networks, “Everyone has to worry about it, but small and medium businesses are most vulnerable”, says Sean-Paul Correll, a senior threat researcher with Panda – “Either they don’t have the needed expertise or they don’t have the budget to hire the expertise.” Completely banning Facebook, Twitter, and LinkedIn often leads only to unhappy employees, who might still use the services through a smartphone or from home. Instead of trying to block such services, SMEs should work with their employees. Moyse says: “Put some guideline in place for employees. If you don’t talk to them about the rules, there are no rules.” Companies should make sure that they notify their employees – both during a training and in the written policy – about how the company will monitor the use of social networks, considers Chris Boyd, senior threat researcher with GFI Software. (Robert Lemos, For Small, 2010)

    REFERENCES

    1. Jerome M. Wendt, Businesses See Risks but Proceeding to Immerse Themselves in Social Media Anyway, 22.07.2011., http://symantec.dcig.com/2011/07/businesses-see-risks-immerse-social-media.htm

    2. Lorrie Thomas, Social Media Marketing for Small Business, 16.06.2009, http://www.wilsonweb.com/newmedia/social-media-sme.htm

    3.     Christian Schmitt, B2B-Umfrage zur Nutzung von Social Media, Nordamerika und Westeuropa mit unterschiedlichem Social Media-Ansatz, 16.05.2011. http://www.media-treff.de/index.php/2011/05/16/nordamerika-und-westeuropa-mit-unterschiedlichem-social-media-ansatz/

    4.     Telegate AG Unternehmen, Studie “Mittelstand und Werbung“,  2010, http://www.telegate.com/htm/de/Unternehmen/1678.htm

    5. Netz Reputation, Social Media: Trotz großer Relevanz kaum Nutzung in KMU, 14.01.2011. http://www.netz-reputation.de/2011/01/social-media-trotz-groser-relevanz-kaum-nutzung-in-kmu/

    6. Social Times, 5 Social Media Risks for Companies and Employees… And How to Prevent Them, 10.06.2010., http://socialtimes.com/5-social-media-risks-for-companies-and-employees-and-how-to-prevent-them_b14745

    7. Robert Lemos, For Small Businesses, Social Networking Poses New Security Risks, 22.09.2010., http://www.darkreading.com/smb-security/security/app-security/showArticle.jhtml?articleID=227500486

    8. PR Gateway, Sociale Netzwerke: KMU ist Skeptisch, http://www.hwr-blog.de/soziale-netzwerke-kmu-ist-skeptisch/,  http://www.pr-Gateway.de/presse

    9. Norbert, Einsatzmöglichkeiten für Social Media im Unternehmen, 04.02.2011., http://www.ragazzi-group.de/2011/02/social-media-im-unternehmen/

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Über Prof. Dr. Heike Simmet

Prof. Dr. Heike Simmet Professorin für Betriebswirtschaft Speaker und Beraterin
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