Much has been written about the power of social media to connect people and to potentially connect people to your product. Beyond the fun stuff and personal use, there is real value for businesses using these tools, but many owners echo the refrain that they want to see a ROI and an improvement to the bottom line. Is that the best way to measure the value of social media? I would argue not.
Although the bottom line is ultimately what business is striving to improve, there are at least three good reasons, aside from sales, for using social media.
1. Gain market insights: I rank market research as one of the most critical benefits. Business owners can pay a lot of money for research and insight on their brand. However, courtesy of the web and social media, often many of those insights are available for the taking. You just have to know where to look, be tapped in and actively monitor activity. Add in the benefit of timeliness and truthfulness, and it starts to look like an anecdotal, qualitative research tool. Learning what your customers think about your brand, products or services through the unfiltered and unfretted social media consumer window is priceless. In a recent Marketer's benchmark survey conducted by Focus.com, 49% of business to consumer brands cited improving client understanding as the highest strategic priority for 2011. Social media will be at the heart of those efforts.
2. Increase visibility: Brand or business visibility can be increased substantially using social media. Social media has a bearing on search. Most search engines use a form of blended search, which means they don't just pull from traditional websites, but from various media – YouTube, blogs, Twitter, Facebook, LinkedIn, Foursquare, Gowalla, Yelp, Flickr, Yelp. If you don't have a presence on some form of social media, you will have less ubiquity. Neilson Media reports that 70% of consumers trust consumer opinions posted online, and that 90% of major purchases are researched online prior to purchase. How you show up on your website is important, but increasingly important is what others now say about you online.
3. Improve customer loyalty: The customer loyalty loop is increasingly important, not only for its role in influencing the initial purchase, but also that customers role in potentially influencing other customers in the future. A loyal customer online using social media can be a friend indeed. And as consumers increasingly turn to the web for research on brands before buying, that existing loyal customer in actually an extension of your sales and marketing force. Social media fosters the building of community around the brand. Fans and those they influence don't require nearly the intensity of sales focus that less engaged prospects do. Again, the Marketer's benchmark survey revealed that 49% of business to consumer brands planned to improve brand awareness, and 40% planned to improve customer retention in 2011 using social media.
To me it seems obvious that these three factors do ultimately effect the bottom line, albeit indirectly, and that has been the challenge in justifying investment of both money and time for many small businesses.
Here is a great resource for businesses wanting to get up to speed on this topic: www.socialquickstarter.com. This site is geared to both those getting started and more sophisticated users, guiding you with both video and written content on areas such as an introduction to social media, Facebook, LinkedIn, blogging, YouTube, ratings and reviews tools, location-based services, QR codes, and email marketing with social media. It's a great one-stop shop and how-to guide in helping you understand and use social media to your advantage.