Recent studies are divided on whether social media can help a small business sell more goods and services.
One study, by researchers at three universities, found that customers who interact with a business via social media spend more on goods and services than those who don't. The study estimates that "social media" customers contribute 5.6 percent more in revenue and visit the business about 5 percent more than other customers.
Another study singles out Facebook as a social media goldmine for small companies. Syncapse found a Facebook friend is worth $174.17 to a business, up 28 percent since 2010. Facebook fans not only spend more money on the brands they fan, they are also 18 percent more satisfied with these products and services than nonfriends.
But in another recent study, Manta, a social network for small businesses, found that 61 percent of the small businesses surveyed don't believe they get any return for investment in social media. Survey respondents cited Facebook as the hardest social media site on which to maintain a presence. The Manta survey found that despite their disappointment in the results, about half of all small businesses are increasing social media spending.
While contradictory on the surface, these studies suggest that social media will only help certain types of small businesses -- those whose customer base routinely use social media to get information about products and services.
Before investing in a social media program, a small business should first evaluate its customer base. The business also should calculate how much it will cost to build a social media network of friends and followers and what its potential return on investment might be.
Once a small business takes the social media plunge, it should be committed to both keeping its information fresh and encouraging customer interactions. Just throwing up a Twitter account or a Pinterest page won't do much to move sales.
-- Robert A. Stein
Institute for Entrepreneurial Excellence
Business Workshop is a weekly feature from local experts offering tidbits on matters affecting business. To contribute, contact Business Editor Brian Hyslop at firstname.lastname@example.org.