Why is social media important for your business?
With the constant expansion of social technology; more and more companies are making use of the business potential it provides. Some industries, however, remain behind.
As a study conducted in 2012 by MIT, in collaboration with Deloitte (MIT/Deloitte), finds; entertainment, media and publishing as well as IT and technology are both leaders in social business, whereas industries like energy or manufacturing lag behind.
Another study, from the Harvard Business Review Analytics Services (HBR), draws similar conclusions: ‘nearly two-thirds of the 2,100 companies who participated in [the study] said they are either currently using social media channels or have social media plans in the works. But many still say social media is an experiment, as they try to understand how to best use the different channels [and] gauge their effectiveness […]’.
According to both reports, a lack of holistic understanding of social media opportunities is one of the main obstacles facing those business leaders who are still hesitant as to the usefulness of social media in business. In line of this perspective, this article seeks to shed light on: why is social media important for your business?
- External functions
Social media is a powerful tool to create and connect with potential leads, customers and clients. By accessing or creating communities of social media users and by offering multimedia channels for communication, companies are now able to connect to huge numbers of people and engage in a dialogue with them about their product and/or services. As the MIT/Deloitte report states, ‘organizations are using social software, social media and social networking to improve their relationship with customers in a number of ways: monitoring online communities; creating and supporting virtual communities; developing new communication channels; and fostering a wide range of customer engagements, including coupons, contests and other sponsored events’. Moreover, as social technology expands and new social media channels are created and used, this opportunity of connecting to external hubs of people is only inflating. According to the HBR report, ‘the exponential growth of social media, from blogs, Facebook and Twitter to LinkedIn and YouTube, offers organizations the chance to join a conversation with millions of customers around the globe every day.’ Ignoring these hubs of connected users can present serious drawbacks to an organization’s competitive advantage.
- Internal functions
Social media’s full potential still remains undiscovered by many industries, as pointed out above. While its external functions are clear to many, its internal ones are less so. Social media tools not only provide opportunities to establish more efficient external connections, but it has the equal power to help a company thrive internally, within its own staff. By offering a plethora of tools that defy geographical boundaries and time zones, employees are today able to take advantage of a range of platforms that can help them increase the efficiency of their collaboration, and that can give them the potential to form a more connected internal community. As the MIT/Deloitte study reports: ‘from the perspective of operational performance, social business offers value by enabling knowledge to flow within […] an organization’. Moreover, the new generation that is coming to the workforce is increasingly more social media-savvy and study further states: ‘a new generation of workers is building momentum for new modes of collaboration and communication enabled by social business’. Whether it is to enhance internal communication, create a solid and sustainable community at work or allow for more efficient collaboration to take place, social media can help a company be more productive at many different levels.
Social media not only allows both internal and external growth, but one of its other key functions is collective intelligence. As more and more people interact on social media channels to share their opinions and comments, a pool of growing information is made available online instantly and constantly. This, in turn, can be converted into crucial business intelligence. Companies can use this online data to identify weakness areas in their products/services, suggestions for new ideas, recommendations for existing products, customer trends and other elements that will allow them to take their business forward by either adapting their product/services to users’ feedback, or creating new ones. As the MIT/Deloitte study states, ‘companies are using social business activities to source new ideas and refine existing products and services.’ Thus, the active participation of customers has, today, become a crucial asset that companies can leverage to their advantage. MIT professor Eric von Hippel states that ‘consumers themselves are a major source of product innovations’; and companies need to tap into and make use of this collective intelligence in order to gain competitive advantage and get ahead of their competitors today. ‘Publishing tools like TypePad and WordPress offer any company or customer the chance to write a blog, while microblogging on Twitter allows a rapid-fire stream of real-time commentary, complaints, and recommendations’, according to the HBR report. With the increasing proliferation of social media, this social media opportunity is bound to increase as well.
- Snowball effect
Each time a business connects to one social media user; it has the opportunity to connect to a part of this user’s network as well. Social media channels are virtually designed to allow referrals to be made in one simple click. This feature is perhaps one of the most important aspects of social media. Consumers typically prefer to purchase a product or service that has already been tried and recommended by someone they know. By spreading the word about your business, online users thus take part in your marketing efforts too. ‘Never before have companies had the opportunity to talk to millions of customers, send out messages, get fast feedback, and experiment with offers at relatively low costs. And never before have millions of consumers had the ability to talk to each other, criticizing or recommending products — without the knowledge or input from a company’, states the HBR report. This facet of social media can either be a great advantage to your company, or instead, a detrimental disadvantage, depending on whether customers like your product/service. Businesses thus need to focus their efforts on listening to their customers and turning their product or service into a desirable one; the rest of the work will be done by happy customers. As Paul Gillin, author of The New Influencers, writes: ‘conventional marketing wisdom long held that a dissatisfied customer tells ten people. But…in the new age of social media, he or she has the tools to tell ten million.’
To conclude, social media offers a range of business advantages that business owners have the opportunity to leverage in this day and age of Internet revolution.
As social media keeps on expanding and as new tools are created and used every day – especially in the field of mobile technology – companies need to keep up with the changes in the social media landscape and adapt to these innovations, if they do not want to end up lagging far behind, far too quickly.
Sloan School of Management professor Wanda Orlikowski, who researches the interface between technology and organizations and the implications of new digital tools in the workplace, says: ‘companies need to get started because this is here and it’s here to stay, especially for the Millennial generation. This is what they are used to.’
Thus, it is no longer a question of whether to do it, but of how to do it. Businesses need to turn social media into a strategic resource sooner rather than later in order to stay ahead of the social revolution and maintain competitive advantage over others in their industries.
For more information about social media in business; join our online course at www.SocialMediainBusiness.com/Learning