Social Networking: a New Generation of Business Development

Growing a business has its obvious challenges. The owner(s), usually with a limited allotment of initial resources, must battle the clock in creating a meaningful strategy to steal market share from larger competitors. A few pivotal client relationships can make or break the entire business. In many ways, these challenges have not changed over time–but in 2008, there are also new ways to compete.

Clicksharp Marketing has participated in a research effort involving Zoomerang and other Web 2.0 companies, surveying close to 500 businesses nationwide from a wide variety of industries. The objective was to understand the following about owners of small businesses: (1)

* How they value new client relationships
* How they approach lead generation
* How comfortable they are with social networking on the Internet

New client relationships - the lifeblood of small business.

Imagine that two CEOs meet at a conference in New York. Sarah, the owner and president of up-and-comer Startup LLC, approaches Bob, the CEO of the multinational Megacorp Inc., asking for advice on how to grow her business. Bob finds that her concerns as a small business owner are far different from his:

* Sarah places far more emphasis on new client relationships, knowing that her business will flounder if she does not continually generate new sources of revenue. (2)
* Despite the obvious risks involved in depending too much on a small handful of clients, Sarah still finds it difficult to diversify her client roster by adding new ones. (3)
* Whereas Bob employs a massive sales organization led by many capable managers, Sarah is reluctant to hire additional sales personnel to grow her business. (4)

In short, Sarah knows that her company is finished if she cannot find new sources of revenue. But with all the usual small business hurdles in front of her, where can she turn?

Social networking - a turnkey solution for business development?

A social network, according to PC Magazine, is “a virtual community for people interested in a particular subject.” (5) Popular examples today are Facebook, Myspace, and LinkedIn.

Sarah knows all about social media. When Bob told her how important word-of-mouth marketing has been for his business, she gave some thought to how social media can accomplish the same thing: (6)

* Adding one contact gives her access to all their connections; with a little time, growing the company’s network exponentially would be easy.
* With a keyword-driven interface, qualified individuals would have little trouble finding her company’s profile and engaging in meaningful discourse.
* Information on products and capabilities, along with all positive feedback from clients, is easily picked up by search engines, making them a useful branding tool.

And she could accomplish all this without hiring more salespeople. Moreover, this marketing strategy would circumvent other major obstacles typical of new marketing campaigns: (7)

* Upfront costs. Social networks thrive on user-generated content, a comparatively small investment of time and perhaps a nominal membership fee.
* Lead time to implementation. Social networkers are “always on,” 24 hours a day. The more information goes out, the more feedback eventually comes back in. And unlike at Megacorp, seniority means little.
* Return on investment (ROI). Whether or not Sarah records information on client development, social networks always leave a paper trail (or the electronic equivalent). This makes it easy to weigh acquisition costs against the revenues generated.

Which social media will generate the most leads for small businesses?

This will usually depend on the products and markets at hand, and can be better understood with the help of a marketing firm specialized in social media.

News Corporation bought Myspace after the site enjoyed tremendous growth at the hands of performing artists and urban socialites. Match.com and other dating sites thrive by delivering a measurable, lucrative advertising target. Emerging sites like Salesconx allow sales professionals to trade introductions to key decision makers.

For a small business competing in virtually any industry, chances are there is already a social network in place, bringing buyers and sellers together. According to eMarketer, the number of U.S. adults participating in social networks will grow to 69 million people in 2008 (a 21% increase over 2007). (8) Over time, one or two of those garage bands on Myspace might pan out, but the businesses which invest in this innovative form of interactive marketing have a much better chance at success.

References
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1 - 82% of participating companies reported less than $500,000 in annual sales.
2 - 39% of our respondents count on new business for at least half of their annual revenues.
3 - More than one-third (34%) of businesses surveyed are adding no more than three new client per year.
4 - More than half of respondents (56%) believe that growing their company’s sales force would have AT BEST a neutral effect on new business generation.
5 - PC Magazine: Definition of social networking site.
6 - 61% of respondents answered that client referrals and other forms of word-of-mouth marketing account for at least 50% of new business.
7 - Percent of respondents who were at least “somewhat concerned” about major launch criteria: Upfront costs - 62%; Lead time - 56%; ROI - 67%.
8 - Social Network Marketing: Ad Spending and Usage,” eMarketer (2007).