Why Small Business Fails in Social Media

We were curious as to why small businesses fail in social media. More fail from their attempt than succeed. At least, that’s what our research showed. And there is one leading reason; fear of commitment. We looked at 2,500 businesses in the U.S. and 1,500 in Canada that we considered small businesses (see our methodology below.) What we found was one overall reason businesses just plain flopped in social media engagement. Committment.

It’s a Huge Challenge
Any small business owners out there will probably agree; there’s just not enough time in a day to run the business and pay attention to all the added challenges of engaging in social media. There’s sales to keep the business open, then operating costs like payroll, rent, inventory or delivery of the service/product, taxes, accountants, client follow-ups and, well, so on.

Major Irony: It’s The Best Bang for your Buck.
While at the same time, the small businesses who do succeed with social media will tell you – it’s the most cost effective marketing tool. But patience and commitment is necessary. For a small business, social media provides two critical things to growth: 1) Trust building and 2) Evidence.

1. Trust: By using social media tools like LinkedIn, Facebook, FastPitch, Plaxo and so on, you can establish trust with prospective clients over time. You can show “who” you and your team are – short videos, photo’s of work done, video testimonials (from real people not fake “J. Jones, South Dakota” names that anyone with a keyboard can type in!) and links to referring clients.

2. Evidence: Proof of your work. References and images/video of jobs completed, innovations and helpful blogs and related content are all evidence that you are an expert, that you know your stuff.

The Reasons for Failure:

1. Commitment: This the piece on the pie graph above labeled as “time/commitment” – we analysed comments from small business owners in channels like LinkedIn, Facebook, Twitter and Identi.ca who made comments on why the found it difficult to find value in social media. In large part text analytics only goes so far and some human “coding” has to take place. We also looked at comments in blog posts and news media stories across primary news channels like the Globe & Mail and several U.S. state and localized news media sites. What it really came down to is that small business owners find it takes a long time to find a direct (perceived?) time to an ROI. Unfortunately, this is true. Expecting overnight success or even within a week or two, is unrealistic. This is true of marketing in general. We suspect that marketing/advertising in traditional channels would actually take twice as long.

2. Resources: The second most popular reason cited was available resources – i.e. the humans needed to engage. For a small business, every employee must have a direct and measurable impact on revenues. Small business owners, because they are small, often (and rightly) feel that if they hire an employee, that person must have a positive impact on revenues either through customer satisfaction or sales. It is a major stress point for a small business owner to hire someone. Unfortunately, as social media engagement can take time, many small business owners are (wrongly) tempted to think the required engagement time is a poor investment. This comes down to an equation of being able to carry such a marketing resource until the beginning of a return period. Sadly, what many small business owners also fail to realise is that it takes 6-9 months for a new sales person to become profitable to a company, yet for a lower cost overall, a social media resource can produce similar revenues. Economics here, are failing the small business owner.

3. Content: As many small business owners feel they must “control” all aspects of their business (this may be so until you reach employee number 2) they must control what happens and what is done. It is very hard for an entrepreneur to “let go” of certain aspects of their business because they are (rightly) very passionate about their business. But delegating and letting people do what they are good at it and then letting them do it is often the sign of entrepreneurs who win in the long run. This goes to producing the “content” needed in social media; from blog posts to quick videos.

4. Knowledge: This relates again to staff, but also to the small business owner. On the one hand we mean the “knowledge” of the entrepreneur of the tools that are available. On the other this relates to the entrepreneur feeling no employee can have as much knowledge about the business as they do. Again, that relates to a fear of letting people do what they are good at.

5. Assumptions: This was directly related to the assumptions that business owners make about social media because they don’t use it themselves and is incredibly dangerous. While it may rank as low for what entrepreneurs or small business owners say, it is incredibly important in and of itself. Small business owners will tend to think social media services are used by kids when they service an older demographic. This is potentially lethal and perhaps, the most damaging assumption a small business can make. It’s the +25 demographic that uses social media to talk about products and services more than youth. So much so that a small business may not even realize they’ve been targeted with negative social media.

So…what do you think about why small businesses fail with their social media engagement?

Methodology:
We sampled content from blogs, Twitter, Identi.ca, Plurk.com, Facebook, Plaxo, FastPitch, 100 forum groups, GoogleGroups and other channels. We pulled in the text and ran our Artificial Intelligence engine and then set loose a human analyst on a coding matrix. We then compared results and ran a validation. From there we measured against per capita populations and FTC data in the U.S. on the small business market in targeted regions and Statistics Canada for Canadian businesses and based on the overall findings produced our results. From our overall sample size the margin of error is +/-7% on a per capita, moving average basis.

The Collateral Damage to Business From a Social Media Crisis

Most discussions and case studies around social media crises faced by companies is focused on consumer reaction – and direct loss of sales or brand impact. While these are critical, a non-consumer focused company may think they are more immune to these issues and a consumer product company may think the damage is relagated to the consumer segment, not their business to business side. This can be a dangerous assumption. We look at some of the collateral, perhaps harder to measure, damage that can occur.

Mistake Number One: Many companies who only sell business-to-business (B2B) assume that social media is all about consumers and that they are immune to damage. This is a fatal error. Many industries have niche social networks, forums, blogs, Twitter accounts, where industry news is discussed. Failure to understand this can cause significant problems.

Risk From Government Contracts
If a business also sells to governments, contracts may be lost. Depending on the severity of the issue, such as legal actions being talked about or happening, government agencies may be reluctant to buy products or services from a business they feel may be distracted from a contract or unable to fulfil it. It is hard to know if this happens. Some indicators may help determine the risk however.

Competitor Leverage
The bigger the story via social media (whether general sites or industry-focused channels) the more a competitor can cause harm. Employees can quickly and easily share information, this means relying on stories only being in major news media is dangerous. Competitors can shape perceptions with existing clients of yours and use it to foster perceptions of inability to complete work and more.

Every Industry Has Social Media Channels
We’ve conducted research and analysis on many industries. There is always some engagement by people in the industry in specialized niche networks, Facebook groups, LinkedIn discussions, FastPitch, eCademy, forums and newsgroups. Whether or not a CEO or senior executive is aware or participating in them doesn’t matter – employees are. Including from competitors. And they share information. A lot.

Board Perceptions & Risks
If it is a public company or just has a board and a smaller set of investors, once word trickles out, problems of governance come into play. A board or set of shareholders, may feel management has lost control of the company or are nervous of the management teams ability to contain and deal with the issue. If it is a major shareholder or board officer who raises awareness of an issue to management, they may feel management is not suitably aware of industry issues. There is then the possibility of a fractious board, a senior management battle and so on…

Investment Challenges
Companies looking to raise capital from equity sources or even debt, may find themselves in a challenging place if a negative story has reached the ears of those in the financial sector whom they are courting. If financiers perceive problem or potential escalation, they may either require more security or stall on a deal.

Supplier Fears
Suppliers of services or materials to a company who are tuned into the industry networks (often, they are more connected into online channels than the buyer of their product) may be concerned with the company’s ability to surface from a crisis. If they have extended credit, they may retract that credit or require new terms or demand outstanding payment to mitigate increased fears of risk.

Perception Can Rule The Day
The reality of these challenges are ones that businesses are just beginning to grasp.  Since these issues are  beyond just reputation management and are not as quantifiable being more qualitative in nature. It is not as easy as seeing immediate sales losses or a series of negative “tweets” on Twitter. Often, senior management is unaware of the social media tools being used in their industry. Monitoring tools rarely, if ever, pick these up because they are focused a) on mainstream social media channels for consumers, b) more business-to-consumer than B2B and c) perform poorly with smaller data sets to display.

We live in a world where perception can quickly become the reality. And that can spread across far more than just the consumer market and into supplier networks, financial sector and shareholders.

A Whole New Set of Headaches
All of this to say, the CEO and executive management of a company today have a whole new set of risks to manage. In some cases, they may not even realise an issue escalated as the result of a forum discussion or blog posting. Some research into these deep Web sources (where social media monitoring or reputation management tools simply do not go) can help a) understand the issue and b) help address the issue and give management the opportunity to mitigate risks and deflect the damage quickly.

Atlantic Conversations 4: Social Media in Atlantic Canada

We’re delighted to be releasing our 4th annual report on social media use in Atlantic Canada – the “Atlantic Conversations IV” report that was launched at Podcamp Halifax on January 22nd, 2012. We thank the largest number of attendees ever to the event and hope this information is helpful to clients and anyone else interested.

Click on the hyper-link to download the free PDF with analysis: AtlanticConvo4-Badger 2011.

Key Findings:
Our key findings in 2011 were as follows;

- When it comes to youth, the place to connect with them is on Tumblr and the best creative is video

- For adults, while Facebook remains popular, the trend is for people engaging more in “niche” social networks on platforms like Ning for their hobbies and interests.

- For use of social media apps on Smartphones, it’s the 30-39 age bracket that uses them more than youth. This was a surprise.

- Nova Scotia continues to lead overall use of social media in the four Atlantic provinces, but New Brunswick is catching up quickly.

- LinkedIn was the social network that grew the most over 2010 for businesses.

- Businesses continue to have low engagement in social media. In 2012 this could cost them revenues as consumers increasingly look to discuss regional brands and services.

- The “buy local” trend of discussions and consumers recommending grew and it expected to become ever more important in 2012.

- Governments both provincially and municipally are increasing their presence but it is slow. Nova Scotia government leads the way of the four provinces, but their engagement is faced with the challenges of complexity, available resources and ensuring protection of privacy with regard to individuals.

- When it comes to consumers or citizens engaging with brands and government – they want authenticity and to feel a real person is engaging with them in an authentic way to build trust. Standard “spin” lines are likely to cause friction.

A more detailed version of the report is available for CAD$995.00 and can be requested by emailing or calling us. We ask that if you use the content herein that you provide attribution and respect the Creative Commons license. The presentation made at Podcamp Halifax can be found on Slideshare at this link.

- The MediaBadger Team

Industrial Espionage & Social Media

Most companies are concerned with cyber threats such as hacks, viruses, malware and denial of service attacks. Yet a new threat to industry comes from social media or social networking services. That is industrial espionage by a) recruitment of employees to buy secrets or b) monitoring of employees engaged in social media to gain insights into what is happening and c) moles as employees using social media to engage employees or transmit intelligence. We take a quick look at these threats;

1. Employee Recruitment: Sounds like cold war style stuff doesn’t it? Fact is, it happens and is happening. Someone makes “friends” via a social networking connection and over time builds a trust relationship with that person. The end-goal being to get key information from that employee. The agent doing the recruiting may be a State employee working for an intelligence department or it may be a competitor who has staff that do this (usually former police or intelligence officers) or retain a third party.

2. Monitoring for Social Network Intelligence: Using data mining tools, social media monitoring services or through manual research and assessment, a competitive company or government looks for keywords and small bits of information. This is intelligence that can be used to assess corporate activities like moving into a new market, taking over another company or product information. Employees who use services like Twitter, blogs or Facebook may not even realize the damage they can cause through sharing information – what they think is an innocent comment, connected by a trained analyst can draw a bigger picture for a competitor.

3. Employee Moles: A government or competitor may insert an employee into a company in a department where they may be able to steal corporate secrets such as software, product plans, financial information etc. This is a challenge for companies and depends on their security procedures and perceived level of threat. This is a fairly common practice however and companies can have difficulty in Canada, US, EU and UK with regards to how much they can dig into a persons background or ask for information. Nor can a company dictate what a person does outside work hours, such as being on Facebook or using Twitter.

The Occupy Movement & Social Media

The use of social media technologies to create awareness and organise protests and “camp-ins” last year (and some continue today) was the first time these tools were used on an international scale. This is unprecedented in the history of mankind, at such speed and with incredibly well organised precision. As the Occupy protests lengthened, most often, it would seem, those protestors featured by many news media channels were the down-and-out, hippies and young students disenfranchised. Stories of partying, drugs and alcohol seemed the perfect fodder. But were they? Are they? We did some digging to analyse just who is online and who makes up the Occupy movement. What we found was not what we thought we would find.

Forget About Youth In Occupy Movement – The Demographics
It wasn’t just a bunch of university students. In fact, as we analysed the age groups, we found the average age to actually be 36. We also found that across the 5,000 profiles and commentaries we looked at, over 50% had a university education. We also found they weren’t poor either. Perhaps the “working poor” – yes. We estimate an average income of about $45,000CAD from  USA, Canada and UK. We suspect this median would hold up in many other countries as well. Certainly there were those who are on the margin of society and the students or youth movement. But they do not represent the majority. Involved were doctors, lawyers, entrepreneurs.

Nor was there racial or religious divide. All forms of faith and races were represented as were men and women.

It’s Not A Union Driven Thing
That unions played a key part there is no doubt. Unions have and likely will continue to, play a key role. But unions, mentions of unions and references to union messages we estimate were less than 10% of the overall social media engagement. The Occupy movement is not owned or being driven by unions. The unions help in rallying and organising but it is being driven not by any one organisation. It is truly driven by the average citizen.

Activist Groups & Agitators
While some may suspect underlying activist groups with more radical agendas, this doesn’t appear to be the case. We found little evidence of more fringe, radical activist groups. The organisations that support the Occupy Movement are more socially oriented, those that are necessary in a functioning democratic society.

Our Summary Conclusion
While we haven’t provided all the detail of our research here, we can quickly surmise that the Occupy Movement is international in nature, it is still active and likely to become increasingly more organised. What started out in anger and protest with no  defined agenda has developed an agenda and is refining that agenda. This is truly a movement more of the disenfranchised middle class who are also looking to the margins of society to help them as well.

Our forecast is that we will see increased Occupy activity and a clearer agenda form. There will likely be “fractioning” of the movement, if it can be said to be organised enough for there to be fractions occurring. Even the thought leaders of Davos have realized this is a serious societal issue of significant scale across multiple countries. We suspect the Occupy Movement to be a significant indicator towards a demand for greater change within current political systems.