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.

Influence Competitors: The New Corporate Threat

A whole new scale of threat has evolved for corporations, and governments as well, in the court of public opinion. We call them Influence Competitors, some have called them Irregular Competitors. Regardless, these competitors are looking to influence the views and opinions of the same market businesses and governments may be looking to influence. Only they’re opposed to your views.

The way citizens and consumers receive, consume and share information today is highly complex, fast and easily spread to their own networks. Every person has a network of people that they have influence over, just as companies, governments and other organisations do, from markets to the general public. Today, it is very easy to influence people. It is also very hard to influence people. The biggest Influence Competitors that pose a threat to corporations and sometimes governments are activist groups. Non-Government Organisations and Non-Profits who target the practices of corporations they disagree with and government policy attempts or legislative moves they feel threaten their agenda or audience. Sometimes, competing companies will align with Influence Competitors as well, providing an entirely new dynamic to a company’s competitive landscape. At other times, activist groups will work with opposing political parties to the one in power, again adding a new dynamic.

Influence Competitors leverage social media as their primary tools with industrial news media used mainly to drive the message to social media where the battle for influence really begins. In industrial news media, an NGO may only get 3 minutes tops in the news cycle and then for only limited periods. Once they have eyeballs online, compelling content is used through video, images, text and sound to deliver sophisticated messaging and even encourages dialogue.

The Confidence Factor
Once an Influence Competitor has developed online dialogue through social media services and an audience has grown, it’s influence grows and they may then become an Authority Competitor. When citizens or consumers see others engaged in dialogue, actively contributing and adding content, this provides individuals with a sense of confidence – that others are committed to the cause. This creates the authority of the organisation (you might call it crowdsourcing your citizen activists) and it becomes increasingly difficult to unseat an Authority Competitor. Corporations or governments that don’t respond, or offer very little response, quickly lose influence share and citizens then take action.

So What? Why Does Citizens Shouting On Facebook Even Matter?
It’s easy to think they don’t. It’s easy to shrug off people venting on Twitter or blog posts and Facebook group pages. The reality is, it does matter and it has a very tangible, measurable and direct impact. The real-world results are phone calls, emails and letters to Senators, Members of Parliament, Congressional Representatives, industrial news media. Petitions go round. Protests happen. Sometimes, employees are attacked or facilities burned down or otherwise damaged. Or in the case of London, riots occur. Social media tools go from driving the idea to then being used for organising direct real-world activities.

Understanding Influence Competitor Threats
No social media monitoring tool will help. They may tell only part of the story and they’re not good warning indicators. What’s needed is a deep analysis into the lead Influence Competitor social graph, their connections, size of community, past campaigns and outcomes, current activities and more. Monitoring tools play a part, but analysis and insight from industry specialists, anthropologists, sociologists and law enforcement adds an unparalleled level of insight. Once this is known, then a strategy can be used.

Mobile Will Increase The Threat Level
As more and more citizens use SmartPhones and tablets like the iPad to participate in social media services, the threat from Influence Competitors will only increase. With the ability to live-stream video and instantly upload photo’s integrated with real-time services like Twitter, the challenge to monitor and then dig deep into the issues will become increasingly difficult. This will present a new challenge for public and investor relations teams, marketers, corporate legal counsel and the C-suite. CEO’s if they are the spokesperson, will face some interesting challenges. These are issues well beyond simple reputation management of a brand.

What Kind of Threats?
This is where influence and authority trump reputation management. The types of threats coming from Influence Competitors are those that can cause significant economic damage or bring down a government (such as Egypt, but that’s okay, it was a dictatorship) or potentially cause catastrophic damage to a company. These threats include;

- Derailing legislative efforts

- Destroying lobbying efforts

- Changes in legislation that derails a corporate plan

- Causing damage to physical assets

- Threatening employees or causing harm

- Cause a stock price to plummet or a competitors to rise

- Balance the influence in favor of a competitor

- Create petitions and enable an opposition government to cause collapse of a government in power

Fortunately we provide analysis and monitoring of Influence Competitors. Look for our White Paper coming soon. In a world of Big Data, companies and governments need to be able to quickly sift through vast amounts of information to find the intelligence that matters.

Why Social Media In The Enterprise is Failing So Far

Culture and established process are the key reasons for social media failing in the enterprise. Social Enterprise tools (essentially a Facebook for business use) is a very logical tool for businesses and can be a game-change. And that’s the problem – it’s a game-changer. It’s disruptive. It sets everything on it’s ear. Larger businesses, the Enterprise segment, has spent billions of dollars integrating tools like SAP, or SharePoint etc. SharePoint is a great tool – yet has not truly succeeded when it’s biggest competitor is DropBox. DropBox is used by employees to store and share files online – because SharePoint is too complex. Enterprise tools are complex by nature because they focus on the nirvana of bringing clarity to all aspects of the Enterprise.

Big Doesn’t Quite Get It
The other reason social enterprise tools are struggling to find a grip is that the enterprise management solutions offered by Oracle, SAP, IBM and others don’t really have a truly “social” element to them.  Sure, they include some pseudo “social networking” tools, but they aren’t truly reflective of what a social networking tool should and can do. Just as the social enterprise tools are anathema to corporations, so they are to the manufacturers and implementers of existing solutions like SAP and Oracle. They haven’t figured out how to make money off these tools, so they’re advising against them to their clients. Some elements of social media are in these tools, but not enough. Yet.

We Don’t Want People Partying All The Time
This is a perception issue with social media. We see it all the time in our own research projects. The C-suite is still under the illusion that “social media” or “social networking” is only about kids, teens and college students and that these tools aren’t used in serious ways. We definitely saw this attitude shifting in late 2011 and we suspect in 2012 it will shift even more to the C-suite taking social media seriously, beyond reputation management and simply marketing.

But many a senior executive also may see “social enterprise” meaning people are going to be sending each other jokes and silly videos and planning luncheons with these tools, rather than being productive. Our suspicion is this is largely a problem of wording. The word being “social”. There is a connotation with social, that it is not “working”, that it means being, well, social. This couldn’t be farther from the truth. But perceptions are what they are and so good, effective marketing is needed.

We Haven’t Hit Decade One Yet
The reality is, all these social media tools and services that exist today, haven’t even been around a decade. Enterprises move slow. Adoption of new technologies takes time. The commercial Internet has only just reached 15 years of age. Today, business takes advantage of and leverages the Internet. But social media services, even though they are delivered via the Internet, are still less than 10 years old. Blogging is approaching a decade, but only just. Blogs are the most adopted tool by large corporations, but it took them nearly a decade to get there.

The Marketing Echo Chamber of Social Enterprise Solutions
For the most part, the companies marketing social enterprise tools are doing an amazing job marketing their tools. Not. The problem is, they are marketing them via social media channels. Not where their market is. Some no doubt, are getting to the CEO. But marketing inside your echo chamber is not going to get the message out. As we know, the C-suite reads news online, but social enterprise needs to be the channels they are reading. Engagement by the majority of CEO’s in Twitter, Facebook, LinkedIn etc is still very low outside the tech industry. Publishing articles in LinkedIn is good to garner lower echelon support, but not much more.

2012 Could Be The Year
In 2012, we’ll see a lot more focus on the business value of social media, as we’ll see similar value for social media in civil society. In large part it will be up to the software companies that can figure out a better way to market to and reach the right CEO’s, CIO’s and CTO’s in the enterprise. We also suspect that the likes of SAP, IBM and Oracle will start to look more closely at the value of these tools.

In the meantime, the other big challenge is dealing with the “social” perceptions of the C-suite. And that is not easy. There’s an interesting and good article on Forbes that discusses the logical benefits of Social Enterprise tools here.

Civil Society Groups & How They Use Social Media

From the Arab Spring to the Occupy Wall Street movement and the Keystone XL issue and even down to small, localised activities, civil society groups (from radical left-wing activists to the average and necessary protest) have figured out social media and are making increasingly effective use of it. Below, we’ve provided a diagram of how these groups, some that have been around a long time, others that just form for a short period, are using these tools. Businesses would do well to understand them and the processes for marketing, investor and public relations.

In the Management block, we can see how social media tools are used to manage the administrative functions of the group. In this case they may use email, a Facebook group, Wiki’s and other tools, that are a mix of “open” to the public and private. In the second block, Communication, we see how they use the various tools to communicate/broadcast the messages developed as a team. All forms of digital content are used across multiple platforms (e.g. Twitter, YouTube, Facebook, Flickr etc.) Once the content and creative has been released it moves to the “Engagement” phase, where the grassroots group enters into dialogue with the general public, answering questions and ensuring the message is consistent and understood by the public and hopefully shared. The Actions shows how once the message is out there (i.e. “meet at the town hall, wear your t-shirts and bring signs at 2PM”) it can result in a number of real-world activities. The green circle indicates that if an event in public or online piece of content (e.g. video) is successful, the general public shares the results of the activity that took place in public and the feedback communications loop is triggered (the green line returning to the communications block.) Once news media picks up on a story, such as a highly successful public rally, this transitions the story to a broadcast public, usually significantly increasing recognition for the civil society group and expanding their message. Social Media is a highly cost-effective route to organizing, creating and communicating a mission. Traditional news media then plays a vital role in expanding audience attention and driving further public actions.

We have seen this process used in a number of actions over the past two years. It works and has become highly effective. The gap we often find that our business and government clients miss, is that these social media is simply a set of tools used to galvanize support and actions that take place in the real world. They might see videos after  a protest or action and say “oh well, yeah, we know that happened.” But the same tools were used beforehand to organize the rally. Those affected by these necessary and key parts of a democracy could, however, be better prepared.