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.

Unions And The Double Edged Sword of Social Media

Through our research, we’ve come to find that unions are becoming increasingly active and very skilled in using social media. That’s a natural; unions are extremely good at organizing, coordinating and communicating. Three of the essential elements of social technologies. Our research shows that of the major unions, the most active and aggressive with social media is the IBEW (electricians) in the U.S. and Canada, followed by the United Auto Workers (UAW). Unions in the U.S. are more active online than Canadian or British unions, but these countries are catching up to America. Essentially, social medias were born in the USA, so that makes sense.

But there is a downside. What we’re seeing start to happen is like the disconnect in a corporation between management and employees. This disconnect is showing in unions between members and leadership. Some, it would seem, are more equal than others on the farm. The latest example is in Canada between the union representing the Air Canada flight attendants and the union leadership negotiating for them.

In a non-union corporation, employees are less “organized” in the sense a union is, so while there may be disconnect and disagreement, one rarely will see coordinated anti-management activity in social media channels. In the case of Air Canada flight attendants, they have formed their own Facebook group to gripe against union leadership. It has nearly 4,000 members out of the just over 6,000 flight attendants working for Air Canada. That is a significant statistical representation. One a leadership can’t ignore. The Air Canada pilots are in a similar group venting on issues of union management on their behalf.

While social medias can play a vital and positive role for unions to communicate their message and coordinate activities, we can see that the very same tools can be used against them. Union members implicitly understand the concept of solidarity and know how to rally in a cause. It will be a harder challenge for unions to manage this kind of social media crisis than a company dealing with some angry customers. In the case of a consumer driven social media crisis, it is about fair treatment over a wrongdoing or mistreatment. The situation also fades away fairly quickly. When it comes to unions with leadership versus members, it is about ideologies – and this is where people get passionate. This is a far more significant challenge for union leadership than a consumer issue. To the credit of the CUPE negotiators in the Air Canada flight attendant issue, they acknowledge and understand their members voice and their role as elected leaders; but realize the challenge this creates at the negotiating table.

Aside from the ideological issues, the public, government and corporate management can see a fractured organization when and if such ideologies start to clash. And that presents opportunities to those they’re negotiating with. A united front (or at least the appearance of one) is key in any type of negotiation. With news media reporting a rift in the ranks, this adds considerably more work for the representative union. One that they may not be able to contain offline.

It is an interesting paradox for unions that the very tools which fit so well with their way of operating, can cause such a challenge. From our seat on the fence, we see yet another area where social medias are impacting traditional sectors in public and private life. The one key benefit for unions over government or corporations however, is their ability to coordinate and they are generally more “in touch” with their constituencies. Exactly how these social technologies may change union culture or the concept of unions is yet to be seen. Just as with politics and business, we are still in the opening days of understanding how social media may cause significant changes.

(Photo Credit: University of Wisconsin, Madison Libraries)

Social Media and Tourism

Our research into tourism and social media over the past two years has provided us, along with our clients, with some key insights into how tourists use social media. Among our key findings is that it is almost equal between males and females using social media to research destinations (52% female to 48% male) across the broad demographic range of 20-55+. When it comes to sharing photo’s and videos of their experiences however, that changes to 64% female and 36% male. This correlates to other consumer demographics where women are more likely to share experiences. When it comes to business travel however, men are 15% more likely to share their experiences from their travels.

Niche tourism markets are also very heavily engaged in social media for both planning trips, sharing experiences and recommending locations, things to do and where to stay. Tourism operators and authorities however, are seemingly still unsure about reaching out to niche markets online. Traditional marketing isn’t very cost effective for reaching niche markets for tourism, but online marketing, especially through social media, is. Niche markets are the most active in social media channels and can be effectively targeted and engaged.

In some of the projects we’ve worked on however, tourism authorities have focused on traditional mass markets and their engagement in social media. This would mean families, retirees or a broad demographic. They too are active in social media channels, but reaching them cost effectively either online or through traditional channels such as television, radio and print, is harder to do and remains more scattershot than targeted. Our research has shown that targeting tourist “segments” through social media, from niche markets to more defined segments (e.g. cruise lovers or value seekers) is a far more successful approach.

Through our work, we see we are at the forefront of this kind of tourism research into social media. And lets be clear, there is a definitive difference between monitoring your brand in social media and conducting social media research on tourism. Monitoring brings up conversations “now” and is limited in its ability to find true trends. Nor do any social media monitoring tools effectively (or to any degree) identify niche markets. Using social media monitoring tools is useful once you’ve done the initial research, engaged and have something to monitor. Using social media monitoring tools to research tourists use of social media will lead to disappointing results.

Tourism is a very hot topic across all social media channels and is one of the top three online topics of discussion and engagement. Tourism authorities and operators that research these opportunities and then engage may find significantly valuable new opportunities.

The Role of Social Media in Foreign Policy

Most discussion on social medias impact on society has been around business – marketing and public relations. But in 2011, we began to see that social medias are playing an increasingly important role in the world of international relations; both democratic and otherwise. This increasingly important role of the Internet in international political affairs arguably started in 2009 with the failed green revolution in Iran and came to the forefront in the Arab Spring start in  January 2011. But as we point out below, social media engagement is not just about security intelligence matters – it can help make our world a better place, in a peaceful way.

Governments are increasingly seeing opportunities for engaging citizens in other countries, and of engaging their own citizens living and working in foreign countries. In our hyper-connected world and seemingly smaller world, such engagement by governments is increasingly important. Citizens in conflict or dictatorial states can, although often not easily, connect with and understand how democratic countries operate and potentially connect with them for support or advice.

Prior to the Internet and the advent of social medias, governments of one country relied on the industrial media of the foreign country to communicate their message; not an easy thing to do in open, developed nations. Impossible in closed states. Now, with citizens in fragile states engaging increasingly in social media, even through mobile devices, it means developed nations can gain better insights into the real concerns of civil society, not just the political elite. This can mean better aid policy decisions, improved trade negotiations and peace operations activity.

For a comprehensive look at the darker side of these issues, we recommend The Net Delusion by Evgeny Morozov for a sobering viewpoint. While he makes some interesting points, he does miss the benefits and the fact there are signs of changes in dictatorial countries. Changes that may take time, but are underway. One democratic state that doesn’t see value to social media however, is New Zealand, who has a policy of non-engagement.

International relations and global politics today is all about seeking dialogue to resolve disputes. That dialogue may be negotiations or using organizations such as the UN or WTO for dispute resolution. This may take longer, but is far better an outcome than war. As governments become more comfortable and develop social media engagement policies, we can be sure to see further engagement in these channels. The question is – will citizens be interested? Can such engagement have the influence governments hope? Our research in this area so far indicates yes, but it depends on a large number of factors and it is still early days.

Foreign Policy & Social Media: A New Battleground

On August 3rd, 2011, the U.S. State Department openly declared its mission to counter extremism online through social media tools like Facebook and Twitter. This action clearly shows that the U.S. government is engaging in foreign policy online. What we too are seeing, through our research, is the shaping up of a new battleground of foreign policy engagement by governments democratic and otherwise via social medias. Some might say the opening act was the failed green revolution of 2009 when the U.S. State Department informally, through a low-level person, asked Twitter to not shut down its servers so Iranian protestors could continue to post. Then came the rise of the Arab Spring in January 2011.

Below we take a quick look at some of the online activities on foreign policy taking place by governments;

US State Department: Countering extremism through channels such as Facebook and Twitter. Already they have a number of embassies and senior staff on Twitter and blogging.

Iranian Basiji: The Basiji are actively engaged in putting out counter-revolutionary rhetoric against those Iranians pushing for regime change and more democracy. This started in 2010 and is only increasing in activity. The Iranian government puts similar anti-revolutionary content out through its website.

Sudan Government: Bashir engages legions of pro-Bashir bloggers to counter pro-separatist statements in 2010 through 2011.

Syrian Government: Assad takes a similar move to Bashir in Sudan using mostly bloggers and Facebook

Russian Government: The Russian government in 2011 ostensibly states it will map and monitor social media to better understand citizen views on issues. Some argue it is for spying on dissidents. At the same time the government has called for a ban on encrypted services like Gmail.

UK Government: Has established its Digital Diplomacy Department to put UK foreign policy issues into the public sphere. Like the U.S. State Department they have a number of Twitter accounts and train FCO staff on using and engaging in social media.

These are just a few examples of governments engaging in social medias to promote foreign policy or defend their roles and actions in the global sphere. While we are examining the use of social media and Internet policies internally, we can see on the global stage that governments recognize a need to listen and engage. It’s too early in the game to understand the long-term implications of these actions, but they are certainly playing a part in international affairs. And we suspect this will only increase over time.