Joining the Social Bandwagon: A Benchmark

of Social Media Use Among Local Small and

Medium Sized BusinessesBy

Ali McGee Kelly

June 14, 2013MANAGEMENT DOSSIER/CAPSTONE: BUSM 650

Quick History• Businesses and the Internet – originally just

web pages & contact information• Like virtual Yellow Pages• Internet gradually became more interactive

Internet Meets Social

• Instant Messaging – ex: AOL IM• Chat Rooms• Message Forums

Mid 90’s• Social networks emerge• Businesses did not begin to use social

networks for business until after Y2K

Web 2.0 - Social Networks

Why Should Businesses be Interested in Social Media?

• Two-way interactions with consumers• Enables more accessibility and transparency• Inexpensive Marketing, CRM, PR, and WOM• HUGE audience

– More than 850 M people use Facebook each day!– Twitter has over 140 M active users– LinkedIn: over 200 M active & educated users– Pinterest has a growth rate of over 1000%!

The Nielson Report, 2012

The Smartest Advertising Dollars You Can Spend.

• Two 30 second commercials on prime-

time television (American Idol slot on the

US Network Fox, 19.5 million viewers).

• 6.5 color page ads on People Magazine.

(Circulation 3.5 million).

• 10 full page color ads on the New York

Times newspaper (Week day print

circulation around 780, 000).

• Facebook charges $8.00 for every 1,000 views of a sponsored story.

•$1 Million will buy 125 Million views.

•What else can $1 Million buy?

About Facebook

• FB “is” social media to most people.• On the forefront of social media marketing.• Originally an online community of college

students.• Now, used by both personal users and

businesses.• “Likes,” “Friends,” “Fans”

About Twitter• Microblogging Site• 140 characters & spaces per “tweet”• # Hashtags• @ Mentions• Mostly public accounts• Pay for promoted tweets• “Tweets,” “Retweets,” “Followers.”

About LinkedIn• Oldest of the popular social networks• Used by professionals for networking and job

searches• Newsfeed like Facebook• Friends are called “Connections”

About Pinterest• One of the newest social networks

(other than Google +)• Originally invite-only• Users “pin” pictures and video to pin “boards”

of different themes• Followers may “like,” “comment,” or “repin.”• Recently allowed business pages.• Enormous growth

The ProblemSmall Business & Social Media

• Small Budgets and less resources to commit • Untrained – don’t know how to best use social

media• Inconsistent advice from “experts”• Difficult to measure effectiveness

without expensive software• Difficult to calculate ROI

About This Study

• Set a benchmark of how Central KY businesses are using social media

• Contribute to the literature on social media

• Provide baseline data for future research

• Demonstrate virtual observation as a legitimate research method.

Research Questions & Findings

• Q1: Does the category or nature of a business correlate with the level of engagement demonstrated in social media?

• H1: Restaurant & Entertainment businesses would have higher levels of engagement.

• Result: Not enough of this type of business in the sample to make a conclusion, but:

Research Questions & Findings

• Q1 Results Scale: 3-15

Scale: 2-10

All Low

Research Questions & Findings

• Q1 Results

• An average was taken for the scores in each type of engagement, then added for a total score.

• Retail appears to engage fans more than other types of businesses on Facebook & Pinterest

Scale: 2-10

Research Questions & Findings

• Q2: Does a higher number of followers and fans correlate to higher levels of customer engagement?

• H1: No• Result: Yes

Research Questions & Findings

• Q2 ResultsFor Facebook

Research Questions & Findings

• Q2 ResultsFor Twitter

Research Questions & Findings

• Q2 ResultsFor Pinterest

Research Questions & Findings

• Q2 ResultsTotal

• Positive correlation with all comparisons• Highest correlations with Twitter followers

and RTs & Pinterest Followers and Likes.

Research Questions & Findings

• Q3: Does the frequency of content correlate to higher customer engagement?

• H3: Yes• Result: Confirmed

Research Questions & Findings

• Q3 ResultsFor Facebook

Research Questions & Findings

• Q3 ResultsFor Twitter

Research Questions & Findings

• Q3 ResultsFor Pinterest

Research Questions & Findings

• Q3 ResultsTotal

• All positive correlations• Pinterest shows much higher correlation

coefficients overall than Facebook or Twitter

Research Questions & Findings

• Q4: Does the frequency of content correlate to a higher number of followers?

• H4: Yes• Result: Confirmed

Research Questions & Findings

• Q4 Results:• All Positive

correlations

Research Questions & Findings

• Q4 Results:

• Pinterest, again, appears to have a stronger correlation between the variables than Facebook or Twitter.

Research Questions & Findings

• Correlation coefficients for all variables, Q2-Q4

• Pinterest is a strong leader

Research Questions & Findings

• Q5: Among CRM, marketing, customer service, PR, and HR, what are local SMEs’ primary uses of social media?

• H5: There would be a higher occurrence of use for marketing than of any of the other potential uses for social media.

• Result: Confirmed

Research Questions & Findings

• Q5 Results

• Marketing activity was observed more than any other business activity

Research Questions & Findings

• Q6: Have local SMEs adopted Pinterest yet as a social media tool to attract and engage customers?

• H6: Not yet.• Result: Confirmed

• Q6 Results• Only 16%

of local small businesses havea Pinterestprofile.

• While it was expected for fewer businesses to use Pinterest, this number is much lower than any other network.

• Only two of the eight businesses were professional service-based.

Research Questions & Findings

Findings & Conclusions

• Central KY businesses show less use of social media networks than expected.

• Slow acceptance of Pinterest, and lower than average usage of Twitter.

• 87% of Fortune 100 businesses use Twitter

Findings & Conclusions

• However, Pinterest is showing huge growth in users, and the highest correlation with follower engagement than Facebook and Twitter.

Findings & Conclusions

• Data on the most engaging type of business needs further study due to the low number of restaurant and entertainment businesses randomly selected for the sample.

• Many businesses seemed to be unaware of the many potential uses for social media such as customer service.

Five Recommendations

1. It is impossible to know if you are missing any business leads on social media if you do not have a presence there. Businesses should at least create a profile with contact information on the major social networks so potential customers have the opportunity to find the business and make contact if they wish. Mere virtual presence is better than no presence according to Naylor et al (2012).

Five Recommendations

2. Professional service-based businesses should recognize that they are at a disadvantage on social media because there are fewer opportunities to connect with customers with visual content like pictures and video. There should be some focus in their social media tactics to include visual content.

Five Recommendations

3. Among the three variables that demonstrated positive correlations with each other, businesses only have control over one: level of activity. There is a very good chance that increasing the frequency and quantity of content posted on different social media networks will lead to more followers and more engagement from fans.

Five Recommendations

4. Don’t forget that social media can be used for more than just marketing. As more (and younger) consumers are reaching out to businesses on social media for customer service, businesses need to be ready to meet that need. Social media is just that: social. It is meant to be a place to foster relationships and build communities, connect with existing customers, and attract new employees.

Five Recommendations

5. Take another look at Pinterest. It is the fastest growing social network. The data shows that content on Pinterest correlates more with number of followers and follower engagement than both Facebook and Twitter. Businesses should consider this and try to find a way to use Pinterest to their advantage. Also, consider the fact that relatively few businesses are already using Pinterest and it could be a good strategic move to differentiate a business compared to competitors.

Implications

Pinterest is on the rise.• Fewer than expected are using Pinterest• Pinterest has a higher correlation with

follower engagementTherefore• Pinterest has the potential to be a better

option for businesses than Facebook or Twitter

ImplicationsCentral Kentucky businesses have not yet recognized the value of social media•Lower than expected current level of use•Have not shown that they are taking advantage of the many uses of social media•Social media is an increasing unavoidable necessity in today’s economy. It is expected that local businesses’ adoption of social media will be increasing for the foreseeable future.

Closing

• By way of virtual observation, this study demonstrates that valuable data can be collected with this method, and

• that there is a vast amount of room for growth for businesses in Central KY regarding how and how often they use social media.