Written by: Ann-Charlotte Ewerhard
Is social media relevant for SMBs within B2B and can you measure ROI?
Small and Midsize Businesses (SMBs) within Business to Business (B2B) might hesitate about exploiting and leveraging social media since they may question the purpose, objectives and Return On Investment (ROI). This text will explore these topics.
Introduction
SMBs are usually categorized through the number of employees or annual revenue. Small businesses can be defined as having fewer than 100 employees, while midsize businesses have between 100 and 999 employees (Gartner, n.d.).
SMBs with smaller marketing departments and limited personal and financial resources might find it hard to grasp and understand the advantages and potential for social media.
The decision to be investing in and present on social media should be based on facts, objectives and strategies and not because of other companies´ actions.
There are many successful Business to Consumer (B2C) companies´ social media campaigns and one can also find larger B2B companies´ successful and viral social media campaigns, such as Volvo Trucks and Maersk Line. The adoption rate for social media has been slower for B2B compared to B2C organizations (Michaelidou et al., 2011), which can explain the lack of academic research done in this area. The literature and research has mainly been focusing on B2C, which might convince critics that social media is not well suited for B2B and especially not for SMBs.
One major barrier for SMBs for conducting social media marketing is the lack of perceived relevance within the specific industry (Michaelidou et al., 2011). There is also a substantial gap for B2Bs between the perceived social media potential and the use of it with customers and partners (Jussila et al., 2014). Some firms claim that personal face-to-face meetings in the selling process are essential. Personal selling is expensive due to labor costs and cannot deliver other benefits and objectives that social media can (Järvinen et.al, 2012). Research shows that the less a firm uses social media externally the less useful they perceive it. A study conducted with B2Bs within the technology industry in Finland revealed that social media was used more internally than externally. It was not common to use social media in the customer interface or communicating with partners (Jussila et al., 2014).
Social media is not a unified and structured set of approaches. Platforms vary from a technological view and also the utilization and functionality, such as Twitter having a maximum length of 140 characters (Jussila et al., 2014). There is a variety of social media tools such as blogs, micro blogs, Facebook, Flickr, LinkedIN, discussion forums / communities, YouTube and webinars.
Social media can be described as “…an enhancement to, rather than a replacement for, other digital media, and accordingly we regard social media as integrated elements, platforms, and tools of digital marketing that facilitate social interaction between businesses and customer networks.” (Järvinen et al., 2012, p.104).
Social media is a media channel even though not a traditional one. Traditional media is signified by indirect and one-way communication where the company creates, distributes and controls the messaging and marketing. Social media is characterized by the equality, since both the company and customers are creating content which strengthens the customers´ control and power. The social network structure is another feature. Social media can also be described as dynamic and interconnected. Today´s popular platforms and applications will probably evolve, some will be phased out and new technologies and applications will emerge. It is hard to predict future developments but one can expect a continuous and rapid evolvement.
Social media´s purpose and objectives
The limited research conducted in the field brings a lack of clarity and holistic understanding of the ideal objectives for social media within B2B, and especially for SMBs. It is assumable that the theories regarding social media for B2B also can be applied to SMBs. The subsequent text does therefore not distinguish between larger companies and SMBs within B2B.
A major issue to decide is purpose and objectives. It might be tempting not to focus on this and instead view social media as another promotional vehicle and thus just adapt the content from existing traditional marketing material and distribute it. This is not a recommended strategy though, since all marketing efforts should have a purpose and objectives.
Companies could try to strive for viral effects and e-word-of-mouth (e-WOM), conducted by advocators of the brand and firm. This might be hard for B2Bs since they usually have fewer customers, who are business professionals, and these might not be enthusiastic to share e-WOM or create and promote viral successes for other companies. Viral campaigns and e-WOM support and strengthen brand building. The increase of brand awareness is also attained without any social media campaign becoming viral. Social media´s interactivity and collaboration characteristics imply that branding is no longer conducted by the company only, but also by the users since they are co-creators of the content. This also implies a risk of weakening the brand if unsatisfied customers share negative experiences with the company or the brand on social media platforms.
Other functionalities and benefits that can serve as purposes and objectives of social media tools are Search Engine Optimization and Search Engine Marketing as well as driving traffic to the firm´s website. The results of these efforts are exposure to the brand and increased brand awareness but also cultivation of existing customers relationships as well as attracting new customers, which sales benefits from.
Another advantage with social media is the possibility to gain customer insights, which enables incremental innovations and improvements (Barwise, Mehan, 2010). Customer insights can also unburden customer support since customers can discuss and reveal solutions to encountered problems. The collection of customer insights inevitably leads to the possibility for customer interaction. The company can reply and treat customers rapidly and uncomplicated. There is a risk of B2B customers not being willing to share due to the risk of sharing sensitive insights and information with competitors. B2B customers´ contributions might therefore be less extensive.
Product innovation is an area where social media enables customers to comment and make suggestions for product concepts, ideas and improvements. The incentives for participating in social media based user communities do probably differ (even though some similarities can be assumed) between B2C and B2B customers. It is also questionable whether B2B professionals are willing to participate as user-innovators for other companies, not to underestimate the importance of legal issues and Intellectual Property Rights, (Nordlund, Lemipiala & Holopainen, 2011).
Social media can also be used for crisis management, if a website is overloaded, as an example, due to the communication functionalities of the platforms. PR is another objective, promoting press releases, as an example.
Social media is also an eminent vehicle for communicating with suppliers, build relationships and identify potential partners (Shih, 2009) since social media platforms can enhance collaboration and communication, which increases the firms´ competitiveness.
There are several purposes and objectives for leveraging social media, of which some are described above. The firm could start gradually in order to enable a continuous and regular presence. The purpose depends on available resources and firms could consider not only to engaging marketers but also employees from other departments.
Metrics and Measurements of ROI
Most companies have measurements and metrics, such as reach and frequency, for deciding the ROI of traditional marketing investments. These metrics should not automatically be transferred to social media. The characteristic of social media is the customer contribution and interaction and a logic extension of the metrics could therefore be to measure the customer interaction and contribution. The customer´s investment with the company´s brand on social media is therefore a preferable measurement (Hoffman, Fodor, 2010).
Measurements of such customer investments can be number of visits and recurring visits, unique visitors, time spent on applications and also more active customer contributions and investments, such as blog comments, Facebook updates and comments as well as Twitter re tweets. These activities will inevitably lead to increased brand and product awareness (Hoffman, Fodor).
There is also a distinction between passive investments (reading blogs, twitter posts and information on social media forums) or active investments such as making comments on blogs and Twitter. A more active investment will probably have a more positive impact on brand awareness and e-WOM.
Management usually appreciates and values short terms measurements such as the influence on next quarter´s sales figures. Social media´s potential to develop, maintain and increase the customer relationships must be measured on a long-term basis, not short term (Hoffman, Fodor, 2010). Findings reveal the positive impact for B2B companies´ sales performances when using social media tools, which emphasizes the importance to add social media to the company´s marketing strategy (Rodriguez et al., 2012). The off-line effects from these online behaviors can be harder to track and measure.
A difference between B2Bs and B2Cs to take into consideration is the smaller amount of customers. When a smaller firm within B2B has very few customers, partners and suppliers the firm might question the relevance of social media since it might be more effective to find other ways to communicate with key influencers. For B2C companies with a mass markets audience social media is very often an obvious and eminent vehicle. SMBs within B2B might want to act more selectively and mainly focus on decision makers and key influencers within their businesses, which would encourage a selective choice of social media platforms.
Today´s metrics for social media will probably evolve and look differently in the future since social media is a fairly recent phenomenon. Firms struggle with different weaknesses and SMBs within B2B will probably not have the resources to invest in all different social media channels at the same time. The choices must be made upon consideration of ROI and where social media can support the overall business objectives since ROI can also be attained outside marketing´s traditional domains. Research & Development, Customer Support, Customer Relationship Management, Public Relations, Human Resources, and Sales are areas wherein social media can reduce costs.
Conclusions
The research gap about social media and SMBs within B2B might depend on the fact that B2B companies have been lagging in the adaption of social media. The lack of research might also slow down the adaption rate. The adaption rate will probably increase when there are more examples, empirical evidence and knowledge spread about successes. The next generation who will be entering the work force will be people who grew up with the Internet. Social media and the digitalization will be natural for them, which has the possibility to increase the adaption rate.
A major threat is failing to remain updated with the developments of social media (Barwise, Meehan, 2010) but this can relatively easily be solved through continuous educational employer investments.
Social media is relevant and there are benefits and potential ROI but companies need not only to consider metrics and measurements within sales and marketing but rather also other departments. This might alter different departments´ isolation from each other on a long-term basis since they might collaborate more closely in the future. Firms could engage and encourage more employees than marketers when implementing a social media strategy in order to fully exploit the potential. This might change future budget allocations since social media has the potential to greatly influence other departments´ needs for resources such as personal resources. Very small firms with very few customers, suppliers and partners might not experience positive effects when exploiting social media. Other companies may see a large impact and substantial gains and ROI. Today´s metrics and measurements will probably evolve due to new technologies and platforms.
Many SMBs could benefit of a toolbox in order to get started. This text has not touched upon tactics but the limitations of personnel and financial resources within marketing, as well with other departments, could hinder the regularity and success of social media. A holistic understanding of different departments´ benefits of social media as well as metrics and measurements could be explored in further research.
References
Barwise, P., and Meean S., 2010, The One Thing You must Get Right When Building a Brand, Harvard Business Review, vol.88, issue 12, pp. 1-5
Gartner, http://www.gartner.com/it-glossary/smbs-small-and-midsize-businesses. [Accessed16 February 2016]
Hoffman, D., L., Fodor, M., 2010, Can you measure the ROI of Your Social Media Marketing? MIT Sloan, Management Review, vol.52, issue 1, pp. 41-49
Michaelidou, N., Siamagka, N., T., Christodoulides, G., 2011, Usage, barriers and measurement of social media marketing: An exploratory investigation of small and medium B2B brands, Industrial Marketing Management, vol.40, issue 7, pp.1153-1159
Rodrigues, M., Peterson, R., M, Vijakymar, K., 2012, Social Media's Influence on Business-To-Business Sales Performance. Journal of Personal Selling & Sales Management, vol. 32, issue 3, pp. 365-378
Shih, C., 2009, The Facebook Era: Tapping online social networks to build better products, reach new audiences and sell more stuff. Boston, MA: Prentice Hall.
Jussila, J., Kärkkäinen, H., Aramo-Immonen, H., 2014. Social media utilization in business-to-business relationships of technology industry firms. Computers in human behavior. vol. 30, issue 2, pp 606-613.
Järvinen, J., Tollinen, A., Karjaluoto, H., Jayawardhena, C., 2012, Digital and Social Media Marketing Usage in B2B Industrial section. Marketing Management Journal, vol.22, issue 2, pp. 102-117
Nordlund H, Lemipiala T & Holopainen M, 2011, Openness of innovating: The new roles of customers and users in business-to-business context, International Journal of Entrepreneurship and Innovation Management, vol.14, issue 4, pp. 282–297