In a global economy driven by increasingly empowered consumers, small and midsized enterprises (SMEs) are challenged to find new ways to stand out from the competition, create tighter bonds with their customers and enhance the growth of their business. Technological innovation has been a key source in maintaining competitive advantage for SMEs. Although expectations and emphasis for particular technologies varies depending on industry and geography, the overall trend is clear – social media is helping SMEs be closer to their customers, and in turn, grow their businesses.

In a recent study with Oxford Economics, 2,300 SME senior executives across 23 countries were asked about strategic initiatives that were most important to them in driving business growth. Of the respondents, 39 percent cited strengthening customer relationships, a combined 63 percent cited domestic and global expansion, and 49 percent noted expanding product and service offerings. Not only must SMEs work on getting closer to existing customers and meeting their ever-changing demands, but they must also look for ways to increase their market share and attract new customers within both domestic and new geographical markets.

As a result, many SMEs have realized the importance of social media in gaining competitive advantage – 40 percent of respondents are widely using social media technologies today. Out of the SME senior executives surveyed, 31 percent stated social media has helped drive better customer service. Additionally, 25 percent cited improved product and service development with social media.

Personal involvement, engagement and connection are among some of the most important reasons consumers choose smaller businesses over larger brands. For SMEs, knowing how to capitalize on this for their growth initiatives is crucial. Social analytics and collaboration tools can help SMEs use social media to participate and reap rewards from engaging with employees and customers more dynamically; learning how to craft a better brand, quickly responding to changes in customer preference and making sure their social media has a positive impact on business.

A recently published list of top 10 SME technology trends for 2014, from the SMB Group, supports these notions. The list reveals that some SMEs will integrate social tools more tightly with Key Performance Indicators (KPIs) such as sales, marketing and content management applications. Others will use analytics to develop more actionable social metrics, and marketing innovators will explore new opportunities based on geographic location. Some SMEs will also use social to improve existing marketing tools, including surveys, email marketing and various networking conferences and events.

Outlined below are more ways SMEs can use social media to innovate and gain competitive advantage.

  • Create a Community.  Social media allows businesses to connect with customers interested in the products and services they offer. Using the right social media platforms and having access to the most relevant audience, allows SMEs to engage with their core customers and build communities. Social media also allows businesses to connect and engage with their employees. By creating internal communities, businesses break down operational silos and improve resource integration, which ultimately leads back to improved customer service and product development.
  • Expand reach. Leading social media platforms like Facebook, Google+, Twitter and YouTube, cater to worldwide audiences. By using these main platforms, SMEs have already taken their business global and extended their messaging. This is especially important for the large number of SMEs seeking to expand beyond their immediate locations.
  • Maximize ROI on Marketing and Advertising. After engaging with their target audience, SMEs can use social media to promote their products and services in a more personal way. A picture is worth a thousand words, and having the ability to upload images, from an event or videos of product demos, for example, can bring SME offerings to life in a way that words alone cannot.
  • Gauge customer and employee sentiment. Social media analytics are more than numbers. Monitoring tools use analytics to measure consumer and employee sentiment from data gathered on social sites. They provide the proof points needed to improve engagement, make decisions, and link social media efforts with the bottom line. For example, through the use of analytics, SMEs can track customer input on products, services and offerings. Empowered with insight into customer sentiment, SMEs can improve customer segmentation, provide targeted offers, and increase upsell and cross sell opportunities.
  • Manage brand reputation and identify opportunity. Statistics show that consumers largely base their purchasing decisions on the reviews, commentary and recommendations of people inside (and even outside) of their circles. By using online reputation management tools, SMEs can monitor for mentions of their brands, products and services, and promptly engage in those active conversations. Engaging with consumers in this way can help negate negative commentary, uncover unmet customer needs, and potentially help convert prospects into customers.
  • Boost website traffic. The popularity of social media has essentially forced search engines such as Google to include social signals into their Search Engine Rankings (SEO) algorithm. SMEs that engage in social media and link to their webpages on their social media profiles, can expect to receive an increase in quality traffic – thanks to the combination of social and algorithm-ranked content.
  • Improve Productivity. According to a McKinsey report on unlocking productivity, the average worker spends an estimated 28 percent of their workweek managing emails. They also spend another 20 percent of their time searching through internal documents and tracking down information from colleagues. As productivity decreases, business costs associated with time mismanagement increases, and employers feel the pain. By connecting employees to experts within the company, social media tools decrease the need for email and encourage collaboration. Increased collaboration capabilities enable employees to share ideas and move projects, products, and services forward faster.

The Oxford Economics study revealed that SMEs are recognizing that there is a digital revolution taking place they cannot afford to ignore. Over 36 percent of senior executives surveyed ranked social media as their most important technological investment over the next three years. Although, the rankings varied from market to market, social media remained a priority in every country. This is because social media and social platforms have an undeniable impact on SMEs’ performance. More than half of the survey participants predicted that over the next three years, their investments in social media will create a competitive advantage for their firm. Additionally, upwards of 41 percent of survey respondents indicated that social media is already creating a significant competitive advantage for their company.

On paper, developing a squeaky clean social media strategy can seem simple. But the execution of all the day-to-day tasks involved in that strategy can be a different story — at least without having the right implementing processes to manage it. As a matter of fact, when asked about the key challenges their firms faced in adopting social media, senior executives cited uncertainty in how to apply social media to their business, not knowing how to measure the ROI, and difficulty getting employees to embrace the idea of social media. Additionally, almost 40 percent of respondents said they were challenged with the amount of effort needed to commit to maintaining a viable social media strategy.

The value social media brings to SMEs is irrefutable. With the right social analytics and collaboration tools, SMEs can overcome these challenges and maximize social media strategy implementation. By enabling SMEs to use social media as a way to measurably strengthen customer relationships, expand geographically, and increase offerings, these tools make social media an essential ingredient for sparking innovation and increasing competitive advantage.