What Is The Significant Impact Of Social Media On Businesses?

The million dollar questions every business owner has about social media is, “What is the impact of social media on my business? What will I gain from having a social media presence?”

As with any aspect of marketing, the answer ultimately depends on your goals, but let’s take a broad approach to these questions…

What Do Consumers Trust Most?

Consumers are bombarded with advertising from every direction all day long. Whether it’s on TV, radio, billboards, the Internet, or any other advertising medium, the fact of the matter is consumers are overloaded with information.

But do consumers really trust this information and how it’s being delivered to them?

A 2011 study conducted by Nielsen paints an interesting picture: Consumers aren’t all that fond of traditional advertising, but they love recommendations from people they know and opinions from real people (read: not impersonal companies).

Here’s Where Social Media Fits into the Mix

Social media hasn’t changed the principles of marketing; word-of-mouth recommendations are still the king of all kings. What has changed, though, is how far that word-of-mouth recommendation reaches.

Rewind ten years ago to a point before social media rooted itself in our culture. If someone had an awesome experience with your business a decade ago, they might have gone out and told a handful of their friends and family members. Past research found a satisfied customer, on average, would tell 5 to 7 of their friends. Basically, word-of-mouth used to be fairly limited.

Today, that same happy customer hops on Facebook, Twitter, or their blog – sometimes before they even walk out of your business – and with a few keystrokes, they tell hundreds or thousands of their friends, family members, and blog readers about their positive experience. Based on the research above, 92% of people trust recommendations from people they know “Completely/Somewhat.”

The logic is pretty straightforward, then:

If you can maximize the number of personal recommendations your customers give, you’ll have more people walking through the door and your bottom line is sure to see an increase.

Think about the potential of having dozens of customers each personally recommending your business to hundreds or thousands of people they know. That’s the return you can expect from being a social business.

With Potential for Great Returns Comes Great Risk

The tricky part of this is social media could go the opposite way of happy customers publicizing their great experience with your business. They could be unhappy customers publicizing a horrible experience with your business.

Whether you adopt social media or not, people will talk about your business online and it’s up to you listen and get involved in that discussion. In theory, you have ultimate control of whether the conversation is positive or negative based on how well you meet the needs and expectations of your customers.

If you needed any more motivation to ensure your customers view your business and brand in a positive light, allow social media to be just that.