Social networking can really pay off

Facebook, MySpace and the like are hugely popular with millions of people around the world who use these sites to communicate with friends. But do these services offer real opportunities for entrepreneurs looking to grow a successful company? Dan Martin, editor of our sister site,, investigates the business benefits of social networking.

It can't be denied that social networking is huge. If you're not a member yourself, the chances are that you'll know at least one of the 30+ million people who spend time poking and turning friends into zombies on the phenomenon that is Facebook.

The networks were originally designed for students seeking a bit of fun online but with such massive user figures, the websites are now seen as sources business owners can utilize to boost sales.

Building trust

Most people don't respond well to in-your-face selling and that's particularly true on social networks. Entrepreneurs who blatantly promote their products or services will not be well received.

William Buist, founder of Abelard Management Services and the organizer of several online business communities, believes trust is key if company owners want to reap the rewards of social networks. "If you're thinking about buying a new car and ask people which model they recommend you buy, you give a lot more credence to what the people you know very well and trust tell you," he says. "The same is true for social networking."

Buist believes there is a three-step process to developing trust. Firstly, entrepreneurs should spend time on forums and in groups looking for questions about issues in which they are an expert. Responding to the problem with free advice will demonstrate you are worth doing business with. "Many entrepreneurs feel that by doing that they are giving away their crown jewels but in reality, if people see you have the knowledge they will want to know more. You then get into a deeper conversation - the second stage," Buist adds.


Top 10 social networks ranked by total Internet visits (January 2009)



These conversations will generally be one-to-one and allow entrepreneurs to approach the third and final part of the process when business can be done. "You enter the sales mode. But it's the sales mode in a conversation rather than an up-front, in-your-face kind of way which tends to turn people off."

Someone who knows all about the power of recommendations is Andrew Fawcett-Wolf who is a self-confessed LinkedIn addict. LinkedIn is a networking tool which can be used to find connections to job candidates, industry experts and business partners.

Fawcett-Wolf, founder of consultancy Thrive Digital, says he visits the site at least five times a day. "I discovered LinkedIn after someone had contacted a friend with a particular requirement who told them to talk to me," he explains. "When I asked them how they found me they said they had been speaking to my friend via LinkedIn."

After four years using the site, Fawcett-Wolf claims that 20% of his business is now generated using the website which he describes as his "primary source of marketing activity".

One interesting benefit of LinkedIn, he adds, is that it allows users to view people who have been looking at their profile and work out whether they are a competitor or a potential business opportunity.

Apply yourself

Facebook fans in particular can't fail to have noticed the plethora of downloadable applications. These widgets allow users to do all sorts of things - from throwing a sheep at a friend to working out the day you're likely to get married. In May 2007 Facebook invited external programmers to get involved.

One company which has taken advantage is online florist Arena Flowers. In July last year it launched a 'Fun and Flowers' application which allows users to send flowers and gifts to their friends. By using the program to promote their company, Arena Flowers has already started seeing benefits. Over 60,000 virtual bouquets have been sent and the application has been added to thousands of Facebook profiles.

Managing director Will Wynne believes that while the application has boosted the company's finances, the real benefit is in the brand building. "We've had a total of 70,000 visits from Facebook and a few thousand pounds worth of orders," he says. "But we hope that at times like Valentine's Day people who have previously seen our app remember us and come direct or are more likely to click if they see us in traditional marketing channels."

Wynne adds that developing an application has helped pitch his company as a tech savvy, modern business. "It's hard to track brand awareness and the impact but our gut feeling is that this has been a very positive experience," he claims.

Arena Flowers developed its application in-house but several web design companies offer the service at a relatively low cost. Yann Motte, former VP product management at Yahoo! Europe who now runs social publishing network Webjam, explains that a new standard will make developing applications even easier. "Open social which is being led by Google and other companies is a standard which is going to be adopted by most platforms," he says. "This means that once you've designed your widget you can use it on any type of network service."

Expand your workforce

Social networking can also be used as a cost effective staff recruitment tool. With such a vast amount of individuals it's highly likely most entrepreneurs will be able to track down someone who could benefit their company. Placing job advertisements can be an expensive process but finding potential candidates on social networking sites generally costs nothing but time.

Daniel Richardson, chief technology officer of Bond International Software, says Facebook, LinkedIn and others give small business owners the ability to find candidates who may not have even heard of their business but possess the just the right skills and experience required.

"Employers should look at the groups or profiles that match a set of criteria, interests, qualifications, geography or industry," he explains. "Searching for competitor names on sites such as LinkedIn may find suitable candidates quickly. Once a talent pool has been identified, engagement through online dialogue should be entered to find out more and create a relationship."

Emily Hill runs copywriting firm Write My Site and has used Facebook to find staff. She believes it is perfect for small business owners looking for temporary employees. "I have found Facebook very useful when sourcing freelancers, consultants and the like but less useful for sourcing in-house staff," she says. "I think it's because the former rely on generating new clients and new business therefore they make the effort to network. People looking for in-house positions tend to head straight for the jobs pages in the local papers so it's best to advertise there."

Hill advises entrepreneurs to post a 100 word ad in relevant specialist groups. "You can expect quick responses as many people check their Facebook accounts religiously. This is handy if you have an urgent requirement," she adds.

It all sounds great but there is a downside.

Many recruiters are steering clear of social networking because of the ethical implications. Donna Miller from Enterprise Rent-A-Car for instance recently claimed that looking up applicants on Facebook and MySpace is akin to going into someone's house and searching through their cupboards.

But Richardson claims that this need not be the case if employers adopt a "strict relevance" approach and ignore information which should remain private. "It used to be that most employment court cases were heard in respect of losing a job but it may only be a matter of time before we see an increase of court cases for not getting a job related to information held on such sites," he says. "Entrepreneurs should be aware and treat information with an open mind, as it may not always tell the whole story."

Turn negatives into positives

The plethora of social networking portals means businesses are open to an increased chance of being criticized. Dismissed staff, unhappy customers or devious competitors can post negative comments about your business all over the internet. But the experts agree that it is not necessarily a bad thing. It can actually be turned into a business benefit.

Yann Motte says attitudes towards negative comments need to change. "We need to move away from the old way where businesses are pushing a message to an audience that is supposedly passive to the new way where you get live feedback from your potential or existing clients," he comments. "If that feedback is negative, it's an opportunity for you to improve."

William Buist agrees claiming that how you respond is the important issue. "It's how you react to the negative publicity which demonstrates your skills, experience and professionalism more than the fact the negativity's there," he says. "If I see something which looks a bit negative about me or my business I engage in a conversation and approach it in a professional manner saying something like 'It's interesting you say that, can you give me more background as to why that's your feeling.'"

In for the long haul

It is clear that social networking provides businesses with a vast range of opportunities but entrepreneurs shouldn't believe the benefits will start flowing in overnight. Security issues also need to be borne in mind but using the privacy controls provided by most sites means you should remain protected.

Ultimately however and like most things in business, persistence is key. "There are no shortcuts; it's a long term strategy," says Buist. "Like any type of marketing, you have to keep at it."


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