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Priming the Economic Engine: How Social Media is Driving Growth for Small and Medium Businesses (SMBs)
This document summarizes a study on how small and medium businesses use social media. It finds that most SMBs use social media for marketing purposes, but also for learning and insights. There is a correlation between increased social media spending and high growth among SMBs. SMBs are open to receiving financial information on social media, especially LinkedIn, and many take action after discovering financial products or companies on social platforms. The document recommends that financial service providers provide useful content to SMBs and engage with them throughout the purchasing process, especially on LinkedIn.
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Priming the Economic Engine: How Social Media is Driving Growth for Small and Medium Businesses (SMBs)
- 1. Priming the EconomicEngine How Social Media is Driving Growth for Small and Medium Businesses (SMBs) Commissioned study conducted by: 1
- 2. Why should youcare about SMBs? SMBs contribute $5.5 trillion in annual revenue (Source: Dun and Bradstreet) 1 Young firms in growth mode are the largest contributors to job growth. 3 2 (Source: Goldman Sachs) Small businesses create seven of every ten new jobs. (Source: SBA Office of Advocacy) ©2013 LinkedIn Corporation. All Rights Reserved. 2
- 3. They’re optimistic about2014 and focused on marketing 8 in 10 41% 10.7% think 2014 will be better than 20131 say increasing marketing and brand presence is their top business priority1 YoY increase in marketing budgets2 1 - RocketLawyer, 2013 Semi-Annual Small Business Survey 2 - Borrell Associates, Dec. 2013 3
- 4. We wanted tounderstand how and why SMBs use social media DEFINING SMBs Small $1M to $9.9M USD Medium 998 Small and Medium Businesses surveyed in the $10M to $49.9M USD US and Canada ©2013 LinkedIn Corporation. All Rights Reserved. 4
- 5. Key Findings Social media:ideal for marketing, but also for learning • 94% of SMB social media users use it for marketing • Half use it for learning and deriving business insights There is a strong correlation between increased social media spend and hyper growth • 73% of hyper growth companies reported increased social media spend • 82% of hyper growth SMBs say it is effective for generating new leads There is a prime opportunity for financial companies to influence SMBs on social media – especially on LinkedIn • 68% use social media for finance-related reasons • 93% are driven to take action after using social for both discovery and consideration • SMBs are most open to receiving financial information on LinkedIn 5
- 6. Social media: ideal formarketing, but also for learning 6
- 7. 8 out of10 SMBs use social media for their business 81% of SMBs are Current Users of Social Media 9% are Future Users 7
- 8. Among social mediausers, nearly all use it for marketing TOP MARKETING REASONS* 1 2 Generate word-of-mouth 3 Deliver content and new information about company 4 Advertise to help increase awareness 5 94% Maintain a company presence and identity Advertise to generate new leads Use Social Media for Marketing Needs *Base: Current Social Media Users Small Businesses are significantly more likely vs. Medium Businesses Medium Businesses are significantly more likely vs. Small Businesses 8
- 9. The reason? Socialmedia addresses their #1 challenge 65% State that attracting new customers is their top business challenge 61% Find social media useful in gaining new customers ©2013 LinkedIn Corporation. All Rights Reserved. 9
- 10. Half also usesocial media to learn and share resources TOP REASONS FOR LEARNING* 1 2 Learn from experts in my industry 3 Obtain insights or best practices 4 49% Access a network of peers to ask questions Find information and opinions to answer my questions Use Social Media for Learning *Base: Current Social Media Users Small Businesses are significantly more likely vs. Medium Businesses Medium Businesses are significantly more likely vs. Small Businesses 10
- 11. Strong correlation between increasedsocial media spend and hyper growth 11
- 12. The majority ofSMBs are growing and one in six are in hyper growth mode HYPER GROWTH Significant Increase in Overall Revenue YoY 16% NON-GROWTH GROWTH Decrease/No Change in overall revenue YoY 48% Increase in Overall Revenue Compared to Last Year 36% Small Businesses are significantly more likely vs. Medium Businesses Medium Businesses are significantly more likely vs. Small Businesses 12
- 13. Hyper growth andincreased spend on social media are strongly correlated Report Increased Social Media Spend Hyper Growth 73% Non-Growth 42% ©2013 LinkedIn Corporation. All Rights Reserved. 13
- 14. SMBs in hypergrowth find social media to be very effective in achieving key marketing goals % Reporting That Social Media Is Effective For... BRANDING WORD-OF -MOUTH 90% 88% 89% 82% Maintaining a company presence & identity Generating word-ofmouth about a company Delivering content & information about company Advertising to generate new leads ©2013 LinkedIn Corporation. All Rights Reserved. CONTENT MARKETING LEAD GENERATION 14
- 15. Social media isone of the most influential touch points when SMBs choose a financial service provider 15
- 16. Over two-thirds ofSMBs on social media use it for financial services TOP REASONS* 1 2 3 Seek advice on a financial decision Evaluate or re-think a previous financial decision 5 Have Used Social Media for Finance-Related Gather preliminary financial information 4 68% Keep up-to-date on financial trends Recommend a financial product to others Reasons Small Businesses are significantly more likely vs. Medium Businesses Medium Businesses are significantly more likely vs. Small Businesses 16
- 17. Social media triggersSMBs to learn more about financial products and companies Top 6 Actions As A Result of Hearing on Social Media 01 03 02 Conducted additional research on a financial product 04 Learned of a new financial company Learned of a new financial product 05 Shared information about financial trends, products 06 Asked a financial professional for additional info Discussed a financial product with a friend or colleague Small Businesses are significantly more likely vs. Medium Businesses Medium Businesses are significantly more likely vs. Small Businesses 17
- 18. Among SMBs whouse social media for both discovery and consideration, almost all are driven to action Path to Purchase 93% DISCOVERY CONSIDERATION DRIVEN TO ACTION Gather info / stay upto-date Seek advice/info to make a purchase (Learn / Discuss / Purchase) ©2013 LinkedIn Corporation. All Rights Reserved. 18
- 19. ...and about twoin five are driven to purchase Path to Purchase 37% DISCOVERY CONSIDERATION Gather info / stay upto-date Seek advice/info to make a purchase ©2013 LinkedIn Corporation. All Rights Reserved. DRIVEN TO PURCHASE 19
- 20. There is asignificant opportunity for financial service providers to cater to SMBs’ unmet needs Top 5 Types of Finance Content expected on social but not received* Best practices, how-to guides, checklists 29% New innovation and technology developments New product information 21% Company background Industry news/strategy information *Base:: Current Social Media Users **Base: Those who expected info 22% 20% 16% 20
- 21. In the pathto purchase for financial services, SMBs consider LinkedIn to be one of the most trusted platforms 21
- 22. LinkedIn is thedestination SMBs are most receptive to learning about financial products Openness to Receiving Financial Information On Social Media Sites* 57% 49% 47% 47% 45% 38% 69% of hyper growth companies are receptive to finance content on LinkedIn *Base: Current Users of Each Social Media Site 22
- 23. Only LinkedIn providesthe 4 C’s CREDIBILITY Nearly 3 in 4 agree LinkedIn allows them to build credibility. CONNECTION Over 2 in 3 agree LinkedIn lets them connect with vendors or potential partners. CONTEXT Over 2 in 3 agree LinkedIn provides a relevant context to promote and advertise their company. COMMUNITY Nearly 2 in 3 agree LinkedIn provides access to a broader community of other companies to seek opinions. 23
- 24. ...providing a valuableresource across different activities in the SMB value chain Sourcing Marketing & Sales Customer Service Open Innovation *Base: LinkedIn Users. 24
- 25. Build relationships throughmultiple touch points on LinkedIn Encourage referrals and recommendations Build community LIKE ▪ GROUPS SHARE FOLLOW ▪ COMMENT Build your followers INMAIL Provide real-time assistance SPONSOR UPDATE Publish thought leadership 25
- 26. Best practices formarketers Enable learning throughout each phase of the purchase path Fulfill unmet content needs Target hyper growth companies v Provide resources for the entire SMB value chain Build your credibility by facilitating open dialogue with SMBs ...LinkedIn has given us great access to new and potential customers. A level of trust is able to be established and thus, contacting these folks isn't as much of a cold call. - Small Business, Healthcare industry ©2013 LinkedIn Corporation. All Rights Reserved. 26
- 27. For the fullresults.... Download the whitepaper: http://lnkd.in/SMB-research 27
Editor's Notes
- #3 Goldman Sachs released research last year that clarifies this further. They said, it’s not necessarily the size of the business that leads to job creation, it’s the age. “The process of young firms (which do tend to start out small) growing into larger firms is the true contributor to job growth.” – Kris Dawsey, Goldman Sachs. So SMBs in growth mode are a very important audience.
- #5 LinkedIn and TNS surveyed 998 North American small and medium businesses with revenue between 1MM and 50MM USD and use or plan to use social media.Our respondents were financial decision makers or influencers at the company or division/business unit level.Small biz. (top 3 industries): Professional Services (e.g., Consulting, Graphic Design, Supply Chain, Real Estate), Retail & Consumer Products, Manufacturing-IndustrialMid sized biz. (top 3 industries): Manufacturing-Industrial, Professional Services, Financial Services, Insurance or Accounting
- #8 Q11. How long has your company been using social media? (Select one)
- #9 Q14. Which of the following reasons describe why you currently use/plan to use social media for your company? Q15. Of the following reasons you indicated why you use social media for your company, please indicate how effective social media was in achieving these objectives? (T2B)Top 5 stayed the same for small and mid sized biz. Small biz are more likely to use social media to maintain a company presence and identity, and to find information and opinions to answer their questions, compared to mid sized biz.Mid sized biz were more likely to use social media to find and source new employees/hires, compared to small biz.Both small and mid sized biz. have comparable ratings when it comes to effectiveness of social media
- #10 Q10. Please rank order the top 5 challenges for your company over the next 12 months.Small companies are sig more likely to state that attracting new customers is their top challenge. On the other hand, mid sized business are more sig likely to find social media useful in gaining new customers
- #11 Q14. Which of the following reasons describe why you currently use/plan to use social media for your company? Q15. Of the following reasons you indicated why you use social media for your company, please indicate how effective social media was in achieving these objectives? (T2B)
- #13 Q8 For overall revenue, please indicate whether your business has increased, decreased or stayed the same this year compared to last year?Sig higher proportion of mid size biz report increase/sig increase in overall revenue compared to small biz.Among non-growth: 71% were small businesses; 29% were medium sized businessesAmong growth: 63% were small businesses; 37% were medium sized businessesAmong hyper growth: 50% were small businesses; 50% were medium sized businesses; 50% were medium sized businesses
- #14 Q9. For the following marketing activities, can you please indicate if your spend has increased, decreased, or stayed the same this year compared to last year? (T2B) BY Q8. For overall revenue, please indicate whether your business has increased, decreased or stayed the same this year compared to last year? (TB, B3B)
- #15 Q15. Of the following reasons you indicated why you use social media for your company, please indicate how effective social media was in achieving these objectives? (T2B)BY Q8. For overall revenue, please indicate whether your business has increased, decreased or stayed the same this year compared to last year? (TB, B3B)Total effectiveness reads from Slide 10:Maintaining company presence: 80%Generate WOM: 80%Deliver content: 86%Advertise to increase awareness: 81%Advertise to generate new leads: 69%
- #17 Q26. For which of the following purposes have you turned to social media? Small companies are least likely to have used social media to any of the above reasons. Mid size companies are more likely to gather preliminary information about financial products/policies/solutions, or financial institutions/companies, and recommend a financial product/policy/service to others compared to small companies.
- #18 Q27. Which of the following actions, if any, have ever occurredas a result of your hearing or reading something on social media? Mid size companies are sig. more likely to have learned about a financial company/institution their company was not previously aware of, compared to small biz. That’s a growth storySmall biz are sig. less likely to have taken an action as a result of hearing or reading something on social media compared to mid size biz
- #19 Q26. For which of the following purposes have you turned to social media? Q27. Which of the following actions, if any, have ever occurredas a result of your hearing or reading something on social media? DiscoveryUse social to gather preliminary information or/andStay up-to-date on financial trends/ products/ companiesConsiderationUse social to seek advice or gather info to make a financial decision or/andevaluate or re-think a financial decision Mass Affluent21% (Disc)32% (Cons)63% (Both)
- #20 Q26. For which of the following purposes have you turned to social media? Q27. Which of the following actions, if any, have ever occurredas a result of your hearing or reading something on social media? DiscoveryUse social to gather preliminary information or/andStay up-to-date on financial trends/ products/ companiesConsiderationUse social to seek advice or gather info to make a financial decision or/andevaluate or re-think a financial decision Mass Affluent21% (Disc)32% (Cons)63% (Both)
- #21 Q24. If a financial services company were to use social media, what types of information would you expect to receive from it for your company? Q25. Which, if any, of the following do you recall receiving from your financial service provider(s)via social media? High proportions of small biz expected receiving new product information, readily sharable marketing materials, and customer stories and case studies, compared to mid sized biz.
- #23 Q23. How open are you to receiving financial content and information from companies you do business with on the following social media sites/services? (T2B)Hyper growth reads:LinkedIn: 69%Facebook: 58%Twitter: 55%Pinterest: 57%Google+: 49%Yelp: 27%
- #24 Nearly 3 in 4 agree LinkedIn allows them to build CREDIBILITY.Over 2 in 3 agree LinkedIn lets them CONNECT with vendors or other companies and allows them to identify credentials of potential partners.Over 2 in 3 agree LinkedIn provides for a relevant CONTEXT to promote and advertise their company.Nearly2 in 3 agree LinkedIn provides access to a broader COMMUNITY of other companies to ask questions or seek opinions.Q19. To what extent do you agree with the following statements about LinkedIn, as they relate to your use of social media for your company? (T2B)Small biz are more likely to perceive LinkedIn as a social media site that allows for building credibility, and connecting with vendors or other companies, compared to mid size biz.
- #25 Sourcing - Allows me to identify the CREDIBILITYand expertise of potential partners and CONNECT with vendors or other companies Open Innovation - Provides access to a broader COMMUNITYof other companies and thought leaders to seek opinions/recommendations Marketing and Sales - Allows me to buildCREDIBILITYand provides a relevantCONTEXT for me to promote and advertise my companyCustomer Service - Allows me to CONNECT with current customers Q19. To what extent do you agree with the following statements about LinkedIn, as they relate to your use of social media for your company? (T2B)Small biz are more likely to perceive LinkedIn as a social media site that allows for building credibility, and connecting with vendors or other companies, compared to mid size biz.