Posted August 9, 2011 12:06 am by with 7 comments

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Small and medium sized businesses rely heavily on word of mouth and referral advertising. We all know that and the point has been made ad nauseum.

Even with that in mind it seems quite interesting to see the findings of a study conducted by SMB insurance provider Hiscox. Essentially it says that many small businesses don’t find social media important yet half of them say that they couldn’t live without referrals from word of mouth (WOM) sources.

eMarketer shared the Hiscox findings

Note that only 12% say they have to do it while only 24% said they get involved in social media when they have the time. The rest?Well, 64% of the respondents said they either don’t use it for their business, don’t know enough about or don’t give a rip at all!

The next chart shows that in the US 50% of the businesses feel that personal recommendations are something they couldn’t live without while social media rated just 4% saying the same thing.

I have worked with enough SMB’s to actually understand this kind of finding. It seems almost counterintuitive to those who are immersed in the world of social media. Isn’t social media the new word of mouth after all?

The answer is not necessarily. This answer is most dependent on a few factors.

Where the SMB is in its life cycle – The older the company the more success they have had with traditional marketing options. Some hold on to everything despite evidence that it all doesn’t work like it used to (i.e. Yellow Pages) while others have jettisoned the less useful tactics while keeping the ones that still work. Because they are pressed for time and resources they just haven’t felt the urgency to “get social”.

The age of the SMB’s top management – Let’s face it, the younger you are the more social media savvy you are likely to be as a general rule. Long time business owners and managers in the 45 plus range just don’t have the time or desire to learn the social media game in many cases. Not to say that this course of non-action is a good one. It just is what it is.

The social media industry looks slimy – At some point having everyone and their brother hanging out a shingle proclaiming their mastery of the social media dark arts is going to hurt the advancement of the cause. Thanks to the path blazed by shady search marketers, social media has gotten to that point even quicker. And no one in their right mind is going to be throwing their trust into an industry that thinks the descriptors of guru, ninja, maven etc are a good thing.

Limited SMB resources – Look, just because a company has even 100 employees it doesn’t mean that even one of them has a true social media aptitude. At this point, most business owners have the realization that may need to hire someone to do something they themselves are not comfortable with. Now you are in the head of the SMB decision maker where FUD (fear, uncertainty and doubt) exist but are not on display in most cases for fear of looking weak. Pulling that trigger to hire even a consultant gets bigger than it should in their mind and the likelihood of it happening fades pretty quickly.

The social media industry (again!) is doing a poor job of defining social media and its business value – That one is pretty self-explanatory don’t you think? We package social media as some magic potion, elixir or spell that everyone is using to the utmost and you, Mr. SMB, must be kinda stupid if you aren’t getting it. Shame on us.

So there seems to be a disconnect here that, if not addressed, can turn into a larger issue than it needs to.

Now, in fine blogger fashion I have outlined some issues without giving you any solutions. Why do I do that? So I can have our readers show that they are experts rather than just claiming it. Any thoughts to help SMB’s cross the chasm and understand that word of mouth and social are not from other planets but rather they are very close relatives?

And if you would like to see another take on this same data from our Inbound Marketing Channel sponsor, HubSPot, check it out here.

  • I think we Internet marketers need to continue spending more time with other businesses – outside of the Web marketing world. We love hanging out with ourselves at search and social conferences. I know it’s comfortable. But it’s not helping our own businesses or the other businesses of our community.

    We have to gain the trust of the rest of the business community. They’re afraid of this stuff. They don’t know who to trust.

    Maybe consider holding monthly Web marketing gatherings in your community. I’m trying that now in Akron, Ohio. I’m the sponsor. It’s free to come. And I supply some drinks and snacks. Our third one will be this month. We’re doing them as round tables so that people can talk and ask questions. So far so good.

    I think it’s all about building trust.

    • @Sage – Good idea. How has your attendance been? What are the reactions of the attendees? I hate to make this take a turn toward capitalism but should you be charging a minimal fee for this kind of valuable information?

      I have seen a lot of folks take free advice (I have given many of these talks as well) and then turn around and do nothing. Now that can be frustrating because you can lead a horse to social media but you can’t make him tweet. (I’m keeping that one).

      • Seeing people not use the information is indeed frustrating. I just got off a call like that.

        Attendance has been OK. So far 12 people at the first event and 5 at the second. Summer is tricky for these kinds of things. I’m looking forward to see what the fall brings.

        I really want to charge for this. And maybe I will at some point.

        But ultimately I’m using it as a networking event. I am trying to come up with as many ways as I can think to meet local businesses. It’s basically an in-person content marketing strategy.

  • I think a big part of getting SMBs to use social media is just to make them comfortable with it. It’s still the “new kid” and doesn’t have the kind of history that traditional marketing tactics do. Business owners understand the effect of putting an ad in a newspaper. Social media is still a little grey for them.

  • Hi Frank.

    The data is really accurate – as a small business marketing coach I see it everyday (and as to WOM, the worst part is most businesses are really dependent on it and have no plan to make it a process to get those referrals).

    As to WOM and Social be different sides of the same coin, what we have to do as an industry is to help SMBs better understand how they do work together. We need to help the business owner (and I would love to see real data on this) understand that a client may mention them to a friend (WOM), but a large percent of the time, that friend is going to check the business out BEFORE they make contact – and that is such a key value of the social investment. Does social generate leads? I’m not so sure – especially in B2B – but does it validate WOM and referrals before the refer-ee contacts the company? – I’ll bet the majority of time it does.

    Dan Kraus
    President, Leading Results

  • you can lead a horse to social media but you can’t make him tweet.

    I like that! 🙂

    Frank, this is a brilliant post. I always compare social networking to a local Chamber of Commerce event or a business networking function offline. People do understand those. The difference is that offline social networking is most often conducted in a contained area whereas social networking online is much more malleable.

    It might be best to get SMBs to try out one social networking service rather than try to hit them all at the same. Perhaps we should marry up the service to their personalities. I’ve discovered that I like Twitter more than Facebook while others (my wife, for instance) prefer Facebook. Why is that?

    Essential to Facebook is the networking. You can’t be on Facebook without interacting with someone. There’d be no point to it. Twitter, on the other hand, can be used as a mass communications tool. Interacting with others, while encouraged, isn’t a necessity. Being a former journalist, it fits my personality better. I can interact if I have the time and if I don’t, then I just tweet my favorite links. I don’t have to meet at the water cooler with a cup of coffee in my hand to be an effective networker.

    Many people still find it difficult to put themselves out there because they’ve been taught that bragging on themselves is uncool or they just don’t feel comfortable chit-chatting with strangers. These are hurdles that can be overcome, but if people see it as a way to simply meet people with similar interests and forget all that hard sell crap, then I think they’d see social media in a whole new light.

  • Success stories of other local SMBs and personal experience will trump bodacious baseless claims every time. Facts tell, stories sell type thing – show tangible proof and/or testimonials from other local SMBs to support the info and reduce the fear.

    Also had some success illustrating to local SMBs how easy and quick a customer’s WOM can go from cash register to Facebook, local reviews, and beyond, in the time it takes to thumb the incredibly small buttons on the chosen mobile device du jour. Do a live demo right there.

    In total agreement with previous comments, it is a fear thing 100%…we try to reduce the fear by educating…which really comes down to sales. Prospecting, qualifying, presenting, and closing.

    We know what the problem is, and how to treat it…communicating the need for help comes down to sales. No reason to add to the chatter and tell SMBs they need to be on FB, rather show them why in easily understood terms.

    Great idea on the local mktg gatherings!

    Everyone is now a social media marketing maven, just like how there are still SMBs out there that “have a relative/neighbor/roommate/friend that does web design.”

    Sorry for long comments, too much coffee – and we’re approaching Noon PDT!