Doesn't it seem like every small and midsized business must be online to have a shot at being profitable? When you look at the recent business lore, from Dell's profitability selling refurbished computers through Twitter to Gap's experimentation with social media to increase foot traffic and sales, the logic seems to dictate following the actions of big corporations online. Do what they're doing and what they have done.
So now every small business is seeking profits with every digital marketing tool introduced. Does adding the latest and greatest social media tool bring a profit?
Not automatically.
Yet many small-business managers believe implementing many of the newest tools and applications is the strategy for their businesses. Users understand features, but they confuse using the features with solving the business pain. This makes the value of social media and digital marketing more slippery than wet soap.
Moreover, recent business successes feed the misperception. Blogs and SaaS-based startups, from the Huffington Post to Klout, have scaled large numbers of followers and users through social media. Many businesses blindly try to emulate such scale, even using shortcuts in many cases. I have seen one or two companies offer the chance to purchase Facebook fans, in the same spirit as purchasing links. I can't imagine clean engagement data if the seed is a highly biased large group.
SMB managers and owners may learn a lot about what to do and what not to do studying how large businesses use social media. But how a business derives true strategic value from any tool, social media or otherwise, is based on the alignment of its business model with customer access to its offerings. Analytics can remind the business how well it is maintaining that alignment.
Understanding where customers are online dictates the choices for leveraging digital strengths, whether they're assets, resources, or employees. Food trucks have used Twitter to tell regular customers where in the neighborhood they'll be located. Twitter makes sense for a mobile business that wants to share location information and galvanize customers.
A small business also has to be willing to think beyond scaling traffic and consider how it can serve nonconverting traffic. This does take a diagnostic effort -- reviewing Web analytics results, running an A/B test, or conducting an online survey. The review can help you decide which additional actions can attract customers and which cannot.
Knowledge of your capabilities can guide measurement efforts, as well. As Tom Davenport and Jeanne Harris noted in their book, Competing on Analytics: The New Science of Winning:
Having a distinctive capability means that the organization views this aspect of its business as what sets it apart from competitors and as what makes it successful in the marketplace... Without a distinctive capability, you can't be an analytical competitor, because there is no clear process or activity for analytics to support.
Examining nonconverting traffic can require considerable effort and dedicated time, a scarce resource for SMBs and corporations alike. But it can be beneficial in revealing new ideas that, when refined, can help a business excel.
Understanding strategy for an SMB also is essential given the fragmented attention of today's Internet user. The Internet has become a hub for people to discover businesses and services. But with so many methods for that discovery, it is clear that small businesses must refine their use of social media in ways that best work for their strengths.
That's why small businesses should be cautious about emulating another company's social media use outright. It is an expression of strategy, not necessarily the strategy itself.
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