Social Media: businesses’ new marketing tool
Published: Thursday, January 31, 2013
Updated: Thursday, January 31, 2013 21:01
Businesses are breaking out of the boardrooms and signing on to Twitter.
A new study by the UB School of Management shows that providing a link between social media and making businesses more accessible to the masses could be beneficial. This connection demonstrates the increase in customer patronage and loyalty to a business. People in the field agree that “humanizing the business” will help the relationship between companies and consumers.
Social media is “redefining the way firms interact with their customers,” according to Rishika Ramkumar, an assistant professor of marketing at Mays Business School and participant in the research study.
Subi Ghosh, director of sales and e-commerceat Joyce Koons Honda Buick GMC and UB alumna, said businesses are attempting to change how they view social media and how it can be used to create more profit from their product.
“Nobody had really measured what impact [social media] had on business,” said Ram Bezawada, an assistant professor of marketing at UB’s school of management.
There is now empirical data demonstrating when customers use Internet sites such as Facebook and Twitter to connect with businesses, they contribute 5.6 percent more to a business’s “bottom line” as opposed to those who do not, he said.
Customers who participated in social media were also shown to buy more profitable items, as well as the business’ unique and top selling products when they shopped in stores, according to Bezawada.
Though firms had been hesitant in the past to invest money into social media marketing, Ghosh said this new study may be able to demonstrate how effective this mode of advertising really is. She believes businesses will now invest more.
“The doubts about the effectiveness of social media arise because the link between firms and social media efforts and return on their investment has not been established,” she said.
Ramkumar explained that 75 percent of Internet users are participating in social media and with numbers like these, companies have been looking at ways to connect with customers via Internet social media sites despite the lack of conclusive data.
In order to achieve definitive results, researchers involved in the study used “actual behavioral data,” as opposed to survey data, she said.
The results of this study, while novel, were not altogether unexpected, according to Ghosh and Ramkumar. While other businesses may have been skeptical about just how effective use of social media could be, both were not surprised.
They agreed there has been enough evidence in the past suggesting that social media – and connecting on a personal, functionally modern level with consumers – benefits a business.
Allowing customers to get to know a business through a medium they feel comfortable with provides an overall more connected experience, which Ghosh has been seeing at her company.
“You are, quite frankly, abandoning your customer base by not giving them an avenue to first, get to know you and second, communicate with you in an open and social manner,” Ghosh said.
According to the researchers it’s assuring to have data to support what they already assumed – making businesses “more human” is effective.
The question now is what to do with the results.
“My co-authors from SUNY Buffalo, Texas A&M and Aalto University School of Business (Finland) plan to work on other aspects of how firms can harness the power of social media,” Ramkumar said.
Bezawada expounded on this, alluding to plans of investigating email ads and other Internet driven modes of communication.
Analyzing how customers interact with a business, and using this to create better relationships between company and consumer, appears to be the main goal of researchers.
Ghosh believes that pursuing this goal will bring in more revenue because it will make the company stand out. Competition between businesses is tight and in order to gain customers’ attention, a company must appeal to them by building a relationship.
This relationship, according to Ghosh, will prove to be the “key in today’s marketplace” for a successful business.