Growing a business has its obvious challenges. Owners, usually with a limited allocation of initial resources, must race against the clock to create a meaningful strategy to steal market share from larger competitors. A few fundamental customer relationships can make or break an entire business. In many ways these challenges haven’t changed over time, but in 2008 there are new ways to compete as well.

Clicksharp Marketing has participated in a research effort involving Zoomerang and other Web 2.0 companies, surveying nearly 500 companies across the country from a wide variety of industries. The goal was to understand the following about small business owners: (1)

  • How do they value relationships with new customers?
  • How they approach lead generation
  • How comfortable are you with social networks on the Internet?

New customer relationships: the lifeblood of small business.

Imagine that two CEOs meet at a conference in New York. Sarah, owner and president of the up-and-coming Startup LLC, approaches Bob, the CEO of multinational Megacorp Inc., for advice on how to grow her business. Bob discovers that her concerns as a small business owner are very different from his:

  • Sarah places much more emphasis on new customer relationships, knowing that her business will be overwhelmed if she doesn’t continually generate new revenue streams. (2)
  • Despite the obvious risks of relying too heavily on a small group of customers, Sarah still finds it difficult to diversify her customer list by adding new ones. (3)
  • While Bob employs a massive sales organization run by many capable managers, Sarah is reluctant to hire additional sales staff to grow her business. (4)

In short, Sarah knows her business is finished if she can’t find new sources of income. But with all the usual small business hurdles in front of her, where can she turn?

Social networks: a turnkey solution for business development?

A social network, according to PC Magazine, is “a virtual community for people interested in a particular topic.” (5) Popular examples today are Facebook, Myspace, and LinkedIn.

Sarah knows all about social media. When Bob told her how important word-of-mouth marketing has been to her business, she thought about how social media can do the same: (6)

  • Adding a contact gives you access to all your connections; given a little time, it would be easy to grow the company’s network exponentially.
  • With a keyword-based interface, qualified people would have little trouble finding your company profile and engaging in meaningful speech.
  • Product and capability information, along with all the positive customer feedback, is easy to find on search engines, making it a useful branding tool.

And you could achieve all of this without hiring more salespeople. In addition, this marketing strategy would overcome other important obstacles typical of new marketing campaigns: (7)

  • Startup costs. Social media thrives on user-generated content, a comparatively small investment of time, and perhaps a nominal membership fee.
  • Wait time for implementation. Social media users are “always on,” 24 hours a day. The more information that comes out, the more comments that eventually come back. And unlike Megacorp, seniority means little.
  • Return on investment (ROI). Whether or not Sarah records customer development information, social media always leaves a paper trail (or the electronic equivalent). This makes it easy to compare acquisition costs with revenue generated.

Which social networks will generate the most leads for small businesses?

This will generally depend on the products and markets in question, and can best be understood with the help of a specialist social media marketing company.

News Corporation bought Myspace after the site enjoyed tremendous growth at the hands of artists and members of urban society. Match.com and other dating sites thrive by offering a measurable and lucrative advertising objective. Emerging sites like Salesconx allow sales professionals to exchange pitches with key decision makers.

For a small business competing in virtually any industry, a social network that brings buyers and sellers together is likely already in place. According to eMarketer, the number of American adults participating in social networks will increase to 69 million people in 2008 (a 21% increase over 2007). (8) In time, one or two of those garage bands on Myspace might work, but companies that invest in this innovative form of interactive marketing have a much better chance of success.