Half of Canadian businesses believe that social media has the potential to increase their profitability, according to a new BMO Bank of Montreal survey.
However, while social media tools such as podcasts and social networking sites present significant, cost-effective opportunities for businesses to engage customers, only 29 per cent of Canadian small business owners are taking advantage.
The survey, conducted by Leger Marketing, found that those who think social media can increase their profit believe it can do so through:
-- Promoting their company's brand or reputation (64 per cent)
-- Providing broader access to consumers (63 per cent)
-- Encouraging word of mouth endorsements and referrals (62 per cent)
-- Selling products or services (46 per cent)
-- Gathering ideas/suggestions (42 per cent)
The top reasons business owners cited for not using social media are:
-- They don't think it is a valuable tool (29 per cent)
-- They lack knowledge about social media (19 per cent)
"Social media, while still a relatively new communication and marketing channel, is definitely here to stay. We anticipate it playing an increasingly important role for Canadian businesses, as they look for cost effective ways to open new markets and broaden and deepen their connection with customers," said Cathy Pin, Vice President, Commercial Banking, BMO Bank of Montreal. "Our customers are also telling us they value opportunities to interact with other businesses, network online and share insights and experiences. That's why we recently launched a new online community for business owners," added Ms. Pin.
The BMO SmartSteps for Business Online Community is a virtual hub with social media features and tools, including a blog, live Twitter feed, and hot topic polls, for small businesses to get engaged online. Business owners access over 100 podcasts that provide advice from top industry experts on topics including developing a business plan, managing cash flow, and the importance of social media.
For those businesses that use social media tools, Facebook is the most popular choice at 70 per cent, followed by LinkedIn (kedIn (32 per cent), and Twitter (31 per cent).
Pritesh Gandhi, Senior Manager, Digital Marketing & Strategy, BMO Bank of Montreal, notes that social media tools have become more advanced over the past five years, and offer various benefits to business owners. "While the most popular application is Facebook, there are other networks and tools that can offer benefits to businesses. For instance, LinkedIn is very effective in building and maintaining contacts for recruitment and knowledge sharing purposes, while the effective use of Twitter can help to keep the dialogue open with your customers and respond to queries in real time." Mr. Gandhi adds that "BMO has increased their social media presence over the past year by actively using Twitter for everything from customer feedback and service issues to generating awareness of the new product or service launches."
The challenge is that a social media presence takes time to build, and the impact on the bottom line is more difficult to measure than some more traditional forms of marketing. On average, Canadian businesses owners surveyed say that 28 per cent of their marketing efforts are focused online as opposed to traditional media channels. Those who believe social media can increase their profitability are also more likely to devote a higher percentage of their marketing efforts online on average, compared to those who do not believe it will help the bottom line (34 per cent vs. 22 per cent).
The survey was completed between August 30 and September 16, 2011, with a sample of 509 small, medium and large business owners in Canada. A probability sample of the same size would yield a margin of error of +/-4.4 per cent, 19 times out of 20.