Face up to IT: Making money from social networks

Facebook, MySpace and the like are hugely popular with millions of people around the world using them to communicate with friends. But do these services offer real opportunities for entrepreneurs looking to grow a successful company? Dan Martin, BusinessZone.co.uk editor, investigates the business benefits of social networking.

It can't be denied that social networking is huge. If you're not a member yourself, the chances are that you'll know at least one of the 31 million people who spend time poking and turning friends into zombies on the phenomenon that is Facebook.

According to data from Comscore, 78% of the UK residents who use the internet regularly use social networks. The average visitor spends 5.8 hours a month on at least one network with the top 20% dedicating at least 22 hours to the activity.

The networks were originally designed for students seeking a bit of fun online but with such massive user figures, the websites are now seen as sources business owners can utilize to boost sales.

Building trust

Most people don't respond well to in-your-face selling and that's particularly true on social networks. Entrepreneurs who blatantly promote their products or services will not be well received.

William Buist, founder of Abelard Management Services and the organiser of several online business communities, believes trust is key if company owners want to reap the rewards of social networks. "If you're thinking about buying a new car and ask people which model they recommend you buy, you give a lot more credence to what the people you know very well and trust tell you," he says. "The same is true for social networking."

Buist believes there is a three-step process to developing trust. Firstly, entrepreneurs should spend time on forums and in groups looking for questions about issues in which they are an expert. Responding to the problem with free advice will demonstrate you are worth doing business with. "Many entrepreneurs feel that by doing that they are giving away their crown jewels but in reality, if people see you have the knowledge they will want to know more. You then get into a deeper conversation - the second stage," Buist adds.

These conversations will generally be one-to-one and allow entrepreneurs to approach the third and final part of the process when business can be done. "You enter the sales mode. But it's the sales mode in a conversation rather than an up-front, in-your-face kind of way which tends to turn people off."

Someone who knows all about the power of recommendations is Andrew Fawcett-Wolf who is a self-confessed LinkedIn addict. LinkedIn is a networking tool which can be used to find connections to job candidates, industry experts and business partners.

Fawcett-Wolf, founder of consultancy Thrive Digital, says he visits the site at least five times a day. "I discovered LinkedIn after someone had contacted a friend with a particular requirement who told them to talk to me," he explains. "When I asked them how they found me they said they had been speaking to my friend via LinkedIn."

After four years using the site, Fawcett-Wolf claims that 20% of his business is now generated using the website which he describes as his "primary source of marketing activity".

One interesting benefit of LinkedIn, he adds, is that it allows users to view people who have been looking at their profile and work out whether they are a competitor or a potential business opportunity.

Apply yourself

Facebook fans in particular can't fail to have noticed the plethora of downloadable applications. These widgets allow users to do all sorts of things - from throwing a sheep at a friend to working out the day you're likely to get married. In May 2007 Facebook invited external programmers to get involved.

One company which has taken advantage is online florist Arena Flowers. In July last year it launched a 'Fun and Flowers' application which allows users to send flowers and gifts to their friends. By using the programme to promote their company, Arena Flowers has already started seeing benefits. Over 60,000 virtual bouquets have been sent and the application has been added to thousands of Facebook profiles.

Managing director Will Wynne believes that while the application has boosted the company's finances, the real benefit is in the brand building. "We've had a total of 70,000 visits from Facebook and a few thousand pounds worth of orders," he says. "But we hope that at times like Valentine's Day people who have previously seen our app remember us and come direct or are more likely to click if they see us in traditional marketing channels."

Wynne adds that developing an application has helped pitch his company as a tech savvy, modern business. "It's hard to track brand awareness and the impact but our gut feeling is that this has been a very positive experience," he claims.

Arena Flowers developed its application in-house but several web design companies offer the service at a relatively low cost. Yann Motte, former VP product management at Yahoo! Europe who now runs social publishing network Webjam, explains that a new standard will make developing applications even easier. "Open social which is being led by Google and other companies is a standard which is going to be adopted by most platforms," he says. "This means that once you've designed your widget you can use it on any type of network service."

Expand your workforce

Social networking can also be used as a cost effective staff recruitment tool. With such a vast amount of individuals it's highly likely most entrepreneurs will be able to track down someone who could benefit their company. Placing job advertisements can be an expensive process but finding potential candidates on social networking sites generally costs nothing but time.

Daniel Richardson, chief technology officer of Bond International Software, says Facebook, LinkedIn and others give small business owners the ability to find candidates who may not have even heard of their business but possess the just the right skills and experience required.

"Employers should look at the groups or profiles that match a set of criteria, interests, qualifications, geography or industry," he explains. "Searching for competitor names on sites such as LinkedIn may find suitable candidates quickly. Once a talent pool has been identified, engagement through online dialogue should be entered to find out more and create a relationship."

Emily Hill runs copywriting firm Write My Site and has used Facebook to find staff. She believes it is perfect for small business owners looking for temporary employees. "I have found Facebook very useful when sourcing freelancers, consultants and the like but less useful for sourcing in-house staff," she says. "I think it's because the former rely on generating new clients and new business therefore they make the effort to network. People looking for in-house positions tend to head straight for the jobs pages in the local papers so it's best to advertise there."

Hill advises entrepreneurs to post a 100 word ad in relevant specialist groups. "You can expect quick responses as many people check their Facebook accounts religiously. This is handy if you have an urgent requirement," she adds.

It all sounds great but there is a downside.

Many recruiters are steering clear of social networking because of the ethical implications. Donna Miller from Enterprise Rent-A-Car for instance recently claimed that looking up applicants on Facebook and MySpace is akin to going into someone's house and searching through their cupboards.

But Richardson claims that this need not be the case if employers adopt a "strict relevance" approach and ignore information which should remain private. "It used to be that most employment court cases were heard in respect of losing a job but it may only be a matter of time before we see an increase of court cases for not getting a job related to information held on such sites," he says. "Entrepreneurs should be aware and treat information with an open mind, as it may not always tell the whole story."

Turn negatives into positives

The plethora of social networking portals means businesses are open to an increased chance of being criticised. Dismissed staff, unhappy customers or devious competitors can post negative comments about your business all over the internet. But the experts agree that it is not necessarily a bad thing. It can actually be turned into a business benefit.

Yann Motte says attitudes towards negative comments need to change. "We need to move away from the old way where businesses are pushing a message to an audience that is supposedly passive to the new way where you get live feedback from your potential or existing clients," he comments. "If that feedback is negative, it's an opportunity for you to improve."

William Buist agrees claiming that how you respond is the important issue. "It's how you react to the negative publicity which demonstrates your skills, experience and professionalism more than the fact the negativity's there," he says. "If I see something which looks a bit negative about me or my business I engage in a conversation and approach it in a professional manner saying something like 'It's interesting you say that, can you give me more background as to why that's your feeling.'"

In for the long haul

It is clear that social networking provides businesses with a vast range of opportunities but entrepreneurs shouldn't believe the benefits will start flowing in overnight. Security issues also need to be borne in mind but using the privacy controls provided by most sites means you should should remain protected.

Ultimately however and like most things in business, persistence is key. "There are no shortcuts; it's a long term strategy," says Buist. "Like any type of marketing, you have to keep at it."

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Post a comment

AccountingWEB.co.uk - 15-Feb-2008
Categories: Marketing/PR
Story read: 9077
Number of comments: 7

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Business networking tools

Ian Hendry, 14-May-2008 

Many thanks four your input Adam. It's perhaps a little unfair for us to hijack Andy's original article on LinkedIn with a feature comparison between our sites, especially as you don't have any social networking elements as WeCanDo.BIZ and LinkedIn do (that was the point of the piece after all).

I aimed to address Lu He's comments, which I hope I have done. If you'd like us to pick up a direct discussion in the BusinessZone community forum pages on the relative merits of our approaches I'd be happy to do so.

Ian Hendry
WeCanDo.BIZ
http://www.wecando.biz

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Response to Ian Hendry

Adam Baker, 13-May-2008 

Ian
your comments make interesting reading.
BView, launched on April 14th, is at its core a "list" of businesses. 2.3m of them in the UK....and rising.
It is also a thriving community of businesses and their customers which highlights the best and worst companies, as rated by their customers.
One of BView's biggest successes to date has been enabling businesses to build real contacts and connections with existing and new customers and to gain trusted, credible reviews on the Quality, Reliability & Value they offer their customers.

We're finding people use BView to research and vet a company before doing business with them.

Response from our community has been overwhelmingly positive (our colour scheme aside, which we are addressing). We listen to, and encourage, all feedback so I am interested in learning your thoughts. You can contact me directly through BView should you wish.

Upon searching on wecando for accountants in london no results were returned-- only 8 in the UK (comparison: BView has 39,347 accountants listed). A UK wide search for web designers (one of the most popular classifications on BView) returned only 5 results, 3 of which were for wecando. Printers = 2 results

I will look with great interest in how wecando gets along.

Adam Baker
www.bview.co.uk

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Ratings sites don't compare

Ian Hendry, 13-May-2008 

Thanks for your post Lu He, but ratings sites are something else. There are many of them and they lack a few key benefits we offer:

- The ability to build a network of trusted contacts from your existing customers/suppliers/associates/colleagues/friends (a social networking element)
- An understanding of what businesses the network of trusted contacts use, to give the endorsements context
- The capability to broadcast details of your most urgent business need, so approporiate business come to you.

In essence, what BView does it fairly basic. It is just a list of all businesses and asks its visitors to rate them. There are many sites that do the same and only thing to distinguish one from the other is how many reviews have been added. But ratings are subjective - if you don't know about the values and expectations of the person rating the business, the rating isn't worth much. What may be a great restaurant for them could may be one you hate. Generally, people place much more value on an endorsement from a friend than a rating by a stranger on the internet.

On our site all the businesses are there because they have been added and endorsed by our members. You can see which businesses are endorsed by people in your own network of trusted contacts -- it gives the endorsments context and therefore value.

Also, it should also be noted that most ratings sites, like BView, tend to rate B2C businesses first. We have B2C companies listed on WeCanDo.BIZ, but our users are mainly business people themselves, so we are much stronger on B2B assessments.

Ian Hendry
WeCanDo.BIZ
http://www.wecando.biz

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bview: putting businesses promotion ahead of their personal promo's

lu he, 13-May-2008 

In response to Ian Hendry...

seems BView (www.bview.co.uk) have already beat you to providing a service which puts companies ahead of individuals. Basically BView is business search directory which enables people to review businesses. Businesses can also take control of their profile on the site and actively seek recommendations from their customers as a way to prospect new business. Essentially its a Online reputation management tool for businesses. the more reviews a business gets the higher it is ranked in the BView search.

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Social?

Mark Lee, 27-Feb-2008 

There's an interesting dichotomy here.
On the one hand many of us business folk don't want to mess about with he games and other 'fun' applications on Facebook. I'm there, for example, to explore the business related benefits.

On the other hand, once you strip away the social side of things you edn up with a sterile directory or a forum like AccountingWeb. Is there a 'community' here? I don't think so. Not in the same way as on the 'social' networks anyway. There are however many other similarities.

Ecademy, for eaxmple, where I run the Find an Accountant club, is a business focused online network. Those members who take time to engage with others and who do NOT push their business wares/services get most from it. Member profiles on Ecademy tend to be more 'attractive' if they contain a degree of personal information. Those that focus on business offerings etc tend to generate little interest. It's not a directory facility.

Anyone experimenting with social networks needs first to appreciate that the generic name is misleading. Better to refer to them as online networks.

Can we make money through engaging within such networks? yes - but it's a long game. There are no 'fast bucks' to be made and if you ignore the fundamental principles of offline networking you won't gain any value from online networking either.

Mark Lee
The Accountants' Business Coach

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Still an indulgence until yhey become more business centric

Ian Hendry, 18-Feb-2008 

The fact that people admit to an addiction and that the time spent on social networks is easily perceived as a waste suggests they are still an indulgence (of the ego I would suggest) until they become much more business centric.

LinkedIn is positioned as a business "social" networking site, but it is still mainly about catching up with old chums and presenting your CV so you are more easily located for hiring purposes. The fact that the chargeable upgrades to membership are aimed at recruiters tells me this is a site where membership still puts personal benefits ahead of business ones.

Until such sites allow businesses people to register a profile that promotes their company and its services ahead of their personal skills, the benefits to the business won't be felt.

Keep your eyes peeled on the website we launch in May at www.wecando.biz ...

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Social networks are still a huge untapped business resource

Ash Gupta, 15-Feb-2008 

Ash Gupta

In speaking to a range of sectors from Government agencies to Banking, when I quizzed, have you plans to harness the power of social networks the responses varied from "well we wondering how to get into it" to "That's just not for us" or "well how do they really work?" These are Marketing Directors or people with prime communication roles. Not one said, " we are actively experimenting with them."

Social networks carry the trust and endorsement of tight groups of people and as such can play a key role in micro marketing, viral marketing and is wide open for the first bank or Government agency to take the high ground by tapping into these rich pools of people power.

I have four important editors on my Facebook group alone, and now I feel I know them so much better. We are open with each other so without ever abusing our shared privilege our relationship is now at completely different level than the normal e-mail alternative. We know each other in the round. That is the key.

I am an advocate for sensitive use of Social Networks by business and once this is more common, the age of personalised marketing will really take root fuelled by the force of the www.

Ash Gupta
Managing Partner
The Gupta Partnership
Consultants in Sustainable Transportation & Marketing
32 Barnton Gardens
Edinburgh, EH4 6AE
Scotland, UK
e-mail: ash@guptapartnership.com
URL: www.guptapartnership.com
www.mygreenwheels.com
Phone: +44 [0] 131 312 7771
Mobile : +44 [0] 7774 297937

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