Why Small Businesses Are Turning to Social Media

For many small businesses, relying on traditional advertising and marketing channels just doesn't make good business sense. Instead, they're turning to social media campaigns, for two very good reasons. First, small businesses get more than half of their customers through word of mouth. And word of mouth travels a whole lot faster on Twitter than it does in real life.

Second, small businesses can't compete with the big dogs in terms of advertising and marketing budgets. So free social media platforms like Twitter, Facebook, YouTube, and Tumblr can really help level the playing field.

Original Skateboards is one example of a social media success story. For years the company barely broke even, and then the owners had the idea of posting an ad on YouTube. That first video increased sales by 40%, which led to a focused campaign of advertising on YouTube. Original Skateboards is now a multimillion dollar company thanks, in large part, to its 73,000 YouTube subscribers.Then there's Chocri, a make-your-own chocolate bar company that never intended to compete with the Hersheys of the world. Instead, their focus was on developing a core group of loyal customers who would recommend their product to their friends. The company has succeeded almost entirely on the strength of its social media campaign, which includes a blog and a strong presence on Twitter and Facebook.

When the German company first launched in the U.S., it used its blog to ask customers which ingredients they thought were working, which weren't, and which were missing. Through customer feedback, they were able to adapt to the U.S. market, which had different tastes than the German market. The company has also used Facebook, Twitter, and Tumblr to run contests that help strengthen customer engagement. For example, they now have 47 "phrases" printed on the insides of their chocolate bar labels, each of which was written by a customer.

On a smaller scale, one of my favourite stories is the one of Curtis Kimball and his crème brûlée cart. Before signing up for a Twitter account, Mr. Kimball and his cart trekked the streets of San Francisco, taking whatever customers he could find (like a hot dog vendor, but with crème brûlée). Now, he has more than 5,000 followers who wait to hear where he'll be every day, and when he tweets his location, they go find him. He probably won't be a multimillion dollar business anytime soon, but he has all the customers he can handle, and that seems to suit him just fine.

For companies that don't know where to start, the web is full of simple tutorials, like this one on using twitter for business. And if you're not running a small business, you can still think about using social media to market yourself. Stay tuned in the next couple of weeks and we'll give you our tips on using social media as a networking tool.