Social Networking

Using social media websites to connect with existing and potential customers to increase revenues and expand a business

What is Social Networking?

Social networking, in a business context, is the usage of social media websites to connect with existing and potential customers to increase revenues and expand your business. The most frequently used social networking websites are Facebook, YouTube, and Twitter. Other popular social connection sites include LinkedIn, Instagram, Pinterest, and Snapchat.

 

Social Networking

 

While social networking has been used from its early beginnings by individuals to make social connections with other people, the explosion of social network marketing by businesses has largely occurred just in the past decade, shortly after the advent of Facebook in 2009. Social networking has proven so effective as a marketing tool that the vast majority of large companies have hired social media consultants or marketers to help them promote their products.

Primary advantages of marketing through social networking include its relatively low cost compared to traditional advertising and its proven effectiveness in creating not only sales but brand loyalty.

 

Summary

  • Social networking is the usage of social media websites to connect with existing and potential customers to increase revenues and expand a business.
  • Social network marketing has increased astronomically since 2010.
  • Primary advantages of social networking include reduced marketing costs and increased brand loyalty.

 

Advantages of Social Networking

 

1. Reduces marketing costs

Using social networking for marketing purposes can dramatically reduce your advertising costs. Paid advertising on social sites such as Facebook is typically much cheaper than traditional advertising venues – such as radio or television advertising – and often offers the additional advantage of being able to reach more people.

The increased sophistication of social media advertising enables businesses to effectively target individuals who are likely to be good potential customers. For example, a company that sells children’s toys can target their advertising to new mothers.

Social networking can be especially helpful for new, small businesses that have limited funds for marketing. Such businesses may be able to forego paid advertising altogether and market their products by only investing the necessary time and effort to post information about them on social networking sites.

 

2. Gets product feedback from social media

Using social networking sites is one of the most effective ways to obtain immediate and reliable customer feedback on your business products or services. Monitoring social media comments on your products or services can provide you with continuous information on how – and why – consumers are liking or disliking what you’re selling.

In addition to providing such valuable information, social networking offers your business the ability to respond to customers immediately. For example, if a customer posts something about having problems assembling or operating a product your company sells, then someone from your customer service department can quickly offer them assistance online.

Social site listening/monitoring tools can help you stay informed of mentions of your products or company that occur anywhere across designated social media sites.

The consumer feedback that you obtain online through social networking can be extremely valuable in tweaking existing products or services or in helping to guide the design of new products or services to meet customer needs or wants more effectively.

 

3. Builds brand loyalty

Because social networking creates a sense of community among the members of a social network, it can provide an immense boost in building brand loyalty to your company’s products or services.

Being present on social media websites helps to “humanize” your company and increases a sense of personal connection with your customers – both potential and existing. Customers who feel a personal connection with your company are more likely to continue buying from you and will resist switching to a competitor.

Responding directly to consumer comments about your products or company engenders customer loyalty. In addition, simply being present on social networking sites means that your company’s logo and brand message are frequently seen by potentially millions of people.

 

4. Increases website traffic

The use of social networking can help increase visits to your company website and increase sales and revenues in a couple of ways. First, social networking increases the mention of your company online overall, which can help boost your SEO ranking, putting your company higher in online search results. Secondly, providing direct online links to your company website in social media posts can increase traffic to your site.

 

More Resources

CFI is the official provider of the Certified Banking & Credit Analyst (CBCA)™ certification program, designed to transform anyone into a world-class financial analyst.

To keep learning and developing your knowledge of financial analysis, we highly recommend the additional resources below:

  • Customer Bonding
  • Marketing Campaign
  • Millennials
  • Types of Customers

Financial Analyst Certification

Become a certified Financial Modeling and Valuation Analyst (FMVA)® by completing CFI’s online financial modeling classes and training program!