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Social Media Investments Pay Off for Small Businesses

Social Media Investments Pay Off for Small Businesses Credit: Social media hand image via Shutterstock

Having customers who are also Facebook fans are more valuable to retailers than those shoppers who aren't as social media savvy, new research finds.

A study by researchers at the University at Buffalo, Texas A&M University and Aalto University in Finland revealed proof that customers who engage with a business through social media contribute more to the bottom line than those who don't.

Ashish Kumar, the study's lead author assistant professor of marketing at Aalto University, said researchers discovered that shoppers who are active on a business' social media site contribute 5.6 percent more revenue and visit the business about 5 percent more than customers who don't participate on social media.

While companies may have questioned whether there was any return on their social media investment, researchers said the study proves that building online communities, personalizing messages and encouraging contributions from online members enhances the customer experience, as well as increases the frequency of social media visits and increases overall sales.

The research shows the keys to social media success include maintaining a user-friendly site, sending regular updates about events, personalizing key messages to customers and encouraging interaction from them.

As a result of the research, the study's authors believe business managers now have a better understanding of the return on their investment in social media and now know there is a direct correlation between social media participation and the number of items a customer buys.

The study, co-authored by Rishika Rishika and Ramkumar Janakiraman from Texas A&M University and Ram Bezawada from the University at Buffalo, was published in the journal Information Systems Research.

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Chad  Brooks
Chad Brooks

Chad Brooks is a Chicago-based freelance writer who has nearly 15 years experience in the media business. A graduate of Indiana University, he spent nearly a decade as a staff reporter for the Daily Herald in suburban Chicago, covering a wide array of topics including, local and state government, crime, the legal system and education. Following his years at the newspaper Chad worked in public relations, helping promote small businesses throughout the U.S. Follow him on Twitter.