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The two sides of social media: interactive tools or one-way conversation?
Evidence from Italian small and medium enterprises
Davide Bolzoni S3834387
Supervisor: dr. Sakshi Girdhar
Master’s Thesis
MSc Management Accounting and Control Faculty of Economics and Business
University of Groningen
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1. Introduction
Social media is often described as a two-way interaction platform (Enders et al., 2008; Kaplan & Haenlein, 2010). This is because it allows companies to talk to customers as well as customers to engage with companies, enabling them to build strong customer relationships. Attracting new customers and cultivating customer relationships are considered to be some of the most important goals for many organizations when using social media (Michaelidou et al., 2011). This highlights the important role of relationship marketing and is aligned with past evidence suggesting that the internet and technology could be used as tools to build relationships with the customers (Sharma, 2002; Bauer et al., 2002).
Not only social media has proven to play an important role for larger corporations, it also becomes increasingly relevant for small and medium-sized enterprises. In particular, SMEs can benefit greatly from a widespread adoption of social media, which might help to “level the playing ground” with large firms (Kim et al., 2011). This is particularly true for Italian small and medium enterprises (SMEs), with the rate of social media adoption by small businesses steadily growing in recent years. In 2014, the percentage of companies using social media was 31.8%, increasing to 39.2% in 2016 and up to 44.0% in 2017. Companies claiming to use at least two social media are also slightly increasing, with their percentage rising from 15.6% in 2016 to 17.5% in 2017 (Istat, 2019).
Given that social media adoption has outpaced the development of current academic research (Durkin et al., 2013), it is important to shed light on how SMEs can gain value from the use of social media and overcome the factors impeding a more effective adoption. While previous literature has generally described social media as a two-way interaction platform (Kaplan & Haenlein 2010; Safko, 2010; Xiang and Gretzel, 2010) this paper focuses on SMEs to show that social media are used, on the contrary, as an extension of traditional media and, therefore, SMEs are not gaining value. The problem arises because of the limited ability to realize risky investments and a strong focus on core business activities, which are directly aiming at increasing the company’s profit. Given their typically limited resources and capacities, SMEs have to make well-thought decisions concerning the implementation of new technologies such as social media applications. The contributions of this paper are therefore twofold: improve SMEs’ ability to make informed decisions on whether or not to adopt social media by enhancing knowledge of key success factors as well as potential impediments. SMEs decisions to implement social media seem, in fact, to be driven by factors such as innovativeness of the CEO (Cragg & Mills, 2001; Lu, Yao & Yu, 2005) or anxiety to adopt what is perceived to be a new essential tool for business growth (Durkin et al., 2013). This paper provides SMEs with a thoughtful agenda through which value could be added to the customer experience.
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country. Findings will be particularly interesting for marketing agencies trying to answer their clients’ requests more effectively. Furthermore, organizations adopting new social media technologies following the growing trend will be more aware of the barriers they are facing, enabling managers to benchmark their own business.
The paper is organized as follows: Section 2 reviews social media literature to identify the gaps to be addressed in this study. Section 3 describes research methods and the organizational setting. Section 4 discusses key findings and the implications of the study. Section 5 provides concluding comments and directions for future research.
2. Literature review
Recently, social media use in a business context has been subject to considerable attention. There is a growing number of studies focusing on the use of social media by companies. In this section, I review relevant literature supporting the idea of social media as a two-way interaction platform. Advantages of social media compared to traditional media are explained applying “The Long Tail” concept (Anderson, 2006). In addition, I present several recent works on social media and SMEs, addressing the literature gap introduced in the previous section.
2.1 Social media as a two-way conversation
Among studies focusing on social media, a considerable number of authors describe social media as interactive, collaborative platforms. The key purpose of all forms of social applications is, in fact, to engage people (Kaplan & Haenlein 2010; Safko, 2010; Xiang and Gretzel, 2010) where, in the case of business organizations, people engagement can lead towards profit generation. Findings of Stockdale et al. (2013) support this idea with a case study arguing that the business value of social media, for SMEs, lies primarily in customer engagement.
As part of a two-way conversation, customers are also able to engage with the organization and generate contents. In this regard, Mangold & Faulds (2009) describe social media as a hybrid element of the promotion mix, as, in a traditional sense, it enables companies to talk to their customers, while in a nontraditional sense it enables customers to engage with companies. Peters et al. (2013) argue that social media characteristics are, among others, many-to-many interactions and user-generated content. The first feature means that the customer base that can be reached through social media is incredibly broad and is forecasted to expand furthermore in the next years. The second feature refers to the direction of social media data, which, unlike traditional data, also flows from customers to companies and not only on a companies-to-customers direction. Mangold & Faulds (2009) highlight that information control now lies with the customer, with social networking sites becoming “de facto modus operandi” (Mangold & Faulds, 2009, p.359) for users to disseminate information about brands. For Kaplan and Haenlein (2010) social media are “a group of Internet-based applications that build on the ideological and technological foundations of Web 2.0, and that allow the creation and exchange of user generated content”.
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for collecting information/feedback from customers (Michaelidou et al., 2011), initiating two-way conversations and developing relationships with customers through communication and interaction (Enders et al., 2008; Kaplan & Haenlein, 2010).
Overall, it can be argued that social media creates customer value because they are superior to traditional means of networking in two ways. First, they offer new ways of interacting with customers and, second, they facilitate the management of existing contacts. To analyze these advantages in more detail, I draw on the insights of “The Long Tail” concept (Anderson, 2006) and apply them to social media. The Long Tail concept illustrates how the emergence of electronic retailing and digital goods created a paradigm shift in the way companies can generate revenues. While in traditional physical stores the Pareto principle can usually be observed, meaning that 20% of products typically account for 80% of revenues, internet-based retailers have realized that “endless choice is also creating unlimited demand” (Anderson, 2006), especially since limitations in shelf space, and cost for producing, storing and delivering goods are not as relevant as in the real world. Transferring the concept of The Long Tail to the realm of social media helps to understand the above-mentioned advantages of internet-based media. First, via traditional means of networking, organizations almost exclusively hit a certain, limited target. This is due to the nature of traditional media, which are not suited for generating engagement and interactions. Relationships thus expire over time due to a lack of interaction (Burt, 2000). Social media, however, offer a much larger pool of potentially interesting contacts than traditional means of networking can typically provide. Thus, it becomes possible to manage a constantly growing number of contacts with limited efforts.
Based on this framework, it is reasonable to expect that the interviewed SMEs use of social media focuses on customer engagement, which is where business value for SMEs lies also according to other authors (Stockdale et al., 2012).
2.2 Adoption and use of social media applications in SMEs
While the adoption and use of internal social media applications in corporate context, widely termed as “Enterprise 2.0”, has recently generated a lot of research interest, there is scant literature addressing the benefits of social media for SMEs that has consequences for understanding its adoption and use (Stockdale et al., 2012). Several case studies on social media adoption and use in enterprises show a diverse area of application in Enterprise 2.0 implementations (Seebach, 2012; Riemer et al., 2012; Mansour et al., 2012; Zhang et al., 2010). While it is well known that social media can positively impact small firms’ performances, so far attention has been mainly focused on tactical marketing issues – for example the adoption of Twitter as a business tool and the impact of on-line engagement for off-line social relationships (Simmons et al., 2011; Fisher and Reuber, 2011; Kramer, 2010; Bulearca and Bulearca, 2010) and mobile marketing (Jayawardhena et al., 2009; Palka et al., 2009). These studies surely provide valuable insights to operational aspects of social media adoption and use, but “there is a deficit in the research with respect to a more strategic consideration of how social media can add value to the customer-SME relationships” (Durkin et al., 2013, p. 720).
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recently started to develop internal social networking platforms. Richter and Riemer (2009) identified three modes of use in three cases of large, knowledge-intensive organizations, including fostering existing relationships, building personal context and identifying experts. Another social media application that has received a broad academic attention are weblogs. Enterprise weblogs can be used in project management as project logs or for communication between the CEO or head of marketing and the company’s customers, as shown by Cook (2008). Furthermore, Efimova and Grudin (2007) identified benefits to both individuals and organizations when blogs are used as personal communication and knowledge management tools, while Wattal et al. (2010) showed other positive externalities. Recent literature has also highlighted how enterprise wikis can be used to create a shared knowledge base of common term (Mansour et al., 2012; Holtzblatt et al., 2010). Empirical studies show that wiki technology was used to support a vast range of work activities within an organization, including project team collaboration, information dissemination within communities of practice, idea generation, e-learning, technical support, customer relationship management and resource management (Stieglitz et al., 2011; Chai et al., 2010, Yates et al., 2010; Arazy et al.,2009). However, as Stockdale et al. (2012) have shown, social media are rarely used internally by SMEs, meaning this stream of literature does not clarify how social media can be used to develop more valuable relationships between customers and SMEs.
Despite the potential advantages social media offer for organizations, they face different challenges when dealing with their implementation and management (Bughin et al., 2011). In a comparative case study, Fuchs-Kittowski et al. (2009) summarized findings about a whole range of economic, cultural and technical factors that can be seen as great obstacles to the use of web 2.0 in enterprises. Among them, cost-benefit analyses yield unclear results, suggesting measuring business value from social media applications has long been a problematic area for businesses and remains a difficult challenge in the domain of social media. Angel and Sexsmith (2011) find that the reason why organizations are not gaining business value from the use of social media is that they are failing to define the value proposition. That is, “failing to identify desired goals and thereby underperforming in their use of the applications” (Angel and Sexsmith, 2011). In the case of social media, the value proposition lies predominantly in the ability of businesses to engage with their customers (Economist, 2010; Blanchard, 2011). Consequently, Dyerson et al.’s (2009) study of UK SMEs found their use of social media to be focused on the more superficial levels of communication, ignoring the opportunities for more strategic uses such as creating interactive websites, analysis of customer information and facilitating interaction with customers. These findings have considerable implications in the highly interactive environment of social media where collectivity leads to customers’ expectations of immediate and consistent results (Geho et al., 2010). This is problematic for SMEs that are ‘failing to gain a deeper insight into the “true” nature of their customers’ (Parrott et al., 2010, p.198) and who will therefore not be able to exploit the potentialities of effective and relevant communications in the current era of social networks.
Kuikka and Akkinen (2011) recently aimed at identifying internal and external challenges related to the adoption and use of social media in a large case company. Results of their study revealed that companies might face internal challenges such as resources, ownership, authorization, attitudes and economic issues as well as external challenges associated with company reputation, legal issues and public/private network identity.
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3. Methodology
This empirical study offers guidance on whether and/or how to most effectively and efficiently adopt social media solutions in the management and development of customer relationships. Therefore, a case study is assumed to be the most suitable methodology to cope with the complexity of organizational processes in a real-life scenario. Furthermore, a case study method is consistent with different papers claiming the relevance of this type of investigation in studies on social media management (Worrell et al., 2013; Haefliger et al., 2011).
In the period from August 26 to December 20, 2019, continuative interactions with a marketing agency and four of its SME clients enabled to draw on empirical evidence to examine the concepts identified in the literature. Client companies were selected to match the European Commission definition of SME (European Commission, 2019). Accordingly, all the interviewed clients had less than 250 employees and a turnover of less than €50 million or, alternatively, a balance sheet total lower than €43 million. Furthermore, in order to gain a more balanced view of social media use, interviews were carried out with firms operating in different sectors, including manufacturing, consultancy and digital payments industries.
The first data source consists of face-to-face interviews with people in charge of managing and using social media. Internal documents provided by the marketing agency were used at a second stage. A total of five interviews were conducted following a semi-structured protocol, each lasting from one hour to two hours according to the respondents’ available time. The interviews covered types of social media adopted, reasons behind their adoption, process of adoption as well as areas and benefits of social media use. Factors that may impede a wider and more effective adoption of social media were analyzed, as well as how participants are planning to use social media in the near future. Each interview opened by providing definitions of social media as two-way-interaction platforms as shown in the first paragraph of chapter 2 (literature review). That was to ensure that participants had the same understanding of the matter they would be dealing with in the interview. Follow-up calls and informal chats were conducted to clarify several details, insure richness of the findings and increase reliability.
Table 1 summarizes the number of interviews and their timing over the research period. The interviews were
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Company Industry Role Duration Method
Client company A
Manufacturing industry
Marketing Manager 1,5h Face-to-face
interview
Client company B
Manufacturing industry
Marketing Manager 2h Face-to-face
interview, follow-up calls and chats
on LinkedIn Client company
C
Consultancy Marketing Manager 1,5h Face-to-face
interview
Client company D
Digital payments Head of communication
1h Face-to-face
interview
Marketing Agency
Marketing Research & Insight Director
2h Face-to-face
interview, follow-up mails
Table 1: number of interviews and timing
The internal documents I examined relate to social media reports and additional memos and minutes from meetings between the marketing agency and its SMEs clients. Using these reports, evidence from the interviews was triangulated with a concrete visualization of how a social media strategy is constructed. The minutes, notes and memos are additional material collected during interviews meetings on top of the social media reports. These documents include communication plans, editorial reports and internal presentations. Corporate websites and social media platforms of the interviewed SMEs were analyzed to gain a deeper understanding of the companies’ customers in terms of relationships and level of engagement, the tone and type of communication as well as frequency of interaction.
Results were analyzed using Atlas.ti software. Interviews were coded according to three categories: current use, barriers and engagement. The first category refers to how social media are currently used by Italian SMEs; the second category, refers to the perceived barriers that prevent SMEs to engage in two-way interactions; the last category includes the reasons why organizations decided to pursue customer engagement.
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4. Results
4.1 Social media as a one-sided interaction platform: empirical evidence
Initially, a preliminary analysis revealed that Facebook is the most adopted social media platform. As the interviewees stated, Facebook is the most diffused social media platform and almost all SMEs’ customers have a Facebook profile. Therefore, SMEs feel the need to be on this channel, as the potentialities to reach their target are high. LinkedIn is the second most used platform, with only one firm claiming not to use it:
“we prefer to receive spontaneous job applications on our website or to rely on external head hunters. Furthermore, LinkedIn requires a level of engagement and commitment we cannot afford”
Client company A
Costs of LinkedIn’s business solutions are perceived as too high by SMEs. Hiring solutions are difficult to implement and time-consuming, while managing a LinkedIn corporate profile require constant efforts, especially in terms of the quality of contents posted, which have to be always interesting and engaging. Despite requiring higher quality contents compared to other platforms, companies value the professionality of this channel, as they can share industry-specific news and keep in contact with customers and suppliers. Interestingly, Harrigan and Miles (2014) found in another research that the most used social network by small-and-medium-sized firms was LinkedIn, with Facebook, identified in my study as the most diffused platform, only in fourth place. This might be because of the differences in the composition of the sample in the two researches. While the research presented in this paper also involves small and micro businesses, Harrigan and Miles’ sample focuses mainly on medium enterprises (with less than 250 employees), that might be better able to take advantage of all LinkedIn functionalities thanks to a better access to a broader set of resources. This hypothesis is supported by the findings of Cesaroni and Consoli (2015) showing that, in a sample of 48 small and micro businesses, Facebook was the most used social media, with an adoption rate of 79%.
Only one organization also claimed to make extensive use of YouTube. The firm operates in the manufacturing industry, producing high-complexity machines for the aseptic processing of injectable pharmaceutical products. YouTube, as they state, is:
“a great aid for our commercial agent when introducing a machine to a customer, as the videos are used as an animated brochure to show how each component of the machine works”
Client company B
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“we already have 3D models developed by our engineers. What we do is ask them to convert the model to a video and upload it to our company’s YouTube channel. Easy and effortless. Our commercial agents are then able to link the video to a client asking information for a specific machine, along with the brochure and, at a
later stage, the quotations. These videos have also proven extremely useful at industry fairs, as they contribute to a seamless customer experience”
Client company B
Overall, websites are used by all the analyzed SMEs to highlight job vacancies and opportunities as well as to announce the firm’s attendance to industry fairs and events. However, they did not report these events on their Facebook page, using the “events” functionality, as none of the firms perceive it as “professional”. Furthermore, no functionalities that create engagement, such as blogs or tools to receive feedback, were implemented by any of the firms. This might be because of the way SMEs manage “personal contact networks”, (PCNs). Such networked relationships constitute a key business resource, one that is particularly important in maintaining the core relationship between an SME and its customer base and, therefore, most SMEs prefer to handle these relations face-to-face. As one interviewee stated:
“these relationships are developed around trust and commitment, which reduce risks and uncertainty for the parties involved”
Client company D
What is increasingly becoming apparent however is that, with the diffusion of social media channels, SMEs perceive that the generation and maintenance of trust and commitment is becoming more artificial and remotely facilitated. Although being very different from the way SMEs used to manage relationships, social media’s potential to replicate dimensions of face-to-face interaction in a virtual environment and to provide high levels of self-disclosure, as suggested by Kaplan and Haenlein (2011), has the potential to considerably enhance personal contact networking activities.
Results of this preliminary research are consistent with the objectives of social media listed by the firms. Interviews highlighted that the main reason why an SME decides to adopt social media is to reach new customers, with all firms claiming to use social media to increase visits to the company website and to present new products. A firm’s representative declared that:
“we use social media to acquire new customers and keep in touch with the old ones”
Client company B
However, all organizations admit their inability to know how many contacts are actually transformed into real customers. Many firms are also claiming to use social media for recruiting purposes, which explain why LinkedIn is the second most used social media by the SMEs in the sample. Two firms identified knowledge and information dissemination as key objectives for social media adoption. One organization is using social media for communication purposes, that is to share interesting and relevant content related to industry fairs and events. Another firm states that:
“the main objective of social media is to increase brand awareness by sharing ideas, thoughts and industry news”
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Social media have enabled them to generate interest that directed traffic to their website. Overall, reasons to use social media seem to be directly linked to variables such as industry setting and the competitive position of the SME. For instance, SMEs in the manufacturing industry direct their social media efforts towards becoming knowledge leaders, with the ultimate objective of strengthening their competitive position.
With regard to future plans, interviews results show a widespread interest towards social media potential. All interviewed firms are thinking to increase their presence in social media to enhance brand awareness and word of mouth. One organization is planning to follow the direction of relationship marketing, while another one claims that:
“we will use social media to reach the highest number of interesting/interested contacts”
Client company B
Building and maintaining web relationships with customers are not easy activities and require time and resources. Despite their willingness to interact and collaborate, many firms still have a one-way, and not two-way and interactive communication, which means SMEs are not gaining value from the advantages of social media highlighted above drawing from The Long Tail framework. This is due to a series of barriers which influence the way SMEs use social media. As a result, the studied firms use web channels as an extension of traditional media, to communicate with suppliers and customers and to promote their products. These barriers are discussed in the following section.
4.2 Barriers of social media
As other studies have shown, decision-making processes regarding the adoption of social media are difficult because costs of the adoption process may be estimated precisely, while benefits can be hardly measured (Agostino et al., 2016; Weinberg et al., 2011). Interviewed SMEs claimed that they face diverse barriers that prevent them to internally pursue more complex objectives, such as customer engagement. As a result, they are not gaining any value from social media, as previous studies demonstrated business value for SMEs lies primarily in customer engagement (Stockdale et al., 2012).
When asked about barriers related to the implementation and operation of social media, SMEs mostly mentioned lack of resources, insufficient training of employees, issues of corporate culture and the absence of a social media manager. The most cited lacking resources are financial resources and time. One interviewee claimed that the allocated budget for the marketing division is:
“not enough to develop campaigns, to invest on tools such as Facebook Adv or to involve any influencer” Client company A
Social media management and, particularly, relationship management is seen as an extremely time-consuming activity. One participant stated that:
“the use of social media in our industry involve high level contents, which require a processing time and a writer’s commitment that do not often combine with the available time”
Client company C
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instance, an interviewed marketing manager is also dealing with public relations, social media management and event planning. This is not surprising since SMEs usually have very scarce resources and focus their efforts on their specific field of business. Directing the use of social media towards creating engagement with the customers and generate interaction require more resources and demand a comprehensive managerial strategy, which can not be easily provided by SMEs. Overall, it is apparent that an early consideration of issues of company, customer and context allows to identify the possible extent of meaningful adoption in the SME’s specific circumstances. In gaining a greater understanding of the business context and general fit with social media, the identified barriers may influence either the extent of SME’s level of engagement or serve to identify a resource need that was formerly unrecognized.
In addition, related to the lack of resources are the issues of corporate culture. Often, this issue is broader and, as one participant claimed, it involves a lack of corporate culture concerning marketing and communication. Unlike bigger companies, among SMEs there are less pressures to imitate best practices in the industry, and the adoption of an innovation is therefore based on the perceptions of organizations regarding the particular technology. This is consistent with previous studies arguing that the adoption of new web technologies also depends on the personal innovativeness of the CEO as well as the innovativeness of the specific organization (Cragg & Mills, 2001; Lu, Yao & Yu, 2005).
It is interesting to note that, unlike previous literature focusing on different samples (Michaelidou et al., 2011, on B2B in the UK), Italian SMEs do not perceive that the usefulness of social media is dependent upon the industry setting. None of the participants, in fact, identified the uselessness of social media in their particular industry as a barrier to their adoption. Nonetheless, it is apparent that the industry SMEs operate in influences objectives, reasons for using social media and usage patterns (Stockdale et al., 2012), which accords with Chua et al.’s (2009) assertion that the industry context is very important to understand social media use and that the type of business changes the objectives for adoption and use. This contrasts Michaelidou et al.’s (2011) assertion that, despite relevance perception with respect to industries prevail as a significant external barrier to social media usage, results of their study indicate that usage patterns do not differ based on the industry B2B SMEs operate in. Overall, findings seem to highlight a stronger sensitivity to industry context in B2C rather than in B2B SMEs.
Consistent with the extant literature, where lack of training, management support and technical skills were cited as significant barriers to using technology (del Aguila-Obra & Padilla-Meléndez 2006; Kuikka & Akkinen, 2011), results also highlight internal barriers that are unique to SMEs, such as issues of corporate culture, lack of resources and the absence of a dedicated role as factors that prevent Italian SMEs from using social media to support their brands.
To overcome the above-mentioned obstacles and to guide SMEs’ adoption of social media, the next section draws from the case studies to elaborate a set of six key success factors. According to previous literature (Stockdale et al., 2012) and evidence provided by the interviewed marketing agency, these guidelines aim to increase customer engagement and mobilize a two-way interaction, therefore enabling SMEs to gain value from social media.
4.3 Social media adoption key success factors
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“the pillar of online communication and they must be managed and updated in a way that is coherent with our brand, target and business; this is something we cannot do on our own”
Client company C
In details, clients ask for social media campaigns that create engagement through experiences, testimonials and storytelling that raise interest, curiosity and awareness among the customers. Customer engagement is seen as important by the firms and cited as a driver of their social media campaigns as it generates long term and long-lasting results. Through engaging customers, loyalty is enhanced, and new business opportunities are explored. One participant stated that:
“engagement is a preliminary requirement to increase loyalty to support the differentiation strategy of our firm”
Client company D
As a result, they can retain their customer base, which is essential when launching a new service.
Recent literature (Stockdale et al., 2012) claim that SMEs can gain business value from social media when using them to cultivate customer relationships. This case study supports this concept, as most SMEs asking the marketing agency for a social media campaign had as their primary objective that of improving customer engagement. When addressing these requests, the interviewed marketing agency follows different principles that this study turns into six guidelines for SMEs willing to use social media in the most effective way. They include create networks of like-minded people, enable customers to submit feedback, develop contests, provide information and support causes that are important to customers.
4.3.1 Consider the competitive position of the organization
There are several variables that SMEs have to consider in order to develop social media campaigns that are coherent with their brand, target and business. Statements of the marketing agency and analysis of the case studies seem to highlight a relationship between strategic objectives of marketing campaigns and competitive position of the firm. In details, SMEs decisions to switch from a use of social media as a one-way interaction platform to a two-way can be related to their industries as well as their role in a certain market. Consequently, the choice of the most appropriate social media strategy should start from an accurate analysis of these two variables.
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barrier to new players. Again, participants seem to agree that business value for SMEs lies primarily in customer engagement, but the strategic goals that an organization should pursue through customer engagement are dependent upon their competitive position and industry. Accordingly, the most appropriate configuration of social media campaign should be selected.
Overall, SMEs selecting ex-ante the most appropriate strategy can optimize investments and overcome limitations such as financial barriers and time constraints. One interviewed SME claimed that:
“setting up an agenda for social media adoption and a relative budget allowed us to plan the right steps to take and optimize the way we use different platforms”
Client company B
At a minimum, therefore, it is clear that an early consideration of matters of context and company allows for some optimization in defining the most appropriate social media adoption strategy based on the SME’s specific circumstances. This was perceived by all participants in this study as a valuable insight for considering the effective exploration and exploitation of potential social media opportunities by the SME.
4.3.2 Focus on the right networking applications
Customers are more likely to discuss about a product or a brand when they are in a network of like-minded people. When they are with people with similar values and beliefs, they like to share their opinions and to network. Organizations can leverage this desire by developing networking applications such as Facebook groups or other online communities, like forums, that can center on shared interests and values. Social media can also be directly used to provide various types of information along with opportunities for interaction through messages and comments. Networking opportunities can be effective also when based outside social media. Most campaigns developed by the marketing agency generate engagement by creating and managing a blog tool on the client’s corporate website. Customers are encouraged to post pictures of the products and to tell their stories, and they can easily receive assistance and suggestions on how to use the products. The most appropriate networking applications should be selected based upon the target group to be reached and the message to be communicated. SMEs focus most of their efforts on their core business, therefore they can not participate in all social media, especially since one of the key requirements of success is being active. In addition, SMEs often have local clientele and are not attempting to broaden their business beyond their own region (Lacho & Marinello, 2010). Accordingly, SMEs can limit their efforts to a specific platform or niche, removing important barriers such as the need of a social media manager. An SME in the manufacturing industry claimed:
“We know our customers. By focusing on industry-specific blogs and LinkedIn there was no need for particular technical skills or new positions. We believe the best way to use social media is to generate
customer interaction, which in our case translates to customer retention”
Client company B
On the other hand, when various social media are used in order to have the largest possible reach, alignment needs to be ensured across all the platforms. Among the main goals of communication is the resolution of ambiguity and reduction of uncertainty. Fragmented and contradicting messages across different platforms will lead to more confusion instead.
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services is outside their direct control. Monitoring tools, such as control rooms or sentiment analysis, are essential to avoid transforming a negative feedback into a crisis. A good social media strategy should know how to take advantage of negative feedback, for example by creating a real time support page on Twitter.
4.3.3 Encourage customers to provide feedback
Customers feel more engaged with firms and products when they are able to submit feedback. Findings suggest that feedback contributes to a perception of transparency and proactivity, as it signals organizations are willing to listen to criticism and take into consideration customers suggestions. Overall, it generates a sense of community where open communication is encouraged and customer engagement is enhanced. Feedback can be collected and analyzed directly, by means of platforms such as blogs, as well as indirectly. The latter is more complex, but it provides a comprehensive overview of the customer’s perceptions about a product or a brand. Indirect feedback is not provided by actual customers, but rather by bloggers and industry journalists. These third parties are able to generate word of mouth and encourage customers to provide their own feedback. Engaging with influencers and bloggers might provide excellent sponsorship opportunities as well as giving the firm a powerful sentiment analysis tool.
Social media platforms provide many tools that can be used to collect feedback. Instagram and Facebook have polls and other functionalities that allow to ask questions to customers. The results can be analyzed with the platforms’ own analytics tools, which are often free and easy to use and understand, or with more complex sentiment analysis and text analysis tools. The marketing agency claimed that:
“online voting tools give social media users a sense of increased engagement and ownership”
Marketing agency
Overall, adopting social media to collect feedback can help SMEs overcome one of the most cited barriers, namely lack of time. One participant said to be using feedback collection functionalities to:
“improve the efficiency of our customer relationship management function, as Facebook allows to have all the reviews in one place and respond to them in real time”
Client company B
Ultimately, an effective and encouraging customer engagement leads to revenue lift and long-term value creation from the development of relationships (Angel & Sexsmith 2011).
4.3.4 Select the right mix of traditional and web-based promotional tools
One of the main reasons for social media adoption reluctance among SMEs are cultural issues. Most SMEs are used to manage relationships with customers and suppliers through face-to-face interactions. Suddenly moving these interactions online would be impossible. Therefore, it is fundamental to select a media mix that includes both traditional and web-based promotional tools. As one SME shows, there are different solutions available:
“we have really long-term relationships with our suppliers, which in some cases are small artisans from the nearby cities that are not very keen on new web technologies; that is why we have decided to stick to
traditional ways of communications with them, while trying new promotional tools to attract new customers”
Client company A
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Additionally, when they are engaged with a product, service or idea, people are more likely to communicate through both social media and word of mouth. This engagement may come spontaneously when people are emotionally involved in certain causes, in a particular product or in a specific brand. However, it can also be creatively activated for products and services which generates less psychological involvement.
Contests and customer loyalty program are mentioned by the marketing agency as the most effective campaigns to involve customers. Engagement is generated by enabling customers to redeem points with every online purchase and by allowing them to participate in sweepstakes drawings for larger prizes. Unlike traditional ones, social media contests have to be very creative “in order to draw customers’ attention when they are scrolling through their social media”. Firms can and, to a certain extent, must change the traditional definition of contest. For instance, a contest developed by the marketing agency consisted of a Facebook live that was streaming a set of burning candles. Behind the candles was a 90% discount code that could only be used by the first customer to read and use the code. As a result, customers were following the live stream waiting for the candles to burn and reveal the discount code. The campaign generated great word of mouth and a particularly effective customer involvement, although being far from the definition of traditional contest with points and sweepstakes.
Social media promotional tools can also be used to hit new targets when, for example, launching a new product. One strategy suggested by the marketing agency involves driving a new target market to the organization’s website through a joint campaign with another product which focuses on a similar target market. Online competitions are also effective. Customers can be encouraged to post pictures or videos with the products of a brand, entertaining and engaging other customers while communicating product benefits. Such campaigns are inexpensive and generate a great deal of word of mouth and engagement.
4.3.5 Disseminate information
Customers can be encouraged to talk about brands and products when they feel they know a lot about them. Social media can be used by SMEs to provide detailed information on a variety of subjects that may be helpful to customers. Communication can also focus on a wider range of topics that highlight products’ benefits, such as product innovations and research and development efforts, detailed information about products and how to use them:
“we like to share in depth information about product innovation, the extent of our research and development investments and the scientific foundations behind our machines because we believe that the
more a customer knows us, the more likely he will engage with us”
Client company B
Information shared through social media will feed word of mouth and customers will be encouraged to engage with the company, mobilizing a two-way interaction.
4.3.6 Reflect values that are shared by customers
The values underlying a social media strategy need to be aligned with the customers’ own values. Customers will likely share and talk about things they are emotionally involved with. If a company is able to identify these elements, they can be leveraged to generate emotions. Customers prefer brands that share values they would like to support. The brand’s customer engagement strategy has to attract customers’ attention and give them the right reasons to interact with the firm, generating brand engagement. Social media can help to achieve this objective: Facebook has a fundraising tool that can be used to support causes such as environmental issues, animal rights, education and child welfare.
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“there is no need for huge marketing investments when a good social media campaign can take advantage of storytelling to promote the brand’s value and identity”
Client company C
Stories can be memorable as they create vivid memories that are likely to be repeated in social media as well as traditional word of mouth.
4. Discussion and conclusion
The significance of this study lies in the analysis of both the literature and business case studies to show how business value can be gained from the adoption of social media by SMEs. While much of the literature relates to large organizations, the study offers SMEs guidance on how to gain value from the use of social media. The contributions of this research are twofold. First, an analysis on how social media are currently used by Italian SMEs was conducted. The expectation set in the literature review section drawing from the insights of “The Long Tail” concept was contrasted by showing Italian SMEs are not gaining value from the theorized benefits of social media. On the contrary, they are using social media as an extension of traditional media rather than as two-way interaction tools as described by previous literature (Enders et al. 2008; Kaplan & Haenlein 2010). This is because SMEs face diverse barriers preventing them to gain value from social media. These barriers are analyzed in light of the findings derived from the interviews. Lastly, a set of key success factors to guide SMEs in their adoption of social media were drawn from empirical evidence. Value is also generated through increased customer engagement, greater recognition of the traits of an SME’s customer base, and the provision of information and knowledge to enhance reputation and create trust to thereby gain competitive advantage.
Initially, an analysis on how social media are employed by Italian SMEs was conducted. Italian small firms are starting to realize the importance of social media and virtual channels to achieve business goals and are gradually learning to take advantage from the use of such technologies, as statistics show. However, social media are still often used in ways that will not change the company's competitive position and add value for the customer. Customer engagement is often not the primary objective of internally developed social media strategies for Italian SMEs, meaning that social media are used more as an extension of traditional media channels, as most SMEs are not able to engage in a two-way interaction. Their use is in fact largely underestimated, precisely because social media are not involved in a comprehensive strategic plan that includes process management and marketing strategies. Consequently, the study argues that the adoption of social media in SMEs is influenced by a set of barriers. Among others, insufficient training of employees and issues of corporate culture are perceived as the most relevant. This is consistent with previous literature listing barriers for technology adoption in bigger organizations (Fuchs-Kittowski et al., 2009; Angel and Sexsmith, 2011; Kuikka and Akkinen, 2011), while other identified barriers are exclusive to SMEs, namely lack of resources and the innovativeness of the management.
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need of complex technical skills; an early diagnostic approach looking at issues of context and company allows to select ex-ante the most appropriate strategy and, therefore, optimally allocate investments and overcome limitations such as financial barriers and time constraints; improve efficiency of CRM processes thanks to functionalities such as feedback collection, therefore limiting the time constraint; face cultural issues by selecting the right mix of traditional and web-based promotional tools. These guidelines have been gained from a review of the academic literature, as well as from discussions with representatives from a marketing agency and SMEs that have begun to use social media successfully. The case studies have been selected among the marketing agency clients as examples of SMEs gaining positive outcomes from their implementation and use of social media. The firms’ social media profiles and websites display signs that they are successful businesses. Their pages are up-to-date, present interesting and well-thought information for customers and constantly refresh the content while maintaining a sense of continuity. Opportunities for customer engagement are evident with the social media profiles being well integrated with their websites, blogs, events and competitions. As such, the four businesses are best practices in the SMEs context, and viable cases to illustrate how to derive value from the use of a range of social media applications.
Unexpectedly, two findings that were not included in the original research question resulted from the study. First, this paper contrasts previous studies claiming SMEs’ social media adoption is not dependent upon industry setting, such as by Michaelidou et al. (2011). As findings show, SMEs’ use of social media differs based on the industry they operate in. This is consistent with extant studies (Chua et al., 2009; Stockdale et al., 2012). Therefore, this paper is, to the best of my knowledge, the first to theorize that this difference might be due to a different sensitivity to the industry context in B2B and B2C SMEs’ use of social media. Although exploring the reasons behind this phenomenon is beyond the scope of this paper, I believe it represents a rather interesting challenge for future research.
Secondly, a relation between the most used social media platforms and the size of the SME was found. Unlike Harrigan and Miles’ (2014) study, showing that the most used platform was LinkedIn, this study proves Facebook is the most diffused platform. The hypothesis that this difference might be attributed to a different composition of the sample is consistent with previous studies showing Facebook is the most used platform in a sample of small and micro businesses (Cesaroni and Consoli, 2015), while Harrigan and Miles’ (2014) sample focuses mainly on medium enterprises. I speculate, based on interviews, that this difference is related to the greater effort and higher quality contents required by LinkedIn, which might explain its greater diffusion in medium enterprises.
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