Solving the SMB Social Media Marketing Conundrum

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The SMB Group’s latest survey, 2012 Small and Medium Social Business Study, examines how and why small and medium businesses (SMB) are using social media in their businesses today. The study also provides trending analysis based on comparison with SMB Group’s 2011 Small and Medium Social Business Study.

Data Highlights

The good news for social media enthusiasts is that overall use of social media is up from 44% to 53% among small businesses (1-99 employees) and up from 52% to 63% among medium businesses (100-999 employees).

We also found that SMBs’ adoption of social media, as well as the benefits that they think accrue from using social media, continues to remain concentrated in marketing areas. As shown in Figure 1, medium businesses cite “increasing brand awareness” (49%) as the #1 benefit by a wide margin, followed by “increasing web leads/traffic” (29%) in the #2 spot. Among small businesses, “increasing web leads/traffic” (42%) takes top honors, followed closely by “increasing brand awareness” (40%).

Figure 1: SMB Top Overall Benefits of Using Social Media

Furthermore, 35% of SMBs who use social media have replaced and/or displaced other tools with social media in 2012. Since SMBs still use social media mainly for sales and marketing purposes, it’s not surprising that the tools that SMBs are most likely to have replaced are more traditional marketing tools such direct mail, ads in newspapers/business trade journals/magazines, yellow pages, and email marketing.

The bad news is that despite the fact that social media is often touted as a more cost-effective marketing mechanism than these traditional channels, only 23% of small businesses and just 17% of medium businesses rate “reducing marketing costs” as a top benefit of social media.

Figure 2: SMB Top Challenges to Getting Value from Social Media

In addition, “not enough time” and “unable to accurately measure the value of social media” are the top challenges SMBs face in getting value from social media, as illustrated in Figure 2. Drilling down a little further, we see that among small businesses, “not enough time” is the top challenge (62%), followed distantly by “unable to accurately measure the value of social media (41%).” The data underscores that small businesses are struggling to find the time for employees to tend to social media–in most cases, in addition to the other jobs they need to do.

Another wrinkle is that unlike more traditional one-way marketing, such as advertising or the yellow pages, small businesses can’t just set it and forget it when it comes to social media. Now, they’re in an interactive dialogue in which customers and prospects are likely to put more demands on their time–and maybe at inconvenient times. For the many small businesses where time is money–and the company’s most valuable asset–lack of time prohibits value, and the high cost of time diminishes their ability to use social media to reduce marketing costs.

In contrast, among medium businesses, “unable to accurately measure value” is the leading challenge at 49%. “Not enough time” slips to the #2 spot (36%), followed very closely by “difficult to integrate social media with other business activities” (34%). It seems that medium businesses may have a bit more manpower to devote to social tasks than smaller companies. But it is proving very difficult for them to measure business value from their efforts. Furthermore, medium businesses are finding it tough to integrate social with other applications. Without adequate integration and automation, they need to use clunky workarounds to connect social with other business solutions. For many medium businesses, the combination of an inadequate solutions to monitor and measure effectiveness, plus cumbersome processes may–at least in terms of perception–cancel out some of the cost savings and value that they could potentially derive through their social media activities.

Quick Take

The genie out of the social media bottle, and SMB use of social will continue to rise because the customer demands it. But, unlike the very early going, when simply using social media–however experimentally–was a way to differentiate, the bar is inevitably rising. To gain a market edge, SMBs will increasingly need to use social media in more innovative and personalized ways, and be able to adjust their efforts in a more granular, targeted and proactive way. Based on the survey results, it seems, however, that most of them lack the right tools for the job.

To help SMBs jump these hurdles, vendors must develop a much deeper understanding of SMB requirements and constraints, rethink their approaches and tune their solutions to these concerns. For small businesses, lack of time is the biggest barrier to getting value from social media. Vendors need to create solutions that take time and labor out of the process, with turnkey services that help them to identify, implement, use and manage social activities in a more time-effective and cost-efficient way–perhaps right from the email or contact management solution that they use every day.

Many medium businesses would be interested in this type of service as well. After all, lack of time is their #2 social media challenge. But the fact that the most significant barrier for medium business is that they are “unable to accurately measure the value” suggests that the current crop of social media monitoring and measurement tools doesn’t fit the bill for many of these companies.

Fortunately, it’s still early in the social media game. And social vendors should have ready access to many tools to gather up SMB pain points, wish lists, requirements and feedback! I’m looking forward to seeing some of them take the next steps to apply these tools to harvest this information, combine it with related SMB market insights, and spend enough time with SMBs to see what a “day in the life” is actually like. May the best solutions win!

If you’re part of a small or medium business, let me know what your biggest challenge is to getting more value from social media!

For more information about SMB social media trends, see 2012 Small and Medium Social Business Study.

The Progressive SMB: Customer Stories are Worth 1,000 Analyst Words

I attended SAP’s SAPPHIRE NOW 2012 several weeks ago and am finally getting a chance to share my thoughts on the customer meetings I had with Big Byte Corporation and KEEN Footwear at the event. These two customers are very “real” SMBs. BigByte has 52 employees; KEEN has 130. Neither is a Silicon Valley venture capital startup, which let’s face it, is a very different breed. Why did they choose SAP, which, after all, is best known for its footprint in large companies? Their perspectives about this are quite interesting because they personify what we at the SMB Group call “Progressive SMBs.”

The Progressive SMB Class–What is it, and Why is it Important?

Our 2011 SMB Routes to Market Study indicated that many SMBs are tightening their tech wallets for 2012 as compared to 2011 (Figure 1). But the study also showed a distinct segment of SMBs that we call “Progressive SMBs.” Despite economic uncertainties, Progressive SMBs plan to increase IT investments. They see IT as a tool for business transformation, and a way to create market advantage and level the playing field against bigger companies. Although while price is a factor, they rate other criteria–such as the ability to customize solutions, strong vendor reputation, and local support and service–higher than other SMBs when making technology purchase decisions. Figure 1: SMB IT Spending Plans and Revenue Expectations More important, Progressive SMBs have higher revenues expectations than their peers. For instance, 75% of the Progressive medium businesses (who are increasing technology spending) anticipate revenue gains in 2012, compared to just 17% of medium businesses that plan to decrease IT spending. BigByte and KEEN Footwear have both adopted a Progressive strategy. They illuminate how Progressive SMBs think about IT, and how their businesses have benefitted by making a bigger investment in IT than most of their SMB peers.

BigByte’s SAP Story

Founded twenty years ago, BigByte provides annual global warranty services, after-sales tech support, product repair and refurbishment and reverse logistics services to large companies such as Apple, Cisco and Panasonic. BigByte had used a combination of entry-level financials, homegrown apps, spreadsheets and manual processes for a long time. But keeping track of the significant inventory on consignment from its customers became more challenging over time. And, since every manufacturer has its own, unique set of processes to handle warranty service, BigByte was struggling to accommodate each company’s individual workflow. By 2009, BigByte’s resources were stretched thin. It didn’t have the inventory controls it needed, and was spending too much time pulling data together for reports. At the same time, the company’s owner wanted to prepare the business for growth and/or acquisition. He realized that to accomplish this, the business had to become more efficient. Michael Franklin, who I spoke with at SAPPHIRE NOW, was hired as COO to fix the problem. Initially, Mike hadn’t considered SAP; he had a couple of other ERP solutions he was vetting for the job. But the company’s owner spotted an SAP ad in Golf Magazine, and thought, why not get information? Mike went to SAP’s web site and was connected to Softengine, an SAP Business One partner. Why did BigByte decide to buy SAP Business One? The other solutions Mike was looking at promised many of the same things, such as a unified management for core business functions and embedded analytics. What sold the company on SAP Business One echoes what we heard in our survey about what Progressive SMBs are looking for:

  • Good value and no pricing surprises. Soft Engine offered a fixed price for implementation, and fixed monthly price per user, per month pricing for everything else (hosting management, 24×7 support, upgrades, etc.).
  • Fast time to value. As part of the fixed scope implementation BigByte got the software and 21 users up and running in less than 6 months via Softengine’s hosting program for Business One.
  • The ability to customize. BigByte needed to tailor return authorization functionality tailored for each of its customers–and be able to customize for future ones too.
  • Trust in and credibility. Softengine had a strong mix of SAP credentials and competencies, along with managed services and cloud infrastructure design and deployment.

Interestingly, although debating what isn’t and isn’t really a “true” cloud solution has become the most popular past time for many of us in the industry, this was not an issue for BigByte. Mike wanted the best ERP solution for BigByte, but didn’t want to manage the IT infrastructure needed to support it. Two years later, Mike says that Business One has given the company what it needs: automated processes and efficiencies; reliable, unified and real-time data; dashboards, tools and reporting for better decision-making. BigByte also uses Business One mobile apps for things such as approving purchase orders. Net-net, Mike estimates the company cut labor costs by about 15%, and cut IT costs by about 80%, because it now outsources hardware maintenance. IT now helps power the business, instead of just supporting it. BigByte can adjust to different customers’ processes and requirements, giving the company the agility to replace shrinking customer demand in the optical disk drive sector with the new customers in the growing LCD market. And, with its business processes in order, BigByte is also much more credible to potential buyers.

KEEN Footwear

If you’re an outdoor enthusiast, you know (and probably love) KEEN Footwear, a Portland, Oregon-based footwear designer and distributor. KEEN’s founders went into business to invent sandals that protect the toes with a signature protective “toe bumper.” Today the company offers shoes, bags and socks for many outdoor activities and for casual wear. I had the opportunity to talk to David Boeschenstein, KEEN’s COO about their SAP story. When Dave came to KEEN from Adidas in 2008, the company had outgrown its ERP system. Dave’s charge was to select a scalable solution that could adapt as the company continues to grow. He looked at a few options–including SAP Business All-in-One (BAiO) for apparel and footwear, which is used by several others in the outdoor and specialty footwear sectors. After extensive evaluation involving multiple users from each department, KEEN decided SAP BAiO–along with SAP Business Objects and Business Warehouse–would be the best fit for the company. Now remember, KEEN has only just over 130 employees! But they are another prime example of a Progressive SMB. KEEN views IT as an essential enabler to drive business growth, and wanted solutions that will scale to support the initiatives they have planned for the next 5 years and beyond. According to Dave, Keen’s motivation for installing SAP solutions was “to ensure we provide our customers with excellent service. Our business operations mandate is to make it easy for customers to do business with KEEN wherever in the world they interact with our products and our fans.”. SAP partner Gravity Pro helped KEEN deploy BAiO (using Rapid Deployment Solutions, or RDS), Business Objects and Business Warehouse in July 2011. KEEN is now live in the U.S., Canada, and The Netherlands.

Customer Stories are Worth 1,000 Analyst Words (or more!)

Much has already been written about the details of the new products, strategies and solutions that SAP announced at Sapphire, and this is, of course, very valuable to understand. But sometimes not enough is discussed from the customer’s point of view–and some of the most important things–namely the business outcomes from technology–can get lost in translation. The BigByte and KEEN experiences help put the SAP into perspective for SMBs, and illustrate how Progressive SMBs are making their decisions about business solutions. They also highlight why it is so important to be–or become–a Progressive SMB.

Tech Tidbits for SMBs: Xactly Express Integration with Intuit QuickBooks

If you’re one of the four million small and medium businesses (SMBs) that uses Intuit QuickBooks and are wrestling with a clunky sales compensation process, I’m serving up this next tech tidbit for you.

Last week, I was briefed on Xactly’s new Express integration with QuickBooks. This sparked my interest because SMB Group survey respondents always cite “attracting new customers” and “growing revenues” among their top three business challenges in almost every study the SMB Group conducts. But, it can be very difficult for small and medium businesses (SMBs) to execute well in this area. Sales and finance are typically coming at this from different vantage points, and its unlikely that the SMB has a dedicated sales comp expert–or the time and money to set up an enterprise-grade comp system.

So, if you’re like the vast majority of SMBs, you probably manage compensation with a concoction of Excel spreadsheets, emails, paper documents and manual processing. Besides giving everyone a headache, it can de-motivate sales people or head them in a direction that doesn’t sync well with your company’s goals.

Xactly (which also has an enterprise solution, Xactly Incent), introduced Xactly Express in 2010 to give companies with fewer than 100 sales reps–and without dedicated sales compensation staff–a cloud-based, self-service solution to “Incent right = pay commissions accurately, on time, reward behavior.” Xactly built Express on Salesforce.com’s Force.com platform, but as it grew the business, Xactly realized that a good 35% to 45% of its Express customers were also Intuit QuickBooks users. For them, QuickBooks is often the primary system of record. So Xactly decided to create new out-of-the-box connectors between Express and QuickBooks. The solution, which was introduced this week, will be available from the Intuit App Center later this summer.

This built-in integration provides an automated data feed from QuickBooks to Xactly Express, as well as single sign-on. Users can access Xactly through their QuickBooks logon to plan and manage sales commissions, bonuses and SPIFFs. Likewise, when you enter a transaction into QuickBooks, commissions automatically get calculated and credited to the right members of your sales team. If you’re doing business outside of the U.S. Xactly’s solutions support over 150 currencies and it provides customer support worldwide, 24/7. Currently, however, English is the only language that Xactly officially supports.

On the sales side, reps and managers can track their performance real-time on Express dashboards via the Web or with a mobile device. They can see where they are in terms of quota or what their commission will be when they’re working on a quote, or figure out which deals will deliver the best commission returns.

Xactly provides a library of customizable sales compensation templates (prospector, hunter, farmer, specialist and captain) to help small businesses get started.  Xactly says that it takes about 6 to 10 hours to get up and running with the integrated Express and QuickBooks solution. Most of this time goes to verify that the data is feeding correctly between the two programs.

According to Xactly, even very small businesses can get value from the solution. Some of its 200 current customers start out with only one sales rep, but have plans to grow their sales teams, and want to get things automated from the get-go.

Pricing for Express is $30 per user/ month, and there is a onetime set up fee that ranges from $1500 to 5000, depending on the complexity of the implementation and set-up–perhaps a bit pricey for the lower end of the SMB market.But Xactly does offer a free 30-day trial so you can see if it will give you what you’re looking for.

The net-net is that if sales compensation is giving you a headache, Xactly Express and its new QuickBooks integration can provide  relief–with the added bonus of helping align and empower your sales team to meet the ever-present challenge of growing your business.

Tech Tidbits for SMBs: Elance

I’ve had several interesting briefings in the last couple of weeks to tell you about. Since I won’t have the time to sit down and write them all up at once, I thought I’d dash them off as individual snippets instead.

First up is this post about Elance. Do you have too much on your to do list? Elance can help you find a contractor to help you get the job done. Or maybe you’re on the flip side of the coin as a contractor looking for work. Either way, Elance can benefit you. Its mission is to provide companies with “instant access to talent” through an online network of contractors and tools that make it easy to find, hire, manage and pay them.

Since my last briefing with Elance, it has grown at an impressive pace. Today, Elance has 1.3 million tested and rated contractors in its fold, and garners about 2,500 new job posts per day. While its original focus was on IT professionals, Elance has diversified to add lawyers, accountants, designers, writers and accountants on its roster.

No doubt that Elance owes part of its growth to the trend we labeled as that of “The Accidental Entrepreneur” in our SMB Group 2012 Top Ten SMB Technology Predictions. We discussed the fact that as unemployment has increased, so have the number of freelancers, contractors, independent consultants and others choosing to go it alone. According to the Census Bureau, small business without payroll makes up more than 70 percent of America’s 27 million companies, with annual sales of $887 billion.

The good news for these solo entrepreneurs is that Elance recently surveyed 1500 small businesses and found that 73% plan to hire more contractors online in the next 12 months. Why? Because it provides them with the competitive advantage they need to get things done faster, better and at lower costs–and helps them to present a larger, more professional image to their customers.

While it’s always tough to take that first plunge to hire a contractor online, Elance provides a community rating system to help you vet potential candidates. Once you select someone to work with, the Elance platform provides tools, such as a workroom with Skype, to help you connect and work together more easily. Real-time time tracking and status updates are built into the system, as are invoicing and payments. Elance also has an escrow process that protects both parties by pre-funding work and releasing payments only when results are approved. And Elance takes care of basic paperwork (such as 1099 forms) to help ensure compliance.

Whether you’re a small business that needs an extra pair of hands, or a solo entrepreneur looking for a new project, Elance could be a great fit.

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