Importance of Social Networks for Businesses

Introduction:
Companies after ever increasing the speed of utilization of internet and social networks by individuals decided to use social networks to become more and more popular in terms of their banding strategies, positioning, marketing activities, customers services and feedbacks, implementation of e-CRM and alike. People use social networks in order to communicate, share their ideas, and use the flow of information and other means of publishing information about themselves.

Although since 1990s, utilization of internet, many social networks and internet tools had emerged, it was not popular. Recently, through the development of social network in friendly atmosphere and with less complexity in terms of functioning for individuals, this service (social network service) has become part of people’s lives.

In terms of clarification of analysis on customer satisfaction, customer retention, and customer relationship management and customer feedbacks, social networks play a pivotal role. As a result companies have tried to utilize Social network services in order to better serve customers and obtain other various objectives. Most companies recognized that social network sites (SNSs) like Napster, Facebook, and Twitter and so on are the best places to them in order to highlight their brand image through which they can increase their market share, and sustainability.

What is a Social Network?
It is considered as a platform through which social relations will be built among people and information sharing will be facilitated. Through social networks sites personal information and relationships can be shared and users can stay in touch.

Most of SNSs provide a personal page for posting, ability to search for friends and other issues like updating profile and personal data and have the ability to restrict and/or conceal the mentioned information by page owner from the eyes of public or specific people.

These Online facilities (SNSs) have improved the movements of individuals on online tasks, especially in the mentioned social networks for the purpose of maintaining friendships regardless of distance (geographical limitation). Not only that but also it enables people to find better jobs and partners.

Regarding the acceptance of these sites by people, companies have become interested to get involved in this process through which they can sell their products and services and better serve customer ‘s needs and wants and through analysis of consumer buying patterns and their feedbacks they can fine tune their decision making process as well as their strategies.

Below information reveals the fact that how rapidly number of social networks increase since 1997.

1997: SixDegrees.com

1998: —

1999: Asian Avenue, Live Journal, Black Planet

2000: LunarStorm (SNS relaunch), Migente

2001: Cyworld, Ryze

2002: Fotolog, Friendster, SkyBlog

2003: CouchSurfing, LinkedIn, MySpace, HI5, Tribe.net,

2004: Orkut, Dogster, Flicker, Facebook (Harward only), Mixi, Piczo, Hyves, Catster

2005: YouTube, Zanga, Yahoo.360, Facebook (Highschool networks), Bebo, Ning, Asian Avenue & BlackPlanet (relaunched)

2006 till now: QQ, Windows Live Space, Facebook (Corporate Networks), Twitter, MyChurch, and then Facebook (Everyone)

Many companies during previous decade as a result of increasing the use of these networks have decided to penetrate into SNSs in order to find the relevant information of people, elicit information and analyze them in order to make appropriate decision based on market moves; not only in terms of customers but also in terms of competitors and rules and regulations. They aim at finding useful information in order to do external (Scanning, monitoring, forecasting, assessing), and industry analysis (5 forces of porter) as well as competitor analysis.

Usefulness of Social Networks:

Considering SNSs as a marketing tool, they help companies to interact with customers and create online communities and pages,

Updating latest activity of companies, advertisements and providing customers with applications necessary or useful in order to increase the traffic of their page, blog or community,

Facilitate the process of being aware of the company, and promote ideas, products and services,

Skipping search engine optimizations rankings,

It helps to get feedback from customers and to better implement the concept o electronic customer relationship management (e-CRM) and to classify valuable customers in order to serve them with value creating activities,

Focus on market, global reach, limitless number of customers who can be served, to better segment the market and customers,

Enables different model of advertising such word of mouth, suggestions for specific group or niche and so on.

Fastest way to get information and finding opportunities,

Social Networking Sites and E-commerce Businesses:
Although other methods of communication exist, they are to some extent different comparing to SNSs. Social network is a place in which individuals become fan of a page, they see each other and based on their mutual interest they become capable of interacting with each other and make a community on their own.

The mentioned issue is the result of shifting the power through utilization of SNSs from company to consumers. More social networks get popular, the tougher is the implementation of business based on traditional procedures therefore; companies must consider market moves in this case. Besides, by digging up the information available on these networks identification of valuable customers would be easier and a business can serve its valuable customers much better in this regard.

Regarding the accessibility of individuals to internet, companies moved from Brick and Mortar to Click and Mortar or to virtual one which resulted in operational efficiency improvement as well as generating revenue.

As companies are moving toward the above mentioned issue (adaptation of EC), they utilize several strategies to achieve success. They used various strategies in business and corporate level to reduce costs of transaction, reducing delivery time, to better serve the customers and to better manage them, and to better inform them about the current activities performing by the business especially for service companies. Accordingly, due to massive passion of individuals in case of using social networks like Facebook, twitter and so on, companies decided to reduce the gap between themselves and consumers by following consumers passion therefore, they started to make use of social networks and possibly other web 2.0 applications on extend their businesses.

In this era, almost all companies have websites and among them, some have social network to better communicate with customers which is linked to a website by the use of social plugins. Consequently, it is highly suggested to businesses that if they are not being first mover in Social networks, at least do never miss the chance of being late mover.

Impact of Social Networks on Marketing:
As it is mentioned above, individuals will be attracted to join famous social networks in order to create a profile and connect with existing members or pages or businesses. Once a profile created, users can interact with each other; send invitation for others to join. By the time a link shaped, communication to a friend, group members become easy because users tend to organize themselves by affinity, life stage, and psychographics which would be an excellent chance for targeted marketing.

Impact of Social Networks on Purchase Intention:
Through the use of social network as mentioned before members share their ideas, they may talk about different thing even including the recent product they bought or a particular type of service given to them or offered by a company. Many people around the world believe in talking to other consumers in order to get the required information before purchasing for a good or service (a matter of trust factor-word of mouth). And nowadays consumers due to availability of information on the internet they prefer to search online and when going online they more like to go to social networks in order to find more information from other customers, and what have been shared on social network pages of a particular company about certain type of good or service.

Form the eyes of marketers the information shared is vital for companies regarding the fact that information shared are the real facts mentioning by customers/consumers, and friends or fans of a particular group may rely or trust on other people (or fans) when saying facts.

In terms of marketing, in social networks various marketing aspects can be covered.

Word of mouth,
Market research,
Market segmentation,
General marketing,
Communication between customers as well as employees,
Public relations,
Customer service
Management of reputation and brand positioning,

Marketers use network marketing because of its various benefits which some of them are:

Product increase and brand awareness,

Being online helps companies to increase the awareness of their products and services especially through social networks sites.

By every interaction, marketers try to indirectly lead members or fans to follow the news of companies and everything and remember the brand and website.

Increase the traffic,

All companies try to increase the traffic of their websites by using various methods like communicating, recommending and postings on SNSs followed by a link in order to guide a fan or member to the official website and let them know their available products and services.

Improve search engine optimization (SEO),

In order to increase the popularity of a website companies need to share more links everywhere so that search engines find the contents follows by link easily. In this case people will read more of the content a company shared. Social media must be part of search engine optimization strategy.

It is worth mentioning that the value of finding content on SNSs is very much because they appear natural to search engines.

Increase loyalty of customers,

Brand loyalty will be achieved when a company can promote its services or products via social networks. By releasing true valuable content, trust go up and reputation of company increases.

In the process of using social media customers feel that they are participants rather than being only a user. If they feel they are participant they will be more involved and as a result of customer involvement and value creating activities of company customer loyalty increases.

Increase the success rate of lunching new good,

Regarding the fact that flow of information is very high in SNSs, understanding customer needs and want become easier which can be considered as a unique opportunity of social networks. Accordingly, companies can serve customers better by lunching goods appropriate to the tastes of consumers and manage product development process in order to increase customer loyalty and retention.

Impact of Social Networks on Sales:
SNSs are helpful in case of acquiring more benefit and possibly increase market share in competitive market. Through the utilization of social networks companies will find new method to serve customers better based on their expectations and their needs, to find customers, communicate with them and understand them in order to acquire new customers and also to retain the existing one.

Although it is a good opportunity, in some organization still a vague attitude toward utilization of social networks exists. Through social networks a salesperson can achieve benefit of having access to profiles before the commencement of communication.

SNSs and e-commerce businesses have made the world very small because they have eliminated the geographical limitations as a barrier for marketing and sales and by going online, they reduced the number of intermediaries therefore; firms may sell more and achieve more profit.

To exemplify, Facebook has millions users and many of them are over 18years old and its traffic is high. Therefore Facebook can be a very good place to do promotional, customer centric activities in order to increase sales. Also lots of pages exists that users are involved in. Sales persons and marketers can analyze the insights of the pages. Every page reveals information about daily, weekly and monthly active users, demographic information, daily feedbacks and so on which can be used to analyze the customer behavior pattern and customer relationship management which ultimately results in increase in sales.

Consequently, through penetrating into social networks, businesses have an access to vast majority of consumers. So creating account in social networks and joining groups leads to expand contacts and increase sales.

Impact of Social Networks on Services:
Individuals using social networks are increasing day by day. So the rate of communication among them increases. These communications can be about social stuff or about a product or service they purchased. These communications among individuals can be considered as an opportunity and also a challenge for customer service departments. Customers mainly like to receive a service based on their preferred channels. Because customers reveal their opinion widely if they are not pleased which result in detrimental impact on a firm’s product or service.

Through social networks companies receive feedbacks from customers which lead them to improve the quality of services/products as well as finding the best opportunity based on customer’s needs and wants. Therefore customer service channels like Facebook, twitter and alike can be used as a tool for performing value creating activities.

It is worth mentioning that through SNSs many problems between customers and company can be solved on the spot and it would be easier to reduce cost of services.

In this case some social networking accelerator tools exist like (Microsoft Dynamics CRM) to better manage, handle and monitor customers. These tools perform activities like:

Monitoring SNSs for branding issues and keywords,
Tracking customers,

SNSs also provide efficient multi-channel service which leads to reduce customer service calls and direct contacts and costs related issues.

Some social network accelerators help to better analyze customer’s feedback and to track the feedbacks easily. Not only that but also to monitor their activities and participating in communities to identify customers service pattern and trend.