Social Media Increases the Profitability of Your Business: Study

Half of Canadian businesses believe that social media has the potential to increase their profitability, according to a BMO Bank of Montreal survey conducted by Leger Marketing.

However, only 29% of small business owners are taking advantage.

“Social media, while still a relatively new communication and marketing channel, is definitely here to stay. We anticipate it playing an increasingly important role for Canadian businesses, as they look for cost effective ways to open new markets and broaden and deepen their connection with customers” said Cathy Pin, Vice President, Commercial Banking, BMO Bank of Montreal. “Our customers are also telling us they value opportunities to interact with other businesses, network online and share insights and experiences. That’s why we recently launched a new online community for business owners.”

Businesses believe that social media can increase profitability through:

• Promoting their company’s brand or reputation (64% believe so)

• Providing broader access to consumers (63%)

• Encouraging word of mouth endorsements and referrals (62%)

• Selling products or services (46%)

• Gathering ideas/suggestions (42%)

For those businesses that use social media tools, Facebook is the most popular choice at 70 per cent, followed by LinkedIn (32 per cent), and Twitter (31 per cent).

 “While the most popular application is Facebook, there are other networks and tools that can offer benefits to businesses,” Pritesh Gandhi, Senior Manager, Digital Marketing & Strategy, BMO Bank of Montreal. “For instance, LinkedIn is very effective in building and maintaining contacts for recruitment and knowledge sharing purposes, while the effective use of Twitter can help to keep the dialogue open with your customers and respond to queries in real time. BMO has increased their social media presence over the past year by actively using Twitter for everything from customer feedback and service issues to generating awareness of the new product or service launches.”

And for those businesses who don’t use social media, the top reasons cited are:

• They don’t think it is a valuable tool (29%)

• They lack knowledge about social media (19%)

The challenge is that a social media presence takes time to build, and the impact on the bottom line is more difficult to measure than some more traditional forms of marketing. On average, Canadian businesses owners surveyed say that 28% of their marketing efforts are focused online as opposed to traditional media channels. Those who believe social media can increase their profitability are also more likely to devote a higher percentage of their marketing efforts online on average, compared to those who do not believe it will help the bottom line (34% vs. 22%).