Study: Companies Missing Opportunity To Utilize Social Media

Many companies are missing an opportunity to utilize social media channels to drive sales growth because of a misunderstanding of what consumers want out of those channels, according to a recent study.

The study, conducted by International Business Machines Corp. (IBM), found that a majority of consumers say the top reasons they interact with companies via social sites are to receive discounts and make purchases, but companies rank those as the least likely reasons customers will follow them.

Instead, businesses overestimate consumers’ desire to interact with the companies, believing consumers hope to feel connected or be part of a community.

Carolyn Baird, a co-author of the study, told Dow Jones Newswires the business community has a great opportunity to monetize social media, as companies launch campaigns or programs that have the potential to go viral.

For example, Baird said when a consumer purchases something of value to them, the individual can share that experience through their network on Facebook or Twitter, which creates a chain reaction of information being sent out to thousands of consumers.

Baird said the need to utilize social-networking sites to reach out to consumers has rapidly grown, similar to when companies jumped into the online boom by quickly launching websites. Companies have only been using social- networking since 2009 to reach out to consumers, Baird said, and many are anxious to build a footprint in that space.

“The executives who are responding to the study are feeling extreme pressure to get engaged as quickly as they can,” Baird said.

IBM also noted the study found a vast majority of social media users are casual participants who visit the sites to stay connected with family and friends. Most consumers say they don’t engage with businesses through social media or social networking sites, and IBM said more than 60% said they need to believe a company is communicating honestly before they will interact.

IBM surveyed more than 1,000 consumers worldwide to discuss usage of social media, while 350 executives were asked why they thought customers were interacting with their companies.

-By John Kell, Dow Jones Newswires; 212-416-2480; [email protected]

  (END) Dow Jones Newswires
  Copyright (c) 2011 Dow Jones & Company, Inc.

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