Within the past few years, social media has exploded. More businesses than ever are engaging consumers through social media, allowing them to boost revenue and build relationships while dramatically cutting their advertising expense.

The most popular social media platforms used by businesses are Facebook, Twitter, YouTube and LinkedIn. Social Media is all about sharing – thoughts, stories, comments, pictures, videos, music, friends and products.

How Social Media differs from traditional media:

In the past, businesses had to rely on traditional media such as television, radio, newspaper and magazines to engage consumers. Traditional media is a very one-sided way of communicating with customers. The only way businesses have to gauge success of traditional advertising campaigns is sales numbers.

Social media, on the other hand, allows live, instant, two-way communication with customers. It allows business owners and marketers to quickly disseminate information which is instantly received by consumers. They can also use analytics software to see who is reading their messages, who is replying, who is forwarding a message on to their friends, etc.

The effects of social media on business:

Build and maintain relationships. Businesses are able to create and build relationships with potential customers and existing customers. Once connected, they are able to communicate sales promotions, tips and tricks, important industry news, upcoming events, new products and other information.

Monitor and analyze communications. Companies are able to monitor and analyze the effectively of their promotional programs. When things aren’t going according to plan, managers can quickly identify and correct problems.

According to a 2010 study of marketing managers at Fortune 500 companies:

Internal Improvements:

  • 77% of companies said they were seeing increased revenue from being able to quickly communicate with consumers
  • 60% said social media helps to reduce marketing costs
  • 52% said social media increases the flow of information between markets and decision makers (in regards to data and analytics)
  • 44% said social media decreases travel costs
  • 40% said social media (and web technology) decreases overhead cost
  • 41% said social media increases employee satisfaction

External Improvements:

  • 63% of companies said they see an improvement in customer loyalty, consideration, conversion, and awareness.
  • 50% notice an increase in customer satisfaction
  • 26% said social media has allowed them to reduce the time necessary to bring a new product or service to market
  • 24% believe that social media and Web 2.0 technology allow them to be more innovative

Supply Chain Management:

  • 57% of companies see an speed of access to knowledge
  • 45% see increased satisfaction of suppliers and other external partners
  • 40% increasing speed of access to external experts

This study shows that social media and web 2.0 technology isn’t just a great way to reach consumers and build relationships, but that it directly translates to decreased operating costs and increased revenue. With this information in mind, there is no time like the present to establish a social media identity for your company!