Firms Still Not Exploiting Full Potential of Social Media

There is a wide variety of possible ways for companies to use social media to bring them greater market success. However, many of these companies are still not exploiting the potential of social media to the fullest, for example, when it comes to improving their products and services. The fact that these opportunities are going to waste is alarming considering that one in every two companies in the information economy active on social media already expects the role that social media plays in a business' success to continue to increase in importance over the next two years. By contrast, only around a quarter of these companies view social media as currently playing a very important role in a company's success. These are the findings of a recent survey carried out among companies in the German information economy by the Centre for European Economic Research (ZEW) in Mannheim.

Simply setting up a company Facebook page or a corporate blog is not enough to make the most of social media's potential to improve the fortunes of a company. It is just as important for companies to assess the feedback given to them by users and to make use of the constructive criticism or creative suggestions they find. Barely a third of companies active on social media in the information economy (ICT sector, media and knowledge-intensive service providers) are already exploiting this potential and using the information and feedback from users and employees to improve their own products and services.

"Some companies have been very successful in actively gathering feedback from customers and users and converting these suggestions into new components of their products. This creates new marketing opportunities and satisfies active users. However, companies need human resources in order to consistently put a strategy like this into practice," explains Professor Irene Bertschek, head of the ZEW Research Department "Information and Communication Technologies".

Social media becoming increasingly important for company success

Furthermore, the ZEW survey reveals that 24 per cent of the firms active on social media consider the use of social media to be extremely important. What the survey also showed, however, was that almost as many companies are currently still unable to appreciate the true importance of social media. When looking ahead to the future, however, one in every two companies using social media believe that the role of social media in a company's success will continue to grow in importance over the next two years. Only about 20 per cent of firms said they were unsure in response to this question. In total 30 per cent of companies active on social media expect the significance of social media to remain unchanged over the next two years.

Social media offer companies a cheap medium through which they can communicate and interact, not only with customers, but also with employees and external partners. This is particularly advantageous for small businesses. Nevertheless, it is larger companies that make far greater use of social media. In terms of the activities companies use social media for, however, there are no great differences; 73 per cent of small businesses and 79 per cent of medium and large businesses use social media for advertising and marketing. Around 56 per cent of companies active on social media hope to increase customer loyalty through this online exchange of information.

For further information please contact:

Prof. Dr. Irene Bertschek, Phone +49 (0)621/1235-178, E-mail bertschek@zew.de