Why is social media important for small businesses?

Key takeaways

• Social media is a two-way communication tool that helps you build relationships with your target audience
• For small businesses with limited budgets, advertising or creating free content for social media can maximize your return on investment (ROI) 
• A consistent brand and posting schedule is key to building a loyal following on social media

Social media is a major marketing tool for businesses around the world. The vast majority of Fortune 500 companies use at least one social media channel to drive revenue—but you don’t need a big budget to see results. 

Why exactly is social media important for small businesses? Social media is important because it helps small business owners find their niche, connect with ideal customers, and build strong relationships on this increasingly lucrative channel. Social media also helps improve your return on investment and allows you to collect powerful customer data. As you get started, find the answers within the following small business social media strategies.

How can social media grow your small business?

Social media for small businesses is a cost-effective way to stand out to your target audience in a sea of competitors. These four major benefits demonstrate why social media matters and how to begin making the most of your digital marketing strategy.

1. Reach more potential customers

According to a survey of 1,000 small businesses, most small business owners rank social media marketing as the best channel for building brand awareness. For companies looking to increase their exposure, social media’s large user base is a major benefit. More than 80% of Filipinos use at least one social media platform, often checking platforms such as Facebook and Instagram daily. 

Each time you produce social media content, you have the chance to reach people from all over the world on a platform they’re already paying attention to—at no cost to you.

2. Build strong customer relationships

Social networks promote two-way communication. When you post on social media sites, you encourage users to start conversations with you through comments, direct messages, or tagged posts. 

When you respond on social media, your followers interact with your brand in a personal way. Your communication can humanize your brand and connect with users in a more intimate way than other online marketing channels, such as search engines.

3. Improve your return on investment

Social media doesn’t just drive revenue—it can also drive down your costs. You don’t have to pay to use social media effectively, but if you do pay for ads, you can maximize your results more than on traditional marketing channels like TV or radio.

Social media networks allow you to specify who you want your ads to show up for based on demographics (like age, income, and gender) as well as interests and locations. This way, when you advertise on social media, your digital ads can reach your exact target audience. 

With digital advertising, you won’t waste your budget on people who aren’t likely to buy. Every cent you spend on social media campaigns will go toward reaching your ideal customers. And if the ad’s not a hit, the financial risk is minimal. For example, with Yelp Ads, you can show up on competitor’s pages, customize the photo and text on your ad, define your target audience by location and keyword, and more—but you’ll only pay for the ad when you earn a click.

4. Get powerful customer data

Many social networking sites automatically collect data for business accounts. Using this marketing channel is a simple way to gather data and insights about your audience, including the type of content they interact with most. With this knowledge, you’ll be able to tailor your messaging for both social media and other online marketing channels.

Some social media platforms, like Pinterest and Facebook, even allow you to add a piece of code to your website to share data between platforms, so you can further improve your advertising. For example, you can track how social media link clicks directly lead to sales on your website, rather than tracking link clicks and sales data separately. Plus, if users visit your website without making a purchase, you can re-market to those exact users on social media to encourage them to return and buy.