Like many of you, I find that sometimes it is difficult to know how social networking can play a part in business – especially small e-commerce and retail businesses. More and more we are seeing companies experiment with or incorporate social networking sites into their marketing strategies. As confusing as it can be – I am intrigued and think that it is very important for all of us to pay attention to trends in this space. For instance, if you’ve been on YouTube lately, you may have noticed that the popular video site is now in the e-commerce business.

The Google-owned company recently announced that it was adding “click-to-buy” links to thousands of videos and will be partnering with e-commerce juggernauts iTunes and Amazon.com in the process.

Watching a video about a soon-to-be-released video game? Well, now you can just click a link and buy it! It’s a bold move that should benefit both the retailers and YouTube.

Which brings me back to the world of social networking and how it can help small- and medium-sized retailers. Did you know that heavy social-networking site users are more apt to visit online retail sites? According to a 2007 comScore study, 95 percent of people who regularly visited sites such as Facebook, MySpace and YouTube said they also visited retail sites. That’s compared to 80 percent of the total U.S. Internet audience.

If you’re marketing to a younger populace, you may absolutely want to think about a social network strategy. According to a recent study by shopping comparison site PriceGrabber, 85 percent of Generation Y participates in some form of social networking.

I recently interviewed Kristi Grigsby, marketing director for Neighborhood America, an organization that builds enterprise-oriented social networks for clients ranging from Volkswagen to Fox News, on how these sites can benefit retailers.

First, Grigsby says, you need to determine if a social site is right for you. She says that merchants who already have customers are more apt to succeed than those who don’t. (After all, a network won’t do you much good if no one goes to it). Having a compelling product is another precursor. A retail technology product, for example, is a better candidate than, say, a lawn care product. (Nothing against lawn care products.)

So, what can a social site do for you? It will let you better connect with your customers. Yes, they will be in control. But that’s a good thing. Grigsby says that when your customers are in control, you will get unfiltered opinions—directly from the people buying your products. Wow – what a cost-effective way to generate some market research.

Best of all, social network sites aren’t just for large car companies or news organizations. Grigsby tells of one small t-shirt retailer, Threadless, which has been wildly successful with its network. The site lets users design their own shirts. These designs are voted on by other users. The top-rated shirts, meanwhile, are then made. The company (which is not a client) is getting thousands of clothing design — for virtually free!

The 35-person firm adds 20,000 new members monthly and receives 150 new t-shirt designs every day. This year, the company expects to post $20 million in revenue!

“That’s a lot of t-shirts,” Grigsby says with a laugh.

Oh, and if you’re thinking that a down economy may not be a good time to start a network, you may want to rethink.

“In these economic times, consumer spending is down,” Grigsby says. “It’s a competitive market. Never has there been a more critical time to think about connecting with customers more intimately — especially for retailers.”

I haven’t solved the mystery of social networking, but I will continue to share what I find out. We are interviewing a subject matter expert on this topic later this month – so stay tuned, it should be fascinating stuff!

'Til next time,
Joan
The eSecurity Diva