FT.com / Digital Business / Web 2.0 - Web 2.0: The salvation of SMEs

FT.com / Digital Business / Web 2.0 - Web 2.0: The salvation of SMEs

Web 2.0: The salvation of SMEs
By Ivan Croxford, Head of BT Tradespace

Published: August 6 2008 12:59 | Last updated: August 6 2008 12:59

Web 2.0 offers an unparalleled opportunity for businesses to compete and thrive in a time of mounting economic difficulty – yet incredibly many have little idea of what it means.

Far too often, the concept is dismissed as a buzzword expression – and yet it could hold the key to the survival of thousands of SMEs as the slowdown kicks in.

Social media and networking sites provide the platform for companies to collaborate, share information and expertise and market their goods. Indeed, all over the web, communities of like-minded firms are supporting each other with advice, swapping internet links and trading together.

The interactivity of Web 2.0 also allows an authentic and direct line of communication between a company and its customers – invaluable any time, but essential in the light of the challenging business environment.

The tools of Web 2.0 - blogging, podcasting, photo and video sharing – have already been adopted by millions of consumers because they are simple and powerful communication methods. For that reason, they are ideal for small businesses to use in their marketing strategies.

A company that is prepared to engage in an open, honest conversation, whether it be through a blog or video, with its customers is being sensible and shrewd. In this day and age, very few consumers are prepared to just listen to announcements and one-way broadcasts without being able to give their feedback.

However, there are still far too many companies which have not tapped into the rich potential arising from the latest internet age because they either are not aware of it or feel it is irrelevant or too complicated.

This reticence may be in part explained by existing attitudes to the internet generally. The majority of SMEs are already struggling with online marketing and sales - 40 per cent do not have websites and less than 20 per cent sell online.

There are good reasons for this. Running a website can be a costly, complex business that often requires the support of third parties to build, maintain and market. The traditional net marketing strategy of larger businesses to use paid search and display ads supported by a comprehensive Search Engine Optimisation strategy to ensure a good Google rating is beyond the financial and technical reach of most SMEs.

If we put the problems of traditional online marketing alongside the growing importance of the internet as a research and purchasing medium for consumers, it becomes all too apparent that SMEs desperately need to find a better way to promote themselves online. This is where Web 2.0 is vital.

To attract customers, it is now necessary to participate in online “communities” relevant to your business whether it be a florist’s or a bespoke furniture maker. That also means engaging in an ongoing, meaningful dialogue with customers on interactive networking sites about products, prices and service.

The social web has changed the landscape of e-commerce forever. Audiences are fragmented and this means customers are harder to reach but they are surfing the web for information about goods in ever-growing numbers before buying. Some recent research from co-operative cashback website Quidco found that 62 per cent of shoppers consult online communities before making a purchase. Furthermore, only 27 per cent of consumers go directly to the retailer.

If these trends continue, then any company wishing to succeed has to embrace the interaction encapsulated by Web 2.0 to build strong, trusting relationships with its customers.

SMEs can benefit hugely from the power of social networking precisely because the tools of Web 2.0 are well suited to the personal and conversational marketing style that already works to their benefit offline.

The campaign to persuade companies to join business social networking sites has now become one of the biggest battlegrounds on the internet. Amazon, eBay, Facebook and BT are all targeting the 4.5 million SMEs in the UK to alert them to the global marketing opportunities afforded by these platforms which could transform their fortunes. There is a massive education exercise taking place to convince companies of the overwhelming merits of these sites.

The momentum is growing. Firms large and small have started to take part in social networks and internet communities but the results are mixed. Some are successfully attracting customers and boosting the bottom line, others are not. Of greater concern is that most have not taken the plunge at all with many approaching the internet in general with apprehension.

These businesses should realise that Web 2.0 offers relevant and powerful tools for them to promote themselves and build an online brand. They should stop hiding – and start using it to their advantage.
Copyright The Financial Times Limited 2008