Effectiveness of Online Promotional Strategies

Abstract

The use of social media sites (Facebook, Twitter, etc.) is becoming increasingly common, with 83% of Fortune 500 companies using at least one type of social media to connect with customers in 2011 (Hameed, 2011). Small businesses are more informal in their marketing strategies, and place a greater emphasis on forming close relationships with customers (Coviello, Brodie, & Munro, 2000). This work examines the effect of small business social media use on customer retention, upon which many companies spend a significant amount of resources (Verhoef, 2003). The ways small business owners use online communities such as websites and social media are explored, specifically with respect to increasing customer retention. The research goal of this project is to determine the effectiveness of these strategies, as well as determine the differences and similarities between the perceptions of small business owners and those of customers regarding social media. This investigation contributes to the currently limited (Bakeman & Hanson, 2012) academic research on small business online community usage by examining the issue from a social identity theory perspective. Social identity theory offers insights into how individuals behave and interact in social groups, such as online communities. To accomplish this, two surveys were administered, measuring the perspectives of two different stakeholders: small business owners and customers. Finally, an analysis was performed using linear regression. This study helps to build a better understanding of how and why both small businesses and their customers interact using social media, and whether using social media as a promotional technique is effective.