|Description||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.||