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Why Social Media Really Works

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How you can benefit from a fundamental shift in the way we communicate.

According to Erik Qualman, author of "Socialnomics: How Social Media Transforms the Way We Live and Do Business," online services like Facebook and Twitter represent a fundamental shift in the way we communicate. Some of his findings may surprise you:

Why Social Media Really Works
Want to stay in business? Here's how you can benefit from a fundamental shift in the way we communicate.
  • Communicating through social media is now the No. 1 online activity
  • Ninety-six percent of Generation Y -- the biggest group of potential home buyers and remodeling customers -- have joined an online social network
  • Facebook added 100 million users in less than nine months -- a record for media growth
  • The fastest-growing user group on Facebook is 55- to 65-year-old women
  • Twitter users send updates constantly, and 80 percent of those updates are read on mobile devices (a potential nightmare for companies known for bad customer service)
  • The second-largest number of online searches are conducted on YouTube
  • Thirty-four percent of bloggers post opinions about products or brands

Build trust and sales
Techcrunch.com reports that Facebook now gets more visits than Google. And a joint study by Chadwick Martin Bailey and iModerate Research Technologies found people are 67 percent more likely to buy from the brands they follow on Twitter, and 51 percent more likely to buy from one they follow on Facebook. Most recommend those same brands to their friends.

Internet sales consultant Mike Lyon says that social media lets businesses build communities around their products and brands. "If they engage these communities, they will build trust," he says, "and buyers purchase from businesses they trust."

How much this will cost depends on how much time a business devotes to updating social media accounts. It's important to add relevant content on a regular basis and respond quickly to posts from prospective customers.

Put someone in charge
Facebook and Twitter are free to use. So if you have a tech-savvy employee with a handle on social media, the investment is primarily time. Dina Gundersen, marketing director for Atlanta-based Monte Hewett Homes, spends an hour or two per day on Facebook and Twitter, checking the company's account frequently to keep track of comments. "You need to know what people are saying about you, good and bad," she says.

If you don't have the time or inclination to manage a social media presence, you can outsource it, says Carol Flammer, author of "Social Media for Home Builders: It's Easier Than You Think!" For builders with the budget, $3,000 to $5,000 a month will fund a major social media program -- including a blog, a managed presence on Facebook and Twitter, and search engine optimization. "That's the cost of one magazine ad," she says.

Drive online traffic and leads
Flammer says that the result of this effort will be vastly improved Web site traffic from bona fide prospects. "With every program we've built in the last three years, we've been able to increase Web site traffic by 50 percent to over 200 percent by a combination of search engine optimization (SEO) and social media. It's traffic that spends three to six minutes on your site. They're not kicking tires."