Small Business Labs

Does Social Media Work for Sales and Marketing?

Gallup has caused quite a stir with a survey showing that social media has little to no impact on the purchasing decisions of most consumers.  

The key study chart study, which shows 62% of consumers responded social media has no impact on their purchasing decisions, is below.

   

Needless to say, not everyone agrees.  Adweek quickly countered with an article titled Gallup's Buzzy Social Media Report 'Deeply Flawed'. Key quote:

These claims have caused a pretty good media ruckus despite having a methodology that appears flawed on multiple levels. Of all the flags that go up, this is probably the reddest: The social media marketing stats are based on surveys that were performed back in December 2012 and January 2013. In the disruptive world of online marketing, 18 months is a virtual lifetime ago. Nearly every social media platform has gone through significant changes since Gallup collected its data.

It's not only Gallup questioning the use of social media for sales and marketing.

A recent study by the Career Advisory Board and MBO Partners found that very few successful independent workers (freelancers, independent consultants, etc.) rely on social media for sales and marketing.  

Key quote from a Chicago Tribune article on the study:

In-person networking still trumps social media: The survey pool reported that while social media is important for contractors’ branding and reputation, it often does not generate income. In fact, just 6 percent said social media outreach led to paid project work. Therefore, create strong profiles on sites like LinkedIn and Google+, but refrain from spending too much time on these networks and make sure you still build in face time.

The effectiveness of social media for sales and marketing, especially for small businesses, has long been questioned. But two things are very clear: (1) social media works works for some; and, (2) social media doesn't work for others.  

Because of this, our social media advice to small businesses remains the same as it's been for years:

learn about and experiment with the various social media platforms, test them for a mix of business purposes, measure your results, and use them if you're getting a strong ROI relative to other uses of your time and money.

Disclosure: MBO Partners is an Emergent Research client.

Coworking for Moonlighters

The coworking space Grind is now offering a coworking option for moonlighters.  According to their press release the new service provides:

dedicated "after-work" and weekend hours, specifically for those who are working a second job, creating a new venture, building a side business or any other reason that might warrant the need for time outside of traditional business hours.

We've been spending a lot of time recently looking at the growth of side gigs.  These are 2nd (or even 3rd) jobs or side businesses started by people to augment their regular employment or activity.  

The primary purpose of most side gigs is, of course, to earn more money.

But side giggers are increasingly motivated by other factors including learning new skills, pursuing a passion, interest or hobby, testing a business idea or simply having something that gets them engaged in ways different from their primary activity. 

The reason I say "employment or activity" is for many side giggers their primary activity is not income producing.  Many are students, homemakers, retired, unpaid care givers, etc.  

Grind's new offering is yet another signal that moonlighting is expanding and side gigs are becoming more common. 

The Freelancers Union National Benefits Platform

Yesterday the Freelancers Union launched their National Benefits Platform. This is a one-stop, online site that will enable freelancers and other independent workers to access a suite of curated, freelancer-focused benefits, including:

• 401(k) plans
• Health insurance
• Dental plans
• Disability insurance
• Term life insurance
• Liability insurance

According to the site there will be additional options coming in the near future.

To use the site you enter your zip code and you are presented with a menu of benefits options.  

According to the Business Week article The Freelancers Union Wants to be Your HR Department this move may "indicate that the freelance economy is maturing."

We agree.

We know from personal experience as well as our research that pulling together retirement plans, health insurance and other benefits is hard, time consuming and expensive for the self-employed.

Having a one-stop shop to help with this will be of great value to many.

It's also an excellent example of the growing array of products of services that are making it easier to be an independent worker.

Disclosure: The Freelancers Union is an Emergent Research client.

Virtual Companies Becoming More Common

The Wall Street Journal's Virtual Biotechs: No Lab Space, Few Employees focuses on how biotech startups are outsourcing lab work and hiring consultants and other contingent workers instead of traditional employees.

Key quote:

Hundreds of virtual biotechs are estimated to be operating today, in tech hubs from San Francisco to Cambridge, England. Bruce Booth, a partner at venture-capital firm Atlas Venture in Cambridge, Mass., estimates that as much as a third of the $4 billion to $5 billion in annual U.S. venture funding for biotech goes to virtual firms these days. Atlas is funding about a dozen, most of which have one or two employees. Atlas and other venture partners invest $2 million to $3 million to fund the virtual firms' first year.

While the article focuses on the biotech space, we're seeing the same trend in almost every industry we study.

Companies in all industries are increasingly using technology, automation, partnering, outsourcing and contingent workers instead of investing in fixed assets and traditional employees. 

The reasons for this are straight forward. Economic uncertainty, high rates of technological change and competitive pressures are resulting in firms focusing on becoming more agile and flexible.

To do this they are reducing their fixed costs - which include investments in plant and equipment (like lab space) and employees - and increasing their use of variable cost services, including consultants and contingent workers.  

We believe this is a structural shift that is changing how industries are organized and work is done. We also think it's changing the competitive dynamic between large and small businesses.

We'll have more on this shift in the coming months.

Amazon's Shopping and Showrooming Phone

Amazon is a retailer, so it's not surprising their new cellphone would be built for shopping.

It's key feature is called Firefly, which uses object recognition software so that users can scan items and then buy them immediately on Amazon.

It can also recognize sounds and link back to the music, movies and TV shows they come from.  

According to Amazon, Firefly can recognize over 100 million items, including 245,000 movies and TV episodes, 160 live TV channels, 35 million songs and 70 million products.

So you can think of Amazon's new cellphone as combining showrooming on steroids with a mobile Amazon cash register.  

Other features include a 4.7-inch screen (slightly bigger than an iPhone), a 13-megapixel camera and earphones that resist tangling.

It also has a "dynamic perspective" feature than uses 4 onboard cameras to track a user's head movements so it can provide 3D like images.  Pretty cool.  

The phone is priced at $199 to $299 with a two-year contract. This is cheaper than similar iPhones, but not as aggressively priced as many expected.

Analysts are split on how successful Amazon's foray into cellphones will be. It's a very competitive market with Apple and Samsung well entrenched. It's also unclear how many people want a cellphone optimized for shopping.

But underestimating Amazon has proven (or proved, for those who take grammer more seriously than I do) in the past to be a bad idea.  

The Economic Shifts Caused by the Great Recession

The New York Times article The Nation's Economy, This Side of the Recession covers how the economy has changed due to the impacts of the great recession.  Key quote:

In the five years since the United States began its slow climb out of the deepest recession since the 1930s, the job market has undergone a substantial makeover. The middle class has lost ground as the greatest gains have occurred at the top and bottom of the pay scale, leaving even many working Americans living in poverty. The housing industry, once the primary engine of growth and a fountain of jobs, has shrunk, while health care, technology and energy have led the recovery.

A major issue with the recovery is relatively high paying industries, like manufacturing and construction, have seen overall employment declines.

At the same time, relatively low paying industries health care and food service have added workers. 

This had led to the growing polarization of jobs and increased economic uncertainty.

This is illustrated in the story chart on the right.

We also think the recession has accelerated a series of shifts in small business formation, leading to more single person businesses and fewer employer small businesses.

It's clear the Great Recession has had major impacts across the economy and society.

And while the phrase that's most often wrong in the forecasting business is "this time it's different", this time things do appear to be different.

Online Talent Marketplaces Continue Rapid Expansion

There are several interesting new data points on the increasing use of online talent marketplaces like Elance-oDesk, Freelancer.com, etc.  

On the buyers side,The Staffing Industry Analysts article Online staffing is the new frontier: CW managers’ interest rises sharply says:

A survey of contingent workforce buyers found a sudden jump in plans to use online staffing. Ten percent of contingent workforce buyers planned to use online staffing in the next two years; that’s a jump from a similar survey in 2013 when only 3 percent planned to use online staffing over the next two years.

The article says 4% of the contingent workforce buyers they surveyed use online talent marketplaces today.

The marketplace themselves are also reporting continued strong growth. 

This is highlighted in the recent global and U.S. work reports from Elance-oDesk, which recently merged.

The chart below, from the Elance-oDesk reports, highlights the relative strong growth on online job listings.

   

On the supply side we've also seen an substantial uptick in the number of freelancers and other independent workers reporting they are using online talent marketplaces to find work.  

We're still finalizing this work and we'll have more information on this in the coming months.

The $11 Billion Workspace-as-a-Service Industry

The 1st Annual Local-Mobile Workspace-as-an-Industry conference was recently held in San Jose. The CloudVo site provides an excellent summary of the event, including links to the conference presentations.

The workspace-as-a-service industry includes office business centers, coworking facilities, incubators and other shared office environments and services.  

The industry is quite large, as shown in the slide below from Scott Chambers' state of the industry presentation. Scott's the COO of Pacific Workplaces and President-elect of the Global Workspace Association, so he knows his stuff.

The workspace-as-a-service industry is growing at a healthy clip, with industry revenues increasing over 15% in 2013.  

I also enjoyed Laurent Dhollande's presentation on how shared workspaces fit in the broader sharing economy. It's well worth reviewing for anyone interested in the sharing economy or the shared workspace industry.

I'm looking forward to next year's event.

Are You Afraid of Getting Fired?

Smartbriefs recently did a non-scientific poll asking readers how frequently they worry about getting fired.

The results, which came from their base of almost 200,000 readers, were:

• Never — I’m irreplaceable: 20.49%
• Sometimes — when projects go wrong or bad things happen: 55.74%
• Often — I am frequently on edge: 17.49%
• All the time — I live in perpetual fear of getting fired: 6.28%

A quick review of these results show a stunning percentage of the respondents worry about getting fired on a regular basis, including almost 25% of folks thinking about it often or all the time.

This data is another example of the growing sense of economic uncertainty people facing. 

Economic uncertainty impacts the economy in many ways. If you don't feel economically secure, you are less likely to do things like get married, buy a house, have children, move to new city, etc.  

This lack of job security also explains why over 40% of independent workers (freelancers, independent consultants, etc.) report feeling more secure being self-employed than if they had a traditional job.

We think economic uncertainty is unlikely to decrease anytime soon. We also think it's having a major impact on our economy and leading to greater numbers of people starting side gigs and becoming independent workers.

See our Economic Uncertainty category for more on this topic.

What is Computational Anthropology?

MIT Technology Review's The Emerging Science of Computational Anthropology covers how digital data is creating new opportunities to study human behavior. Key quote:

The increasing availability of big data from mobile phones and location-based apps has triggered a revolution in the understanding of human mobility patterns. This data shows the ebb and flow of the daily commute in and out of cities, the pattern of travel around the world and even how disease can spread through cities via their transport systems.

The main research methods used by social scientists have historically been qualitative. Ethnography, for example, uses field observation to study a group. 

We use ethnography on a regular basis and most large corporations use some form of ethnographic research.

Intuit calls their approach "follow me home".  Key quote from a LA Times article on Intuit's design for delight approach to product development on follow me homes:

Instead of marketing research or management presentations about product ideas, Intuit conducts 10,000 hours of what Smith calls "follow me homes" each year, in which employees observe customers at home or at work. The goal is to understand their pain points, their needs, things customers may not recognize themselves. 

While qualitative research such as follow me homes will continue to be important, the rise of big data is changing the social sciences - and the market research industry.

Actual behavioral data is increasingly available, reducing (but not eliminating) the use of other methods such as observational research and surveys. It's also reducing the use of government data, which is usually quite old by the time it's released.  

For example, we use Intuit's Small Business Indexes to follow and better understand how the small business economy is performing.  Key quote from their site on their small business revenue index, which is shown below:

This Revenue index is the first to provide current information on small business revenue, and the only source of monthly small business revenue data. Near real-time data is used to measure revenue (receipts) per company, which is compiled into an index starting from 100 in January 2005 for each industry group. The data comes from approximately 100,000 Intuit QuickBooks Online customers, a subset of the total QuickBooks Online user base, and is published monthly on a close to real-time basis. 

Prior to the release of the revenue index, we relied on a combination of out of date government data (often as much as 5 years old) and survey data. Intuit's revenue index is much more detailed and accurate than the surveys we used and much more timely than government data.

The use of big data in the social sciences and market research is fundamentally changing these fields. It's also leading to more timely and accurate analysis and deeper bahavior insights.  

Disclosure: Intuit is an Emergent Research client.