Is the Network Effect Impacting Your Efficiency as an Entrepreneur?
How do you build a strong CRM with and without social media?
Social media has helped us build relationships with more ease. Platforms such as LinkedIn, Facebook and Instagram can add value to our lives if used correctly, while webinars, online workshops and online talk shows have connected the speaker and the participants. However, all these online exchanges have presented our generation with a problem.
Everyone on these social media platforms talks about mental health, fake news and the isolation effects due to the pandemic. According to the Australian Bureau of Statistics, 27% of Australians have very high levels of mental health distress than the rest of Australia (18%) in June 2021. ABS recorded that one in three young adults in Australia faced higher psychological distress than older Australians (aged over 35 years) in the same survey.
Undoubtedly, social media is not all it promised to be. In fact, there is a phenomenon that occurs when you scroll through your social media feed, and you don't even know it: the Network Effect.
What is the "Network Effect" in marketing?
The Network Effect is a phenomenon whereby an increased number of users or people affect the increased value proposition of the service or good. For example, Instagram Reels is the latest marketing trend on social media. In the beginning, everyone was skeptical of Reels as it was inspired by TikTok's idea of short-form entertainment content. However, as the popularity of Reels grew among people and they started to share value to their followers on Instagram, the value proposition of Instagram as a content-sharing platform grew.
People understood the distinction between Instagram Reels and TikTok's concept and started using each service in a distinguished manner. This chain of user engagement and popularity of Reels created an effect on each user to understand the value of Instagram to share content and communicate new ideas. The new concepts in exchange gain more value for the platform and its users' eyes through compounding thousands of new content every day by millions of existing and new users.
The multiplication of these new ideas and unique experiences causes a network effect. Users and creators understand the value of the platform through their algorithmic interaction of such content. But how does the Network Effect impact the daily business operations?
How the Network Effect impacts your everyday business operations
According to media reports, 80% of B2B buying decisions were based on direct and indirect communication as customers. Additionally, only 20% of their decisions were based on the pricing and other logistics of a purchased product or service. In business, it is all about building relationships even outside of social media.
However, when entrepreneurs get immensely involved in social media marketing, they forget to retain their genuine business relationships in the real world efficiently. The virtual connections and networks form a delusional perception of developing networks in great numbers. As an entrepreneur, you should be aware of the consequences of losing your existing clientele.
Do your due diligence and know that you need to adapt to new technologies to operate your business. However, it is crucial to understand that millennials still prefer and enjoy communication outside of your Instagram or LinkedIn story updates. Add value to your social media customers and share and build relationships with your existing customer database.
So, how can you utilize and increase your efficiency as a master entrepreneur with a builder mindset and win-win communication strategies?
Here are five practical strategies for retaining your customers and not falling into the wagon of the bad side of the network effect.
1. Reach out to your existing customers
Call, message or set up an in-person meeting with your existing clientele. If the restrictions do not permit, set up a Zoom meeting but have a regular catch-up or casual conversation with your current customers. Ask them if they need any assistance — if not, then have at least a five-minute conversation.
Show interest in them as an individual. A simple old-fashioned chat can have an effect that is even deeper than saying hello through your social media stories. Many of your customers consider such outreach and problem assistance endeavors valuable.
2. Show up to various networking events
Webinars have been increasingly popular since the beginning of the pandemic, as the world shifts to the new normal of intense security and governance over the spread of the virus. Go to various meet and greet events in your city to network with new people or your potential customers. Reshape and restructure your existing clientele with these new connections formed at these networking events.
3. Follow up with new connections
If you have had an interesting conversation with people at a networking event you attended, send a follow-up message. Most people, including busy entrepreneurs, appreciate simply sharing an interesting conversation. Show them that you are genuinely interested in having another discussion with them and make sure you can add value. A strong and connected network replaces hard selling in businesses.
4. Make your social media more personal and reflect your unique brand
Social media is a great tool to exercise your voice through your personal brand. Reflect your values, beliefs and mission to your community by communicating on your LinkedIn, Facebook or Instagram profile. Add your personal touch to most of your content.
As humans, we have an incredible power to hear the other person's voice while reading a message from them. But this effect is only possible if you are close enough to the reader. Therefore, connect with your customers outside of your social media profile.
5. Listen to your customers and have a genuine interest in your conversation with them
Lastly, have a genuine interest in what the other person is saying. Today, everyone wants to talk and talk, but few want to listen. Everyone has found a platform to share their thoughts but lost their ability to listen and have genuine engagement with the other person. Listening can help you build a closer relationship with your existing and new networks. It will help you to achieve the voice effect mentioned earlier in the fourth point.
Social media has several perks, and the network effect is beneficial to businesses, entrepreneurs and customers. However, the negative side of the same coin is that it can create a false reality or a distorted perception of effective customer relationship management.
Use the power of social media for good, grow your relationships and create new opportunities for you and your business now and into the future.
Related: 10 Laws of Social Media Marketing
Entrepreneur Leadership Network Contributor