Does the network effect have an impact on your efficiency as an entrepreneur?
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Social media has made it easier for us to build relationships. Platforms like LinkedIn, Facebook, and Instagram can add value to our lives if used correctly, while webinars, online workshops, and online talk shows have connected speaker and attendees. However, all of these online exchanges have posed a problem for our generation.
Everyone on these social media platforms is talking about mental health, fake news and the isolation effects of the pandemic. According to the Australian Bureau of Statistics, 27% of Australians have very high levels of psychological distress than the rest of Australia (18%) as of June 2021. ABS has recorded that one in three young adults in Australia was faced higher psychological distress than older Australians. (aged over 35) in the same survey.
Without a doubt, social media is not all it promises to be. In fact, there’s one phenomenon that happens when you’re scrolling 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 affects the increased value proposition of the service or good. For example, Instagram Reels is the latest social media marketing trend. At first, everyone was skeptical of Reels because it was inspired by TikTok’s idea of shorthand entertainment content. However, as Reels’ popularity increased among people and began to share value with their followers on Instagram, Instagram’s value proposition as a content sharing platform grew.
People understood the distinction between Instagram Reels and the concept of TikTok and started to use each service in a distinguished way. This chain of user engagement and the popularity of Reels has created an effect on every user to understand the value of Instagram for sharing content and communicating new ideas. The new concepts in exchange gain value for the platform and the eyes of its users by bringing together thousands of new content every day by millions of existing and new users.
The multiplication of these new ideas and unique experiences creates a network effect. Users and creators understand the value of the platform through their algorithmic interaction with such content. But what is the impact of the network effect on day-to-day business operations?
How the network effect impacts your daily business operations
According to media reports, 80% of B2B buying decisions were based on direct and indirect communication as customers. In addition, only 20% of their decisions were based on pricing and other logistical aspects of a product or service purchased. In business, it’s about building relationships, even outside of social media.
However, when entrepreneurs get heavily involved in social media marketing, they forget to effectively maintain their genuine business relationships in the real world. Virtual connections and networks form a delusional perception of growing networks in large numbers. As an entrepreneur, you need to be aware of the consequences of losing your current customer base.
Do your due diligence and know that you need to adapt to new technologies to run your business. However, it’s crucial to understand that millennials still prefer and appreciate communication outside of your Instagram or LinkedIn story updates. Add value to your customers on social media and share and build relationships with your existing customer database.
So how can you use and increase your effectiveness as a master entrepreneur with a builder mindset and win-win communication strategies?
Here are five practical strategies to retain your customers and not fall for the wrong end of the network effect.
1. Reach your existing customers
Call, message, or schedule an in-person meeting with your existing customer base. If restrictions don’t allow, host a Zoom meeting but have regular catch-up or casual conversation with your current clients. Ask them if they need help. Otherwise, have at least five minutes of conversation.
Show them interest as an individual. A simple old-fashioned chat can have an even deeper effect than saying hello through your social media stories. Many of your customers find these problem awareness and support efforts valuable.
Related: 5 Smart Ways to Use Social Media to Grow Your Business in 2019
2. Show up at various networking events
Webinars have grown in popularity since the start of the pandemic, as the world shifts to the new standard of intense security and governance in the face of the spread of the virus. Attend various meet and greet events in your city to network with new people or your potential clients. Reshape and restructure your existing customer base with these new connections formed at these networking events.
Related: 8 Easy Ways To Make Social Media Work For Your Business
3. Monitoring of new connections
If you had an interesting conversation with people at a networking event you attended, send a follow-up message. Most people, including busy entrepreneurs, just enjoy having 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, connected network replaces tough selling in businesses.
4. Make your social networks 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 the incredible power to hear the voice of the other person 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 take a genuine interest in your conversation with them
Finally, 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 has lost their ability to listen and engage authentically with the other person. Listening can help you build a closer relationship with your existing and new networks. This will help you achieve the voice effect mentioned earlier in the fourth point.
Social media has several advantages and the network effect is beneficial for 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 in the future.
Related: 10 Laws Of Social Media Marketing