A NEW survey has found the majority of small business owners have flocked to social media to give them a leg up on bigger firms, but experts warn the pitfalls can be devastating for those not prepared to handle negative feedback.
A Bibby Financial Services survey out yesterday found 73 per cent of small business owners across the country used social media to make direct contact with customers — 47 per cent through Facebook, 26 per cent LinkedIn, 23 per cent Google+ and 21 per cent Twitter.
Art Shed Brisbane director Manuel Petavrakis said his West End business had an overwhelmingly positive experience through its Facebook page, helping promote local artists and events.
“What we try and do — being a family-owned, locally-run business — is be as sincere and genuine as we can. When friends recommend things to others, it’s a more genuine form of recommendation and we can’t ignore this,” he said. “That’s what these tools are about spreading information.”
Over half the Bibby survey respondents believed smart phones, tablets and cloud technology could give them an advantage over bigger businesses.
But experts warn cases of small businesses struggling to cope with negative feedback online were rising, sparking fears of financial losses if businesses could not find ways to effectively handle complaints or if unfair comments went viral.
Townsville lawyer Evan Sarinas of Sarinas Legal said his firm was taking increasing calls from businesses “fed up with vindictive and careless comments posted on forums”, some of which were having a financial impact.
“These businesses that have devoted a substantial time, money, blood, sweat and tears into building up their reputations over the years, only to have it swiped away by a careless comment in a forum,” he said. “If the comments made are defamatory or cause injurious falsehood to a business, then the publisher of those comments can be sued for damages, and the damage intensifies because the comments can go viral.”
He said one case that had just been resolved saw defamatory comments published at a time when his client’s business was being marketed for sale.
“This had an effect,” he said. “So we issued the concerns notice through Facebook itself to him ... he agreed to retract the statements, apologised and agreed to post retractive comments on all the other forum sites to do with the particular issue that they were commenting about.”
Griffith University Professor Beverley Sparks, who’s leading national research into the impact of negative reviews on businesses and workers in the restaurant and hotel industry, said her team was exploring how businesses might respond effectively to diffuse online negativity.
“We do know from consultancy type research that a business responding does tend to make a customer more confident that they care about the customer and that they’re rectifying problems and issues,” she said.
Professor Sparks said restaurants were particularly exposed because negative comments were often spontaneous and personal in nature — “the staff member was hopeless or this food was dreadfully cooked”.
Restaurant and Catering Australia chief executive John Hart said the industry welcomed moves by the Australian Competition & Consumer Commission to explore whether online review sites in particular needed to be regulated or implement a code of conduct.
“Certainly we are seeing a lot of businesses that are coming to us saying that they have had a vexatious review and that as a result of that trade is dropping off. It has a pretty quick impact,” he said.
Mr Hart said it would help if the owners of sites agreed to take down listings or posts that were proved to be vexatious.
“A small business that employs eight people is not going to have deep enough pockets to undertake (legal) action. That’s why we need the support of organisations like ACCC to intervene here because the market’s clearly not working.”
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