For the past few years, we’ve been inundated with the idea that businesses must use social media to drive sales.

The purported logic is that social networks are an effective and necessary avenue for reaching out to customers. The more you reach out, the more money you will make. However, USA Today says a new study shows that social media has no real effect at all.

The study, a collaboration between Forrester Research and GSI Commerce, analyzed data captured from online retailers between November 12 and December 20, 2010. The research shows that social media rarely leads directly to purchases online — data indicates that less than 2% of orders were the result of shoppers coming from a social network. The report found email and search advertising were much more effective vehicles for turning browsers into buyers.

You can request a free copy of the report, titled “The Purchase Path Of Online
Buyers”. Its focus is on driving online retail “holiday shoppers”. The premise, which seems to bear out in the report’s findings, is that people are on Facebook, LinkedIn, etc. for many reasons that supersede buying. It’s not merely a case of going where your buyers are, but where they go to buy; and social media is proving not to be that place.

The biggest effect of social media outreach, in terms of purchases from it, seems to be news about short-term deals. In that case, 5% to 7% of purchases are influenced by social media activity, states the report.

But the report admits that since most retailers only track where the sale comes from, it’s impossible to say how many “views” or exposures a buyer had – and where – prior to making the purchase. It does not and cannot track the influence on a purchase that might have come from social media conversations, endorsements, buzz, etc.

While there is probably a lot of truth and value to this study for large retailers, I suspect that social media is – and will continue to be – extremely important for small business (both products and services) – in terms of building relationships and reputation.

The key to leveraging social media, as I see it, is judiciously participating in your networks and “adding value” in terms of intelligent information and problem solving, thus establishing you/your business as a reliable source and provider. While this may not result in immediate sales, hopefully it will support and enhance your other marketing efforts.

If anyone would like to fund me to conduct a study on social media’s impact for small business, let me know. Meanwhile, I’d love to hear your experiences — have you gotten new clients/customers/sales from your networking efforts?