Are Startups Active in Social Media More Likely to Succeed?

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Are startups that are active in social media more likely to succeed? One company that funds startups thinks that’s the case – at least for online retailers.

Whether that could be applied more broadly remains to be seen, but it’s an intriguing question: Companies that are on social media are likely to be more responsive to customers, so why shouldn’t they be more successful?

Kabbage, which provides cash advances to online merchants to help them grow, asks applicants for their Facebook and Twitter account information to assess their engagement with customers. Why? Applicants who are active on social media are better engaged with their customers, the company has found, and those who provide the information are 20% less likely to be delinquent on their payments.

It remains to be seen whether Kabbage’s observations apply more broadly, but the message is clear: Any consumer-facing business should be active in social media, interacting with their customers.

Adapted from Kabbage Gets Social for Online Lending at Small Business Computing.