Samir Balwani is an emerging technology strategist at Morpheus Media, a firm specializing in Social Marketing, SEM, and SEO. You can follow him on Twitter @samirbalwani and get his newsletter.

One of the biggest misconceptions with online marketing is that social media is only for large brands. Truthfully, a small business that invests its time wisely can improve customer (or client) loyalty and traditional word of mouth marketing efforts.

Social media is useful for almost every type of business. Cafes, retail stores, and even professional services can build their online reputation and increase trust. By taking advantage of social media, businesses can make themselves more accessible, more personable, and maintain long term connections. For a small business looking to increase referrals, social media can be a powerful tool.

Here are five ways small businesses can capitalize on this new form of marketing.

Why use social media?

The best way to illustrate why small businesses are using social media is with a story. Think back to the days of the wild west. In those days, towns had one general store, and the store owner knew everyone. People trusted him and knew what they were getting. Enter the industrial age, and efficiency trumped personalization. People didn't mind where they bought from, as long as goods were cheap.

Now, that mentality has changed. Consumers are once again reverting to a need for personalization from businesses large and small. The need has been rekindled by the Internet and our ability to find anything we want, as well as a mistrust of advertising (think used cars salesmen).

We've reached a point where the consumer wants to know the store owner's name and that he can be trusted. Small businesses must look beyond their want to grow into corporations, and instead focus on their core customers. Thanks to social media, we're able to foster these relationships easily and quickly.

Big Win 1: Local Social Networks

For local businesses with a storefront, sites like Yelp can make a real impact. Yelp allows businesses to create listings with all the necessary information for a consumer to find you, while other customers can review and comment on your business. Many of these sites will let business owners "claim" their listings and add information, such as phone numbers, store hours, menus, etc.

Consumers use local social networks to find businesses, but also to get social proof when making a decision. They use comments and reviews to go with the "best" listing. Because of the demographic these sites target (people ready to make a decision) small businesses can see a great return from local social networks.

Big Win 2: Blog or Social Hub

When most businesses begin a social media campaign, they tend to focus on Facebook, Twitter, and other social sites. They usually forget to incorporate their own site and tie their social profiles together. Our second big win, is the creation of a blog or social hub. Why push your consumers to connect with you on other sites, but not give them a reason to visit yours?

Building and writing a blog may be time consuming, but it creates a way to connect with users on your own website. Additionally, creating useful content such as how-tos or industry insights can keep customers engaged.

For business owners that don't have the resources to update their blog regularly or can't think of what they'd write, I suggest building a "Connect" page. A connect page, or social hub, offers readers a way to find your business' most active profiles and join you on those social sites. The page could also include a short bio or how you use each social site.

Giving consumers a reason to visit your site is extremely important. A blog or social hub can pull consumers to your site and into the sales funnel.

Big Win 3: Twitter

Everyone is talking about Twitter. So why is it a big win? Simple: it connects you with your consumers in real-time via the web, desktop applications, and even mobile. Finding a way to offer value while humanizing the business can lead to a stronger following and increased word of mouth marketing.

A great example is CoffeeGroundz, a small coffee shop in Houston, Texas. The author of their Twitter account is charismatic and his commitment to customer service has drawn a lot of attention to his business. By being engaging and interacting with the community @CoffeeGroundz has been able to double their clientele.

Big Win 4: Facebook Fan Page

With Twitter, business owners are able to cater to their consumer's needs instantaneously. In a world where everything needs to be done yesterday, a quick response can create a lifelong customer.

Another major social site to target is Facebook. Creating a Fan Page is simple, but truly utilizing it to its fullest potential takes some guidance.

A Fan Page allows a business to visualize and build a community, similar to Twitter. However, unlike Twitter, you can add and customize a great deal more.

At the very least a business should update their Fan Page "status" to keep consumers informed and engaged. A more advanced technique would be to add things like coupons or Google maps directions to the storefront. These kind of resources give consumers a reason to visit the Page and interact with the brand.

Big Win 5: Custom Wiki

My final tip is to use a custom wiki, which takes advantage of a phenomenon called crowdsourcing. In other words, use your customers to give information to other consumers.

The easiest way to do this is by creating a wiki for your FAQ or Customer Service knowledge base. Let your consumers enter the problems they've had via a public forum (the wiki), and provide your responses publicly as well. Although showing problems may seem backwards, it's a very effective way to retain customers and generate new sales.

Consumers aren't stupid, they know that mistakes happen. Instead, they want to see that their questions will be answered quickly. Also, with a public wiki, customers can see if a concern has already been addressed, saving time for both you and the customer.

With minimal moderation, a wiki can build trust in your business and make your customer service more efficient.

More social media resources from Mashable:

Images courtesy of iStockphoto, Aleza and Flickr user meer