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Useful study from Forrester Research’s Gina Sverdlov on Facebook fan-economics.  Using regression techniques, the study provided evidence to support the insight that your Facebook fans are more your most valuable customers (customer value = purchase value + referral value).  Specifically, the study found that fans of a range of brands (the study focused Coca-Cola, Blackberry, Best Buy, Walmart) on are significantly more likely than non-fans to

  • a) consider buying
  • b) purchase (79% vs. 41%)
  • c) recommend (74% vs. 38%)

For those versed in customer loyalty, particularly the Net Promoter System, this will come as no surprise – your fans (‘promoters’) are more likely to come back more often, buy additional products and services, refer their friends, provide valuable feedback, cost less to serve and are less price sensitive.

But what’s interesting about the study is the weight that being a fan has on customer value.  For example, being a Facebook fan of Best Buy increases the odds that a customer will purchase by 5.3 times; the next closest influence factor is conducting pre-purchase research, which only increases the odds of purchase by 1.4 times.  Similarly, whilst having a Walmart nearby doubles the odds that you’ll consider buying there, but being a Facebook fan of Walmart increases those odds by more than a factor of four.

Being a Facebook fan is a powerful proxy for customer value.

Again this insight into fan-economics should not be surprising; research by Bain consulting shows that an Apple fan is worth about 90% more to Apple than a regular customer ($4,400 vs. $2300), primarily because each Apple fan brings about one new customer to Apple every year, accounting for 17% of all Apple’s new customers.

Of course, we need to caveat all this by saying we haven’t looked at the data first hand – Forrester is charging $499 for it – so we don’t know the base numbers used, nor the other variables researched, but the findings support the idea that your fans are your most valuable customers.

But what does the insight that your Facebook fans are your most valuable customers mean for you?

What it does NOT mean is that you should try to boost fan numbers on Facebook with Facebook campaigns; businesses that do this are simply undermining the commercial utility of their Facebook page.

The power of the Like button is not that it creates fans, it’s that it identifies fans.  Your Facebook page is a fan magnet – and allows you to effectively target your most valuable and profitable customers.

We believe that trying to create fans with a Facebook page is misguided, verging on idiotic from a business perspective – your Facebook page should be designed to reward fans.

 

 

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    Facebook fans = most valuable customers | FRANk

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    Mike Darnell

    Your title is a tad misleading – What the study seems to validate is that your Facebook page can serve as a means for identifying your most valuable customers.

    I think your perspective towards the end is very interesting and well worth considering strategically and tactically: “…trying to create fans with a Facebook page is misguided, verging on idiotic from a business perspective – your Facebook page should be designed to reward fans.”

    Best,
    Mike
    @treepodia

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    Mustafizur Rahman

    All side Problem, But Why

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    Shea Warnes

    There are easier and more concrete ways around this – particularly if Walmart was used in this sample of brands. Loyalty cards users –

    – quick survey with existing store users to know if they are on Social (and which channels) or not
    – split the divide evenly (if social has more peeps take a random sample pool)
    – check there purchasing behaviour to determine average spend

    …to add refer value

    – add another tick box to see if anyone had been driven instore my an online referall from friend or user (work out the percentage from the total pool and times this percentage to the social users average spend)

    Sorted! @SheaWarnes

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    @DanielDoherty

    Hi There,

    Nice article. I actually attended an event at Facebook’s London HQ as part of Social Media week in September.

    Facebook Marketing ROI: a master class with Nokia, The Social Partners, Hypernaked, Play.com and The Humane Society of the United States.

    It gave some great insights into how these groups and companies were using Facebook etc. Bit long but worth it, was one of the best talks I went to that week.

    http://www.engagesciences.com/blog/2012/09/27/social-media-week-london-facebook-marketing-roi/

    All the best,

    @DanielDoherty

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