Business, Featured - Written by on Friday, September 24, 2010 17:23 - 8 Comments

Naumi Haque
Will Facebook be your CRM provider?

According to the Facebook blog (as of April 2010), the average Facebook user “Likes” nine pieces of content very month. With over half a billion users worldwide, that translates to more than 4.5 billion Likes per month and 54 billion Likes per year on everything from news articles, to jeans, to movies, and even real-live activities and events. Each of these Likes is tied to a real person for whom Facebook has detailed identity information. Although it hasn’t yet been monetized, this data and the analytics applied to it, could become the basis for Facebook’s core revenue model. On Facebook, you are the product.

For every Like that is made, Facebook is able to correspond a product affiliation to demographic information such as sex, age, geography, and education, as well as social graph data about relationships and influence within a group. With Places, Facebook can even correlate product activity to mobile location data. If mobile payments ever take off, they could get actual sales data as well.

Ad Age recently asked the very poignant question: What Happens When Facebook Trumps Your Brand Site? (alternate title for the article is: How Facebook Became the Biggest CRM Provider). The online article was accompanied by the following graphic showing the top ten brands on Facebook (in terms of total Likes):

Top brands are garnering millions of Likes, yet only driving a couple hundred thousand visitors per year to their branded sites. What this all means is that Facebook has better data about customers than most consumer products companies do. As Ad Age notes:

For many marketers, their Facebook fan bases have become their largest web presence, outstripping brand sites or e-mail programs either because a brand’s traditional web-based “owned media” is atrophying or because more consumers are migrating to social media.

While fan pages may work a lot like a marketer’s traditional “owned media,” they’re not actually owned by the marketers. Facebook hosts the pages and provides analytics for free, but growing marketer dependency on the network for CRM programs, combined with simultaneous declines in traffic for many of their own brand websites, could give Facebook a valuable revenue opportunity.

Of course, it would be difficult to sell granular individual data about users (people would object); however, Facebook could sell aggregate data (trend analysis and market research) and act as a “black box” CRM (Customer Relationship Management) solution whereby companies offer targeted promotions and messaging to individuals with select profile characteristics, mediated through Facebook. Already some companies are using basic Like data to hone their retail strategies. In one example, Urban Outfitters is arranging clothing in its online store based on Like activity and offering select promotions to all those who have liked products. Additionally, Facebook is making information about the Like activity on ads (i.e. “social context” data) available to advertisers on its site. Armed with this data, advertisers can decide to further optimize campaigns by targeting people who have expressed a Like for the ad.

With the Like button, Facebook is benefiting from the power of weak tie relationships (Facebook calls it “lightweight sharing”). Many markets point to the fact that people that Like a product aren’t real fans or brand advocates in the traditional sense. This is s feature, not a bug. By lowering the bar for Liking something, Facebook has opened a channel to—and is gathering data about—ordinary consumers of the brand who otherwise would have no formal connection to the company or its products other than isolated, anonymous purchases. This connection can be potentially valuable in terms of loyalty programs and promotions, market research, and customer support.

A number of factors suggest that the number of Likes will probably continue to grow, including: the continuing growth of the Facebook user base (see chart above, which shows no indication of plateau), expansion in global markets (70% of Facebook users are outside the U.S.), the recent proliferation of the Like button on a range of products and services (the Like button is now on over 350,000 sites), and the growing use of mobile technologies that allow users to Like physical products and experiences. With this in mind, it’s by no means hyperbolic to think that Facebook could be the largest single CRM provider in the world.



8 Comments

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Naumi Haque
Sep 27, 2010 12:58

Just saw this today:

“Almost a quarter of consumers would prefer to receive information from a brand through Facebook rather than its website, according to research by digital consultancy Beyond.

Of the 2,500 people the agency surveyed in the US and UK, 46% follow one or more brands through a social network, with 23% saying Facebook is where they’d like to receive information from a company or brand, the same proportion that preferred direct mail and ahead of a company’s own website (21%) or a company blog (3%).

Half of respondents said they follow a company on a social network to receive special offers or discounts, while 34% do so for the love of the product, 27% to receive news and 12% to gain better customer service.”

http://www.nma.co.uk/news/quarter-of-consumers-want-brand-information-via-facebook/3018595.article

Med Facebook som CRM-system « Paul Chaffey
Sep 29, 2010 2:44

[...] [...]

Ty Jackson
Oct 1, 2010 1:56

What a great question! It depends. If a company is really transparent (let customers know the good and the bad) then Facebook is an ideal CRM. If a company has an entire department to control their image, then no. Facebook and every cloud company is about real information. As a start-up, we use Twitter and Facebook as our single source for customer problems. Easy access, always on, and we learn of every problem instantly.

A.H. Larsen Consult » Er Facebook i ferd med å bli viktigere enn bedriftens egne nettsider?
Oct 4, 2010 14:58

[...] [...]

Andres Felipe Salazar Vargas
Oct 15, 2010 15:58

No hay que negar el poder de las redes sociales, pensadas como redes integradoras de información, que ademas de su objetivo, permiten obtener datos y estadísticas que pueden definir parámetros clave para las empresas. Mi pregunta y reflexión tiene que ver con el grado de propiedad y derechos propios que tienen las empresas en las redes sociales, sabiendo que estas tan sólo son herramientas de otros para el bien de ellos.

Andrés Felipe Salazar Vargas
Oct 15, 2010 15:59

There is no denying the power of social networks, designed as integrated information networks, which in addition to its objective, produce data and statistics that can define key parameters for business. My question and reflection has to do with the degree of ownership and rights to own businesses with social networks, knowing that these are only tools of others for their sake.

Topanga Bird
Oct 17, 2010 20:56

Not until Facebook clears up its privacy problem. I just got my entire contact list spammed when I sent a message to a friend.

Tel
Oct 26, 2010 17:48

Think for a moment about Customer Relationship Management, now look at all the brands shown above. All of them are instant gratification products, quickly consumed, easily replaced by another of the very large selection of similar products on the market. These products benefit from brand awareness advertising, but there is no customer relationship to manage. When did you last take a can of Coke in for a routine service?

Real CRM is about longer term purchases such as cars (require maintenance and spare parts), computer software (needs bug reporting, upgrades, etc), big ticket whitegoods (longer warranty).

If I want to know whether I like Coke, I just buy a can and give it a try, if I don’t like it I just don’t buy any more. Nothing Coke does will change personal taste, the best they can do is encourage me to try it in the first place. If I’m thinking about buying a new fridge then I know I’m going to be stuck with it… so I’ll do a lot more research for a fridge purchase than I would for a can of soft drink. In the case of the fridge I’m going to want to know how other people went with it, how long it lasted, does it get noisy over time, etc.

Suppose I find a comment on a blog where someone says they really hate the taste of Coke… no big deal, not everyone likes the same thing, it’s not going to stop me giving it a try. If I find a comment on a blog saying they bought some brand of fridge and it broke down in the first 12 months, that’s going to put me right off the brand.

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