Social Commerce

Statistics Say: Facebook Fans Are Your Most Valuable Customers

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.

 

 

Chartered psychologist specialising in consumer behaviour, wellbeing and technology. Certified CX professional experienced in Design Thinking. A researcher, writer and speaker, Paul is head of Digital Insight at SYZYGY.

17 Comments Add New Comment

  1. 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

  2. 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

  3. 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

  4. My programmer is trying to persuade me to move to .net from PHP.
    I have always disliked the idea because of the expenses.
    But he’s tryiong none the less. I’ve been using WordPress on several websites for about a year and am anxious about switching to another platform.
    I have heard good things about blogengine.net. Is there
    a way I can transfer all my wordpress posts into it?
    Any help would be greatly appreciated!

  5. Wonderful work! This is the type of information that are supposed to be shared around the internet.
    Shame on Google for no longer positioning this put up higher!
    Come on over and talk over with my web site .
    Thank you =)

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.