The FB connect of brands

'Liking' a brand on Facebook does not always ensure brand loyalty.
Liking on Facebook

Connecting with a brand on the social networking platform is the latest trend these days. While this trend has certainly helped in increasing the reach of the brands, it has also given rise to many questions. For example, are users actually loyal to a brand or are they just searching for some exciting offers and freebies when they support a brand by “liking” it on Facebook?

Some of the prominent areas where retail brands can utilise Facebook can be customer relationship management, promoting offline events and activities and sharing information about products, new launches, discounts and stores.

Some time ago, Amazon indulged in crunching lots of customer and purchase data, revolutionising online shopping and came up with relevant, personalised recommendations. On the same lines, Facebook's combination of data, analytics and payment technology could fuel the next generation of e-commerce.

How much does a “like” mean?

For a brand, the value of a “like”, which eventually translates into a “fan”, is a function of the level and length of relationship it can build with the fan. The purpose of acquiring fans is to build a community, which contributes to a lifetime value. “In that duration, depending upon the objectives (ie, visibility, engagement, lead generation and purchase) and the kind of business, an enormous value can be generated,” says Pradeep Chopra, CEO and Co-founder, Digital Vidya.

For the fan, the value could vary based on the brand and the purpose of the community. For instance, in case of an e-commerce company, a fan on Facebook may get some exclusive discounts. Another interesting perspective shared by Ajay Kelkar, COO of Hansa Cequity, is that while the younger users, who grew up on the web, are more likely to intuitively use the “like” button, older consumers may still seek to click through and explore more content before they get to “like”.

From ‘like’ to ‘buy’

The brands need to answer two questions – Why will someone, who is invited to join the community, end up joining it, and b) Why will that person continuously participate on the community? For instance, Dell has a community on Facebook called “Social Media for Business – Powered by Dell” (http://www.facebook.com/dellsocialmedia). Chopra says it is a great approach to answer the questions listed above. A problem area noticed is that companies underutilise social data and often leave it sitting in its own silo. Social analytics needs to integrate with the rest of the customer data to make a significant

business impact. Companies fall in the trap of passively collecting social data but not using it effectively. Only a few actually integrate business data with social intelligence, which will help drive marketing and business strategy using the data that social media creates.

Kelkar says another example is Target, which, with the ‘MyTargetWeekly’ Facebook application, provides its fans a customised shopping experience with in-store deals that fit their wants and needs through a recommendation system that gets ‘smarter’ as they use it.

A recent study of Wal-Mart, Target, and Best Buy Facebook followers by the Internet marketing research company, ComScore, provided measurable proof that the time spent in building a brand presence on Facebook is cyber time well spent. The ComScore study found that consumers who have "liked" the Wal-Mart Facebook page are 40 per cent more likely to make a purchase from Wal-Mart than those who have don't "like" it. The friends of consumers, who have “liked” the Wal-Mart Facebook page, are 25 per cent more likely to make a Wal-Mart purchase, presumably because of the word-of-cyber-mouth influence. Those who "like" Target are 57 per cent more likely to buy from Target than those who don't "like" it. Facebook friends are not as easily influenced about Target, though. Only 8 per cent of Facebook users are more likely to make a Target purchase after they see that their Facebook friend has "liked" Target. Those who “like” Best Buy are 57 per cent more likely to make a Best Buy purchase and 34 per cent of the friends of Best Buy Facebook likers will make a Best Buy purchase as well. A new study also finds that the questions businesses have about how they should be using social media have changed quite a bit over the last year. Initially, it was more about tactics, but now businesses want to know about ROI.

Truly connecting with consumers

A larger brand, just by the sheer number of its customers, has a strong possibility of having many more likes than a smaller brand. We can take the example of Maruti in India, which would have more customers and hence, more likes than say Volkswagen. In order to counterbalance this, the report introduces the concept of “Likes per Million” (LPM), which implies that the number of “likes” is divided by the revenue of the firm to give a more accurate indication of the brand value. For instance, whether you have 100 customers or 1,000, the LPM would provide a level playing field.

Chopra admits that FB is a great opportunity to fulfill multiple business objectives. “The true victory of leveraging social media, such as FB, is to be able to build a positioning like that of Zappos in US, where ‘Talking to Zappos is like talking to a friend who happens to sell shoes’,” Chopra says.

Facebook had 845 million monthly active users at the end of 2011, far higher than Amazon's 164 million active accounts or the eBay online marketplace's 100 million active users. Despite the huge base, Facebook is primarily a way to connect with friends, and not an online shopper's first destination. Big retailers, including JC Penney, Gap and Nordstrom, had previously set up stores on Facebook but shut them after generating few sales. Here, we cannot miss referring to the new Facebook Timeline, which has pushed brands’ need to actually stop stressing and worrying about fan count but start paying attention to the most important insights statistic – engagement.

Kelkar explains that retailers have to consider the digital platform as “a different way of marketing”. “Instead of thinking about digital as the online channel, marketers should think of it as the way modern consumers seek knowledge about brands and consume them. Thinking one-to-one and thinking mass marketing are fundamentally different. You have to alter your mass market, considering digital to be a powerful paradigm for your brand,” Kelkar says.

“Digital can actually power a lot of one-to-one conversations. Often, I see marketers referring to typical mass marketing paradigms while analysing their digital success. So, a retailer may say they have 5 million or 2 million Facebook fans, but how are they connecting these numbers to advocacy, influence and commerce is the question,” he adds.

According to a study, less than half the percentage of people who “like” a given brand’s Facebook page actually bother to engage with it. However, it is good to note that Facebook users are willing to “like” a brand’s page, which essentially advertises it to their friends, for free.

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