Increase Sales, Word-Of-Mouth Marketing and Customer Loyalty with Facebook

Hereâ€™s some exciting news.

Companies that use the popular social-media site Facebook and its fan page module to market themselves to customers can increase sales, word-of-mouth marketing and customer loyalty significantly among a subset of their customers.

Rice University’s Jones Graduate School of Business in Houston, Texas, did some interesting research regarding the success of using Facebook as a marketing tool. Hereâ€™s a brief summary of their findings.Â Read the Harvard Business Review article or our 60 second summary of the research here:

Researchers set up one companyâ€™s Facebook page and measured the effect on customer behavior. The company was Dessert Gallery (DG), a popular Houston-based bakery and cafÃ© chain. They launched the Dessert Gallery Facebook page and invited everyone on the mailing list to become a fan.

The bottom line for marketers:

1) Facebook fan pages offer an effective and low-cost way of social-media marketing.

The study, based on surveys of more than 1,700 respondents over a three-month period, found that compared with typical Dessert Gallery customers, the company’s Facebook fans:

Â· Â Â Â Â Made 36 percent more visits to DG’s stores each month.

Â· Â Â Â Â Spent 45 percent more of their eating-out dollars at DG.

Â· Â Â Â Â Spent 33 percent more at DG’s stores.

Â· Â Â Â Â Had 14 percent higher emotional attachment to the DG brand.

Â· Â Â Â Â Had 41 percent greater psychological loyalty toward DG.

2) Use Facebook with other types of marketing.

Caution should be used in interpreting the study’s results. The fact that only about 5 percent of the firm’s 13,000 customers became Facebook fans within three months indicates that Facebook fan pages may work best as niche marketing programs targeted to customers who regularly use Facebook. Social-media marketing must be employed judiciously with other types of marketing programs.

3) Facebook marketing programs may be especially effective for iconic brands, which appear to attract a higher percentage of their customer base as Facebook fans. Only 283 (or 2.1%) of the customers on DGâ€™s mailing list became fans within three months. This narrow appeal is not unique to DGâ€™s customers. In an analysis of 50 Zagat-rated Houston restaurants, Facebook pages averaged just 340 fans despite the fact that most of the businesses had tens of thousands of customers.

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