Many companies that use Facebook and its 'Fan Page' module to market themselves are significantly increasing sales, word-of-mouth, and customer loyalty among a subset of their customers, according to research from Rice University's Jones Graduate School of Business, featured in the March 2010 issue of the Harvard Business Review.
Research for the article, entitled 'How Effective is Facebook Marketing?', was conducted by Utpal Dholakia (associate professor of management at Rice University's Jones Graduate School of Business) and Emily Durham (a Jones School alumna and founder of Restaurant Connections, a Houston‐based restaurant consultancy).
Dholakia and Durham surveyed customers of the Houston-based cafe chain, Dessert Gallery (DG), which did not have a Facebook presence before the study began.
The study, which was 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 were significantly more loyal. For example:
- They made 36% more visits to DG's stores each month;
- They spent 45% more of their eating-out budget at DG;
- They spent 33% more at DG's stores;
- They had a 14% greater emotional attachment to the DG brand;
- They had 41% more psychological loyalty toward DG.
According to Dholakia, the results suggest that Facebook fan pages can offer a potentially effective and low-cost channel for social-media marketing. "But we must be cautious in interpreting the study's results," Dholakia noted. "The fact that only about 5% of the firm's 13,000 customers became Facebook fans within three months also suggests that fan pages may actually work best for niche marketing programmes aimed at customers who regularly use Facebook."
Dholakia concluded that marketing programmes based on fan pages published through social media platforms such as Facebook may be especially effective for iconic brands, which are likely to attract a higher percentage of the existing customer base as fans.