After the financial crisis of 2008 and the subsequent economic impact, many firms took seriously finding alternatives to cut spending and increase sales. We are witnessing the period of massive “government budget cuts”, where every single save/unspent dime is very important. Private companies are following down this road too. One of the new “tools” of cost saving and business promoting is the use of social media. In particular Facebook, the leading site in web 2.0 social media, can become a very useful tool for businesses struggling to keep their levels of income high and lower costs. In mid-2009, Anderson Analytics, a research institute based in the United States, concluded after a two months research survey that “60% of the Internet population uses social networks and social media sites such as Facebook, MySpace, and Twitter” (Evans 2010, 2). And with the rapidly growing internet population around the world this is an opportunity the business world can’t miss. It looks like “virtual” is becoming as important as “real” for businesses.
So, what is social media? As researchers Kaplan and Haenlein define it, social media is “media for social interaction, using highly accessible and scalable communication techniques. Social media is the use of web-based and mobile technologies to turn communication into interactive dialogue” (2010, 15). It is a powerful way to directly connect businesses with customers (users) in a public environment and, at the same time, a personal basis. Managers understood that a direct communication with customers is essential for sale increase and customer satisfaction (Gottschalk 2005). Facebook is just the perfect example of this new business-customer relationship. With more than 500 million users, more than the population of the United States, Canada and Mexico combined, it is a public (virtual) sphere of worldwide potential customers that a company better not ignore.
But how does Facebook practically help your business?
1. Cost-effective marketing.
The cost of “traditional marketing” by other media means (TV, radio, newspaper, billboard, etc.) is quite high compared to that of social media. In fact, it ranges from 2 to 15 times more (Evans 2010). But the only honest comparison can be made with a TV ad, since both social media and TV marketing includes the combination of audio & video messaging to the potential customers. Which televised event compared to Facebook has the possibility to deliver your message to hundreds of millions? When you answer that question, please do so with: How much does your company cost a TV ad in such an event? A Facebook ad will cost you on a click-per-person basis. You will pay only for those customers who show interest in what you are advertising. This way you can be sure that all money spent has generated interest among customers. No money spent in vain!
2. Low advertising rates.
Not only you pay for every person who clicks on your ad, but the cost for each click is $1.25. And that is the same even if you sell a product worth hundreds of dollars. That should be a convincing argument for marketing cost effectiveness.
3. New product development.
Facebook makes new product development easier and less costly. The “classical” way of generating a new product comes through a combination of customer surveying, feedback collection, market trends and innovations. Managers are eager to conduct pre-launching tests for their new products and are very careful in designing the product according to the target group requirements / desires (Gottschalk 2005). They contract survey agencies to conduct massive customer surveys and focus groups. All the data gathered should be analyzed and categorized in order to look and find patterns. At the end that is both time and cost consuming for a company. Will the product be well accepted by customers? Will they like it? With Facebook you have the possibility to organize survey campaigns and likewise focus group activities at no additional cost. You have just to be a user to do that. Furthermore, you can publicize certain characteristics of the product you are developing and collect feedback / suggestions. This will allow the company to make any adjustments before launching. And the cost of all this is? Free. You even get “fans” during this process.
4. Continuous customer contact.
A company can have its own Facebook page for free. In it, you as a manager can monitor any feedback given from users on a particular product or anything related to your business. There is no need in conducting customer surveys in order to assess customer satisfaction. This is a good way to assess customer satisfaction for free. Your company even gets free publicity as your “fans” show on their “wall” to all their “friends” any related interaction with your company.
This article was a short introduction to some ways how business can use Facebook and benefit from it.
This article submitted by a guest author who has been studying social media.
List of References
Evans, Dave. 2010. Social media marketing: The next generation of business engagement. London, Sybex Publishing.
Gottschalk, Petter. 2005. E-Business Strategy, Sourcing and Governance. New York. Idea Group Publishing.
Kaplan, Andreas. & Haenlein, Michael. 2010. “Users of the world, unite! The challenges and opportunities of Social Media”, Business Horizons, 53 (1): 59–68.