Monday, April 27, 2009

Social Networks: Acquisition Or Retention Tools For Marketers?

image Presentations from Facebook and MySpace at the Marketing 2.0 conference caused something of a stir - first of all for getting both on stage at the same time, and second as Damien Vincent from Facebook, having only just joined them from MySpace, seemed to momentarily forget who he was working for.

But the content of their presentations was interesting, if only to see how both organizations approach selling their marketing potential to brands. Of particular interest was a set of statistics shown by Olivier Hascot from MySpace, based on surveys in the UK. They found that:

  • 40% of Brand Friends remembered the advertiser when shopping either online or on the high street
  • 22% of Brand Friends said that they spend more money with the advertiser

These could be impressive statistics for MySpace and would no doubt interest any advertise looking to raise both brand awareness and customer spend in the current economic climate. But I’d like to understand a little bit more about them. I’d like to know if the suggested cause and effect (that being a Brand Friend on MySpace led to greater brand awareness and higher customer spend) is actually the case, or if something else is at play.

As acquisition statistics, these do look impressive. If, as a brand, I could get 40% higher brand awareness among non-customers, and 22% higher spend from new customers by being friends with them on MySpace, there would be no question that this would be a good idea. However, I suspect this is not what’s happening.

Consider a brand advocate or even just a regular purchaser of your brand’s products. I imagine that it is these people who are likely to befriend you on MySpace. It is also these people who are likely to both have your brand at the forefront of their mind when out shopping, and spend more with you as a result. So rather than these two outcomes being a result of a consumer being your Brand Friend on MySpace, it could be that all three outcomes (higher brand awareness, higher spend and being a friend) are a result of them being a regular customer or even a brand advocate.

If this is the case, then it could be that social networks, at least the Fans and Pages bits of them, are strategies for retention of existing customers rather than acquisition of new ones. Would you become a Friend or a Fan of Nutella if you didn’t like that particular chocolate spread? Probably not. You are much more likely to join them in this way if you are already a customer, and probably one that is willing to attach themselves (and their social network profile) to your brand.

So from this perspective, activities in social networks are probably best focused on customer retention. Letting your most loyal or enthusiastic customers become your friend so that you keep your brand at the forefront of their mind and they ultimately spend more with you.

Of course, there may be some brands where social networks are a perfect hunting ground for acquisition targets, but I would expect this to be restricted to more aspirational brands or products. Whilst I might not become a fan of Nutella if I wasn’t already a customer, there is a high chance I might become one of the new Peugeot 308 before I have actually bought one. But this is because I am willing to attach the aspiration towards this brand to my profile. This is probably unlikely with most products.

Source: FreshNetworks.