Anyone with a brand would be asking this question – what is the ROI on a Facebook fan? Jon Bird from Inside Retail has managed to hunt down an article that gives some insight into this question – The true value of a brand fan.

Anyone in business knows that it’s often easier to retain the customers you have rather than ‘recruit’ new customers to your brand. Tough economic times such as those we are experiencing now, and the level of competition that can be seen to get the almighty consumer dollar, makes this scenario especially true.

With many brands now having Facebook pages for their fans, it is worth asking the question – What is the value of a Facebook fan?

Some interesting revelations emerged via the study Jon Bird came across – ‘The Value of a Facebook Fan: An Empirical Review’, by an organisation in the US called Syncapse

The study (undertaken about a year ago) looked at 20 of the top brands on Facebook in the US. Fans and non-fans were compared on six variables: product spending; loyalty; propensity to recommend; brand affinity; media value; and acquisition cost. The brands studied were skewed towards manufacturers, but did include Victoria’s Secret, Starbucks and McDonald’s. What became apparent was that fans are quantifiably more valuable to businesses across all variables:
• On average, fans spend an additional US$71.84 per year on products compared to those who are not fans (In the case of McDonald’s, fans reported spending US$159.79 more per year).
• Fans are 28 per cent more likely than non-fans to continue using the brand.
• Fans are 41 per cent more likely than non-fans to recommend a ‘liked’ brand to their friends.

So here’s the question for you, have you got your Facebook page set up?

The online tax push by Gerry Harvey (Harvey Norman), and other large Australian retailers such as Myer, David Jones, Target, House, Borders is receiving incredible (and ongoing) backlash from angry consumers. What the retailers are proposing, is for either the local GST to be scrapped on goods sold for less than $1000, or for a similar duty to be applied to goods bought from overseas online sites.

This tax push reveals two key points – the retailers’ lack of understanding of their customers, and their lack of understanding of the power of social media.

The ordinary people on the street (aka the customers) are flocking to Twitter, Facebook and YouTube to express their anger and disgust over the retailers’ proposition. In fact, the retailers’ public push for this online tax appears to have opened a can of worms. While many people are now saying they will no longer buy from these stores (particularly Harvey Norman), it has also provided consumers the chance to air ALL their grievances to do with the big retailers.

Media reports that the retailers are stunned by the reaction from consumers, which is interesting as we all know shoppers love getting a ‘bargain’. And they love the convenience of shopping online. Combine the two and it’s a heady mix. Trying to take this away from them is like taking a lollipop from a child. It’s never going to end well.

Before the advent of social media sites such as Twitter, Facebook, YouTube etc (that allow everyone a say) this proposed online tax would probably have gotten off the ground without a peep to be heard from disgruntled consumers.

However, social media has changed all this, as borne out by the reactions to this proposed campaign.

Following the public outcry, a recent media release from Gerry Harvey reveals he is stepping away from the campaign, saying it was ‘suicidal’ to have been involved. The backlash to him personally and his chain of franchises, Harvey Norman, has been too strong.

The irony in all this is that retailers source cheap goods and labour from overseas (and consumers are aware of this), but do not want consumers to be able to do the same.

A lesson in amongst this entire fracas is that companies need to create sustainable and mutually respectful relationships with their customers.

In the meantime, the retailers have alerted the public as a whole to the advantages of online shopping with overseas companies – wide range, big savings. Welcome to the 21st century!

The polls below tell the story.
Source: Sydney Morning Herald 7 Jan 2011