Is Social Media an Effective Business Tool?

By | April 21, 2010 at 4:59 am

Interesting case study from Harvard Business Review of the impact of a Facebook page on a bakery’s sales.

The growth of Social Media sites over the past couple of years has been colossal. People now share details about their lives through online sites; updating statuses, tweeting, sharing photos and catching up with friends they haven’t seen for years. But can Social Media offer businesses another method of connecting with consumers?

The Bakery…

A recent study conducted by the Harvard Business Review (HBR) has looked into the correlation between a company Facebook fan page and consumer behaviour. In order to test this theory they sent up a company Facebook page for a Houston based bakery and café – Dessert Gallery.

To begin with 13,270 Dessert Gallery mailing list customers were emailed to gather market research such as store evaluations and data on shopping behaviour; a total of 689 people responded. The Facebook page was then launched and the mailing list customers were asked to join.

During the next three months, the team at Dessert Gallery kept the Facebook group up-to-date with pictures, news, promotions and staff bios. HBR then resurveyed customers and received 1,067 responses from Dessert Gallery Facebook fans, Facebook users who did not become fans, and customers not on Facebook.

This data was analyzed next to the data received from the first email. The results showed that the Facebook page has changed customer’s behaviour for the better. Those who had replied to both the original email and had become fans were now Dessert Gallery’s best customers.

The Results…

Although they spent the same amount of money per visit, they were visiting the café 20% more frequently than non-fans. Furthermore they generated more positive word of mouth than non-fans and were more likely to recommend Dessert Gallery to their friends. Also, they had the highest Net Promoter Score of 75, compared to 53 for Facebook users who were not fans and 66 for customers not on Facebook.

The overall conclusion from this experiment suggests that Social Media, in this case Facebook, can have a positive affect on customer behaviour and may go some way to eliminate the ‘out of sight, out of mind’ effect. Company pages on Facebook for example, provide businesses with a free marketing tool that connects with their customers every time they logon to the social networking site.

As HBR rightly point out though, the results “suggest intriguing possible correlations rather than definitive causalities” – other factors, apart from the company page, could have an effect on customer behaviour. Also there is no way of knowing 100% if the company page made the customers affiliate with the café more or merely encouraged it.

Overall the experiment delivered mixed results for marketers: only 283 (2.1%) of the customers on the mailing list became fans during the three months that the experiment was running. This by no means equates to a successful marketing plan but it does indicate that Social Media can be a useful additional to an effective marketing strategy.

Further Information:

For further information on this experiment, please visit http://bit.ly/cNMEje

Image Credits: Benstein

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  • James Tucker

    This is a great case study. There are a number of bakeries that have been able to build communities – another one is Brasserie Bread in Sydney, Australia which has used Twitter very successfully.

  • Anonymous

    Not sure that these stats are valid – indeed this is ' intriguing possible correlations rather than definitive causalities'. It's easy to “prove” that social media is good if that's what you want to prove