No Nonsense Commentary and Advice for Entrepreneurs

Should your business sell on Facebook?

By on April 10, 2011 in Business Smarts

Are you feeling the pressure to put your business on Facebook? It’s not surprising because lots of small businesses (and large) are rushing to plant a stake in Facebook territory, hoping to take advantage of referrals by people who “friend" their company. It makes sense, because we all know that referrals bring us the best and most loyal customers, those  lifelong relationships. Some marketers are claiming that Facebook will become the next great e-commerce platform.   But before you set up your retail business on Facebook and expect an onslaught of sales, you need to consider whether it will really help you or not.

Forrester Research recently published a report entitled, “Will Facebook Ever Drive eCommerce,” in which they assert that it’s not going to happen. “You go to Facebook to find other people, not to find a product,” claims Sucharita Mulpuru of Forrester. And her report bears that out. About two dozen technology vendors, retailers, and marketers reported few benefits from Facebook, claiming a mere 1%  click-through rate and 2% conversion rate. That’s not very good, considering that if you do direct email marketing, your click-through rate goes up to 11 percent with a 4 percent conversion rate. The problem is that most people use Facebook to maintain relationships rather than shop. That’s an unfortunate but real fact. When Facebook introduced its shopping carts, early adopters rushed to set up their businesses only to discover that unless they get a lot of traffic to their page, people just aren’t interested. After all, who wants to shop at a place that isn’t popular.
 
But there’s another problem. Back in 2009, Morgan Stewart conducted research on consumers’ attitudes toward marketing and marketing in social media sites like Facebook. Surprise! He found that 70% of consumers, even if they declared themselves fans of certain companies, did not want those companies marketing to them. And 40% of those fans didn’t think that marketers should even be welcome on social networking sites!
 
Stewart suggests that entrepreneurs be careful when marketing through Facebook.
 
  1. Don’t act like a marketer – your customers won’t trust you.
  2. Find ways to align with your fans, not sell to them. For example, Steward tells of a “More Than Footprints” campaign conducted by TripAdvisor, the online travel company. The company         distributed $1 million to five nonprofits according to how members voted. The net result for TripAdvisor: 500,000 new members.
  3. Direct consumers to other channels to see your marketing messages. Keep marketing out of Facebook.
     

Just because it’s quick, easy, and cheap to set up a retail site on Facebook doesn’t mean it’s the right thing for your business and your customers. Do your own market research before you make a big mistake.

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Author: Kathleen Allen

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