Rice University Says Small Businesses Should Be On Facebook

You’ve read all the hype about becoming active within social websites, but you’re still skeptical about the actual effectiveness of social marketing. According to a study that will be published in the March 2010 edition of the Harvard Business Review, social website marketing could benefit your small business.

The study was sponsored by the Jones Graduate School of Business at Rice University. What they found was that creating a fan page on Facebook can increase sales, improve branding and customer loyalty, as well as improve word-of-mouth marketing.

The study centered on Dessert Gallery, a bakery and café chain based in Houston, Texas. Prior to the study, the business did not have a Facebook presence. The Rice University researchers asked regular customers of Dessert Gallery to become Facebook fans of the restaurant, and out of about 13,000 regular customers, 1,700 did become fans.

During the three-month period Dessert Gallery jumped into the Facebook frenzy, updating its fan page several times each week. The owners included photos of baked goods and offered promotions to the fans.

The results of the Facebook study were interesting and may surprise you. Those who did become Facebook fans made 36 percent more visits to the restaurant each month and spent 45 percent more of their eating-out budget at Dessert Gallery. Facebook fans also had 41 percent higher loyalty toward the Dessert Gallery brand, as well as a 14 percent higher emotional attachment.

What this means is that your small business can gain greater customer loyalty and increase business through Facebook. However, you as a small business owner must realize that your Facebook fans are a particular niche, and they will most likely represent a small percentage of your overall customer base. The Rice University study emphasizes that only 5 percent of about 13,000 total customer base joined as Facebook fans.

The bottom line is that joining Facebook can lead to an effective and low-cost marketing method. Social media can help improve customer loyalty, increase business, and help spread word of mouth – all for virtually zero dollars. If you were previously unconvinced about the effectiveness of Facebook, now you have graduate study proof that a free Facebook page can work for you.