What Are They REALLY Doing on Facebook and Why Should You Care?


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Businesses typically struggle with new technologies and how to make them work in a business context. They flail about for years in some cases, trying this and that, before they settle on an application that makes sense and may make them some money. This has been the case with virtually every new technology to come along in the past 50 years — possibly the past 1000 years, in fact.

This is exactly what’s happening right now with online social networks. This is a genuine phenomenon that has come out of nowhere and in the past three years has seen sites like MySpace, Facebook and Friendster each attract 60 million users/members or more. As one who is interested in all aspects of consumer behavior and psychology, I find this frankly intriguing and I want to know why. What is it that makes these sites so popular? What do users get from their interaction with them? What role do these kinds of social networks play in their lives?

As with all other concepts in the broad world of customer relationship building, we can’t begin to make use of tools and technologies until we gain a solid understanding of what consumers think and feel about them. As always, the more we know, the better equipped we are to take advantage of the popularity of these sites.

So, what is going on in this online social network world? On the surface it would appear that, for some people at least, sites like Facebook play a role that in the physical world is filled by places that provide opportunities for people to meet and converse with friends and to meet strangers — the so-called “third place” idea that has been popularized by Starbucks.

But, I don’t think it is quite that simple. Clearly, there are differences. We don’t meet face-to-face. They aren’t my “friends” in the conventional definition of the word. We don’t have “real” conversations. Or are they “unreal” only because I have a view that conversation must mean voice communications?

The concept of social networks is not new; it has been studied by sociologists and psychologists since the 1950s. We already know a great deal about the role that social networks play in people’s lives. What we don’t know nearly enough about is how online social networks are different and what these differences mean. Before companies and organizations in general can begin to make use of this phenomenon in their marketing programs or can build them into their customer strategies, there must be a deeper understanding than exists at present.

At this stage in the evolution of online social networks, companies would be well advised to find out how their existing customers are using these sites and what role they serve. Where does Facebook fit in and how do you factor that in as another component of your customer strategy?


  1. Hi Jim

    You are the last person I expected to see talking about social media, but I am pleased that you have. You raise some interesting questions.

    What is social media? Why is it so avidly used by people? What should companies do about it? In short, what works?

    I think most of these questions have already been answered, at least in part; by the many studies available for free on the Internet, by the many excellent blogs on social media and by the slew of new books (which have already been reviewed on Customer Think).

    But it is a mistake to wait too long to see what works. New social media are emerging too fast for that. Instead, what companies need to do is to get cracking with some early experiments with social media, but within a scientific Plan-Do-Check-Act framework. By experimenting in this way, companies will develop new social media capabilities, will gather more insights from talking with customers and will get to see how social media works. This is the perfect starting point from which to look at future social media developments.

    Re-reading your post, I wonder whether you are an old-school Web1.0 type, with your talk of Customer Strategy (something companies traditionally ‘formulated’ and then rolled over customers like a tidal wave), or a Web2.0 type, with their talk of Dynamic Collaborative Strategy (something developed together with customers, that changes as conditions change. What do you think – Old School or New School?.

    Graham Hill
    Independent CRM Consultant
    Interim CRM Manager

    Readability Index: 12

  2. Hi Graham

    I’m not sure why you would be surprised by my commenting on social media as I think you know me well enough to appreciate that I am interested in just about anything that influences consumer psychology and behavior. As mentioned, I am intrigued by the phenomenon and feel compelled to try to understand what is driving it and how business can harness its power.

    You also know that my view of customer strategy in no way implies “rolling over customers”. Customer strategy must be collaborative if customers are to find it relevant and meaningful. But it also means, in my view, that firms must understand the customer and the context and enviroment in which the customer is operating in order to devise a strategy that will indeed be relevant. Today, for some segments, that context involves the use of social media. Different segments will use social media for different purposes and will derive different satisfactions from them. If the firm’s target customers are involved in online social networking, then managers had better understand it and how it is influencing their customers.


  3. Jim

    Thanks for responding. Of course, I do know your very customer-oriented view of customer strategy. That is why you are one always of the few customer strategists always worth listening to. But your post does raise a couple of issues.

    The first of these is the role of emergent customer strategy versus traditional customer strategy. Online social networks (OSN) are growing rapidly. According to a recent Merrill Lynch report on Top Internet Themes for 1H’08, they now account for 8% of Internet traffic and are growing fast. And Facebook’s recent privacy difficulties over Beacon and Scoblegate are just the initial teetering steps as it finds its marketing feet. As a recent Harvard Business Review article by Gavetti & Rivkin on Seek Strategy the Right Way at the Right Time points out, the rapid pace of OSN growth and the large number of unknown unknowns in the market suggest that an emergent, dynamic, real-options based approach to customer strategy, that gets it out into the market for live testing, is better than a traditional, analytical, strategy formulation approach that doesn’t.

    The other issue is the rise of customer to customer (C2C) communications outside the control of business and their customer strategies. Most customer strategies are built on the basis of the business being able to loosely ‘manage’ customers and their behaviour. Obviously, customers are free agents and can pretty much transact how they want, nevertheless, the management illusion persists. OSNs change parts of the marketing mix, mostly in the customer’s favour. Customers can now talk to each other about the strengths and weaknesses of a product. They can warn others if a product really doesn’t do what it says on the tin, or if a company’s customer service stinks. They have much more information than they did in the past. And information drives direct commerce. As the Merrill Lynch report points out, OSNs may soon add C2C eCommerce capabilities so that customers can trade directly with each other, just like eBay or Amazon. Although it is far from redundant, customer strategy without a big socially-networked, B2C2C component is simply incomplete. Maybe even a waste of time.

    OSNs are changing customer strategy forever. The customer isn’t yet in the driving seat. But she is now the back-seat driver. So better pay attention.

    Graham Hill
    Independent CRM Consultant
    Interim CRM Manager

    Gunning Fog Index: 13

  4. Graham

    It does indeed make one think, but possibly in a different direction than we had been discussing. My initial thoughts were related to what role Facebook and other OSN’s are playing in the lives of consumers, who is affected or involved, and what does it all means for how marketers will reach and attract consumers in the future. I believe that the OSN phenomenon is but a part of the sea-change that is going on in the lives of all of us and that it represents one example of the big picture that must be understood if business is to effectively deal with customers.

    Hodgkinson’s article in The Guardian adds further information about the nature of Facebook in particular which will be offputting for some, given its allegedly right-leaning, CIA-connected roots. But for others, possibly for the vast majority of Facebook members/users, this is irrelevant. They are unaware of the politics of the inventors/investors who are behind Facebook. They haven’t noticed that they are being manipulated and happily send personal information to their friends and anyone else who cares to read it. They aren’t overly bothered by the targeted adverts from leading brands that are directed at them.

    I’d suggest that, as a phenomenon that clearly affects millions of people, OSN’s obviously represent something to which businesses and marketers should pay very close attention. But so do other things that are changing in today’s society. Hodgkinson raises some interesting points and questions; some of which were implicit in my original blog.

    Is Facebook a community? For some it undoubtedly is; for others (Hodgkinson included) it clearly is not. This raises the question of what is a community. The answer is that a community may be whatever a consumer decides it is. I’d want to know what role Facebook and other OSN’s play in people’s lives and how central a role is it? Do some use Facebook as their proncipal “community”?

    A second obvious point is that, as with all markets, there are segments within the collectivity of 59 million Facebook users. Marketers will need to know what constitutes these segments and which ones represent viable targets for specific companies and brands.

    This is a phenomenon that is going to occupy the strategic thinkers in many companies for a long time to come. As with most innovations and new technologies, some firms will capitalize on it and others won’t ever come to grips with the potential.

    Jim Barnes

  5. Hi Jim, you are still involved in academic life aren’t you? The massive uptake of these social networking opportunities is a notable phenomenon. Here is Australia, some companies have experienced reduced productivity because employees are online Facebooking. Some have responded by issuing employees with formal warnings; others have responded by allowing employees to feed their online networking habit for up to 30 miniutes per day. This is a complex issue, that deserves a thorough investigation. It’s a PhD topic, my friend, and you are the man to supervise! Cheers, Francis Buttle

  6. Francis

    You are right about the discussion of social networking at work. I blogged about it earlier on Customer Think. Unfortunately, much of the discussion to-date has been started by Internet security companies with an obvious vested interest in generating as much heat about the topic as possible, without shedding much light on it themselves.

    The real discussion about social networking isn’t really about security at all. That is just a sideshow. It is about what sort of social contract companies have with their staff. And how social networking tools can be used to increase productivity. Theory X companies may well choose to treat staff like hired hands and ban them from using social networks. On the other hand, Theory Y companies may well choose to treat staff like, well, people, and allow them to use social networks as they wish. I know which company will most likely have the highest levels of staff innovation, productivity, retention and general business success.

    As you say, the broader discussion around the use of social networks as productivity-enhancing tools is the subject of a PhD. But I just don’t know whether we can afford to wait the three years or more that a PhD takes to find out. Perhaps an analyst’s report based on a meta-analysis of what we already know, would serve the purpose much better.

    Graham Hill
    Independent CRM Consultant
    Interim CRM Manager

    Readability Index: 12

  7. Francis and Graham

    Thanks for adding to the discussion. I believe this is a subject that is entirely deserving of greater study, but I agree with Graham that the kind of research that would be involved in a PhD dissertation would take far too long to contribute now to a better understanding of where social networking fits into the overall marketing or customer-facing world.

    I am currently supervising two graduate students on a smaller project that will be completed in April. We are looking at the role that social networks play in the lives of consumers, building on research in social and consumer psychology, urban sociology, and anthropology that has examined the social significance of objects, places and brands. We’re interested in knowing where Facebook, MySpace and other OSMs fit into the lives of those who use them regularly. I anticipate uncovering some insight into the attraction represented by these virtual spaces. Are they another form of “third place” or are they something completely different? Armed with such an understanding, business may then better know what to do in integrating them into their customer experience strategy.

    I’d welcome your thoughts on things we should be considering.

    Jim Barnes

  8. Jim

    Great to hear that your students are tackling this interesting area.

    Be careful that you don’t replicate the mountain of work already done by groups like the Pew Internet & American Life Project, the Social Computing team at Forrester and Nielsen Buzzmetrics, and individual researchers like Fred Stutzman, Dana Boyd and more recently Grant McCracken.

    What are the subject areas for the research? Have your broken them down into discrete lines of research yet? Have you completed the literature research? Have you developed null hypotheses for testing?

    Please keep us informed by getting the students to blog their findings on CustomerThink.

    Graham Hill
    Independent CRM Consultant
    Interim CRM Manager


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