Reality check: Branded online communities outperform Facebook in consumer buying decisions

Get Satisfaction, a provider of cloud-based online community solutions, just announced the results of a new study that bucks the conventional wisdom that if your prospects are spending time on Facebook, that's where you should build your community.

Not if you want to actually influence buying decisions, according to The Incyte Group which conducted the research for Get Satisfaction. Nearly 2,000 consumers were surveyed in a representative sample for the US market.

This is not good news for Facebook, which is struggling to show marketers a strong ROI on display ads, compared to traditional options like Google. Facebook stock lost about 1/4 of its value since its IPO and then took another big hit after its first earnings report on July 26, due to investor queasiness about slowing revenue growth and business model issues.

The root of Facebook's woes is that the strategy for monetizing the social network requires users to interrupt their socializing to do something completely different -- think about buying something. Google, on the other hand, remains the most popular first stop on a purchasing journey because people go to Google with the intention to learn and buy.

Social media pundits have proclaimed that consumers will shift to checking with their friends on social networks like Facebook. This study gives a reality check. Instead of open social networks, consumers prefer a company-sponsored community. Why? Because they can get more relevant information needed for their purchase decision.

According to the study, 70% of consumers use social networks for, um, social networking. Should anyone be surprised by this? Apparently marketers, because they have poured a lot of money into Facebook because that's where consumers hang out. Unfortunately, only 21% said social networks were their primary destination for purchase decisions, as you can see in this chart.

Source: The Incyte Group

Let's review an example to see if this logic holds together.

Mint.com is a popular online service to help consumers manage their personal finances. Think of it as a lightweight version of Quicken. If someone was looking for a tool for personal finances, how would they go about making a decision?

Well, Mint.com does have a Facebook presence at Facebook.com/mint. Take a look and you'll find 143K "likes" and 2,628 "talking about this," which all looks impressive. You can ask a question in the comments, and Mint.com says "we'll have our MintLife bloggers answer some of them." That's nice, but when I tried to research a question like, "What are the alternatives to Mint.com?" I found it nearly useless. The new improved "timeline" format didn't help, quite the opposite.

But this search is easy on Google, where I quickly found a number of articles, blog posts, forum discussions and, yes, ads -- all which would help me make a decision. And one of those options was a Mint.com branded community hosted by Get Satisfaction.

It seems that Facebook communities are good for building "likes" for brands. In some cases this might reflect real affection, but for most it seems to be a way to get access to deals. Nothing wrong with that, it's worked for Southwest and many other brands. Use Facebook to build engagement and perhaps stimulate some sales with already loyal fans. But search and branded communities are much more effective for consumers when they are in a purchasing process.

So what do consumers want in a branded community. Dale Sakai, Partner, The Incyte Group, says in the paper,

"Consumers are clearly saying that a primary value proposition of a customer community is that it allows them to quickly access information that is relevant and accurate – and they prefer it when that information is provided by other people like them."

Consumers don't want to read brochureware or company propaganda. According to the white paper summarizing the results, good branded customer communities should have these characteristics:

• Designed as a customer engagement community to connect people to people and people to companies
• Brands proactively manage the community and control content
• Supports social sharing between individuals, the company, and advocates
• Trust is based on reputation of the participants, which is measured by the perceived value of their social media content and participation levels

In other words, online communities can pick up a few tricks from Facebook and other popular open networks like Twitter and Pinterest.

The point of all this is not that Facebook should be abandoned. Rather, think of open social networks as just a first step in online social connections between consumers and a brand. The next step, the study concludes, should be a branded customer community. That's where consumers tend to deepen their relationship to become real advocates, and to make informed purchase decisions.

For more information, view the press release or download the white paper (free registration required).