Rice University Study Shows How Facebook Pages Can Help Local Businesses

Facebook Pages actually can boost sales, a recent study Rice University in Houston, Texas, recently concluded. Fans of these Pages are, overall, more loyal to a business, spend more and are likelier to spread the word. The study on the Houston café chain Dessert Gallery was done by their consultant Emily Durham, founder of Houston-based consultancy Restaurant Connections, and Utpal Dholakia, an associate professor at Rice who studies online marketing.

“In a nut shell: Facebook fans visit more, they spend more during their visit, they have a higher attachment to that brand,” Dholakia tells us.

Dessert Gallery is a Houston-based cafĂ© chain with two locations, that’s been around since 1995; the company’s Facebook Page went up in June of last year and currently counts 654 fans. Dholakia points out that, while there has been a lot of anecdotal evidence as to Facebook’s effects on revenue streams, this study had an element of control, as it looked at Dessert Gallery’s customer feedback before — and then after — the Facebook Page was used as part of the café’s marketing.

Dholakia and Durham surveyed Dessert Gallery’s customers via its email list of about 13,000 in June 2009 before the Facebook Page was up and running, and then surveyed the same list in October, after it had grown to about 14,000. The survey in October was also advertised on Facebook. The initial evaluation queried basic store evaluations and shopping behaviors and received 689 responses; three months later, the second evaluation asked similar questions, but also about the Facebook Page, and received 1,067 responses.

Facebook fans, it turned out, are excellent customers.

According to Dholakia’s research, after three months Dessert Gallery’s Facebook fans: made 36% more visits each month, spent 45% more dining out dollars there, spent 33% more at the café’s locations, had a 14% higher emotional attachment to the brand and had a 41% greater psychological loyalty towards the café. Facebook fans also generated more word-of-mouth marketing than non-Facebook fans.

But, Dholakia points out, there are several reasons why this is the case.

First, customers that became fans of Dessert Gallery’s Page were already more interested in the café to begin with and so the Page became sort of a self-selected pool of hard-core customers. However, once the Page began promoting the café’s specials, this group of customers became even more likely to participate or make purchases. Facebook is an excellent and low-cost niche marketing tool, and should be used in conjunction with other media — not as a substitute for a substantive marketing plan, Dholakia tells us. Note: You can read all about using Pages and other Facebook marketing methods in our Facebook Marketing Bible.

“You’re not going to get every customer to participate on Facebook. A select group of people are going to be influenced by the Facebook marketing you do,” he tells us. “But you can’t rely just on Facebook itself.”

Dholakia said a more advanced statistical analysis of the customer responses is in the works to control for the fact that data was self-reported and should be available within a month.

[Dholakia photo via Rice University Public Affairs]