Social Media Has Failed Local Businesses
When I was at Facebook, I created and promoted a step-by-step formula for small and medium businesses to achieve success. We called the system Facebook’s 4 Steps to Business Success. They are to: 1) Build your Facebook Page, 2) Connect to fans with Ads, 3) Engage your fans with quality content, and 4) Influence friends of fans with Sponsored Stories. I was and remain convinced that if any business can follow these four steps that they will find measurable success with Facebook. Companies like Tough Mudder and Hubspot follow these steps and have built huge fan bases on Facebook and more importantly, have driven substantial revenue directly from Facebook.
However, following these steps is not easy for many businesses, especially ones that do not have full-time marketing managers. For example, with step #2, you have to be comfortable with multi-variate testing of different combinations of images, ad text and targeting to find the most efficient way to acquire new fans. In step #3, you have to carefully test strategies to drive engagement and play around with images, video, questions, and fill-in-the-blank status updates. Finally, in step 4, you have to understand the difference between a Like Sponsored Story, Page Post Like Sponsored Story, and a Check-in Sponsored Story and understand that some of these Sponsored Stories may have limited reach, while others will not.
I did not write Twitter’s prescriptive steps to success, but I imagine that their steps look similar to the 4 steps outlined above. You still have to figure out how to scale your audience, engage them, and turn that engagement into influence and word-of-mouth. It’s not at all straight forward to do this well and requires time and significant investment.
Living in San Francisco, I interact with many successful local businesses. They include places like il Cane Rosso, a super popular restaurant in the Ferry Building that always has lines at lunch-time, or Jasmine Garden, my favorite Vietnamese restaurant in the Castro. I have gotten to know their owners and the people they put in charge of social media, which is often one of the wait staff or the owner on a part-time basis. I love these businesses, and my wife and I would be devastated if they shut down. However, I don’t think I can reasonably expect them to master social media. il Cane Rosso has probably hundreds of people coming through its restaurant on a weekly basis, but it still only has 795 fans on Facebook. When they post, their posts are probably seen by 100+ people. Even if 5% of people take action based on each post, the impact is minimal. Jasmine Garden doesn’t even have a Facebook Page, and I can’t imagine explaining to the owners, who are immigrants from Vietnam, how to implement the 4 Steps.
But the good news is I actually don’t think my local business owner friends need to spend a lot of time mastering the 4 Steps. Instead I recommend that they invest in doing what they do best—constantly improving their product and service experience. I love how we’ve gotten to know the managers and waitresses at il Cane Rosso by name and how they always treat us well and give us the best tips on the menu. I love how Jasmine Garden’s owners always give us hugs when we walk in and how they even thought to get us a Christmas present one year. But most importantly, I love how both of these restaurants have some of the best food in their category in San Francisco. This is why I keep going back.
But does this mean they shouldn’t invest in social media at all? After all, social media can drive word-of-mouth at scale, something that has previously been a huge challenge for local businesses. But the challenge has been how to turn the asset of loyal foot traffic that is built on a quality product and service experience into a online or social media connection that can be amplified. Wouldn’t it be so awesome if we could turn a satisfied customer coming into the restaurant into a social media connection automatically?
This is exactly what we are trying to accomplish at FiveStars. By enrolling customers that come in the door into a loyalty program that is activated with a simple phone number of email address, we are giving local businesses what they really need—a way to turn existing relationships into social media connections. Once local businesses have the connection, they can keep doing what they do best—delivering great product and service experiences—and then FiveStars does the rest, including driving repeat purchases, customer referrals, and social media amplification.
I am hoping other technology companies in the local space will help local businesses focus on their comparative advantage—delivering great products, services, and experiences—instead of asking them to master new forms of social media marketing or to take on unprofitable trial customers via a deep discount coupon. Social media companies and daily deal companies have potentially failed local businesses by taking local businesses away from their core competitive advantage and the basic foundation of their business—delighting their customers. I foresee a future where innovation in local will empower local businesses to get back this basic tenet.