Social Media is Losing Relevance for Local Businesses

Facebook for Business Not Going Well

This blog post is provocatively titled, but it’s not meant to be sensational. Efforts to use Facebook and other social media to promote your small business may be misplaced, and you may be better off investing your time and money elsewhere. In this post, I want to explain what’s happening and suggest what you should be doing instead as a small business owner.

Facebook recently announced that starting in mid-January they will reduce the reach of posts from their businesses to their fans that they deem “overly promotional.” Fast Company also published an article talking about new research that suggests that businesses that make Facebook and Twitter the center of their customer engagement efforts may be wasting their time. They cite a recent Forrester Research study that showed top brands on Facebook and Twitter are reaching only 2% of their fans, and only 0.07% of followers actually interact with each post. Even on our Fivestars Facebook Page, we’re really only reaching about 6% of our fans on average with each post.

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In 2012, I wrote a post on my personal blog about how I felt that social media has let down local businesses. It was a controversial and bold statement at the time, when everyone was talking about social. I still stand by the statement but modify it if a local business owner is savvy enough to use some of the targeted paid advertising options that Facebook has introduced. Facebook is rapidly becoming the best direct marketing channel on the planet, which is great for direct marketers like myself, but for most busy small business owners, this isn’t what they signed up for.

So what should small business owners do if they’re not reaching people with their social media posts? Here’s what I recommend:

  1. Build your own customer database (names, phone numbers, emails).
  2. The easiest way is to build your database is with a digital rewards program.
  3. ​If you pick the right platform, you’ll be able to reach over 90% of your “fans”.

With Fivestars, over 90% of your customers will see your promotional messages, and 10% of them will buy after seeing the message. It’s a great alternative for any business trying to engage their customers. Once customers sign up for Fivestars, AutoPilot kicks in, and we can double the rate that your customers come back in.

But what about Facebook? Should small business owners abandon it completely as this author advocates? In terms of social media, the posts that are still getting reach on Facebook are ones that are generated by your own users. If you can get your customers to “check-in” or to tag your business on Facebook, those posts still can generate a ton of reach and word of mouth for your business, but if you still want to use your Page to reach your fans, you’ll have to pay to get the reach and engagement you want.

Social media is indeed losing relevance to local business owners, but customer engagement is not. Build your own customer database, so you can keep engaging your customers after they leave your store.


Chris Luo
About the Author
Chris Luo

Chris Luo is the SVP of Marketing at Fivestars. Previously he was the Global Head of SMB Marketing at Facebook. He enjoys running marathons and figuring out ways to get more Twitter followers than his twin brother.

1 Comment

  • Chris: this is a great post. As an experienced direct marketer and media rep since the ’90’s I have always encouraged the smb’s and hotels I have worked with to build their own database of customers, and understand the lifetime value of a customer to their business. Dun & Bradstreet commissioned a survey many years ago about small business owners (under 25 employees) and their perceptions of the importance of marketing programs to develop and maintain their business. Over 90% responded that they knew marketing was important to their business -but that they felt they did not have either the time or resources to focus on the task.
    Many small businesses (think B&B’s, independent restaurants, auto repair) have had great success using their customer email data with simple programs like ConstantContact, MailChimp, etc. But, with so many review sites and other social media channels businesses need more multi-faceted and capable systems to deal with the new digital fragmentation.
    Hotel owners (and some franchise restaurants) these days often change brands or go independent due to (what they perceive to be) more lucrative franchise agreements and reduction in fees.
    In the last 5 -7 years, many of the major hotel chains required new investment in software and hardware upgrades to facilitate hotel operations handled via cloud-based systems. Because most of their customer data is in the cloud and not on their own PCs the customer data is now the property of the brand, and not the hotel owner. Often, these enterprises change brands before compiling their own customer data. Afterwards, they don’t even have access to what used to be their own customer base!
    It appears to me with FiveStars you can stop that from happening and help the business retain control of the customer communications for the business they built. Bravo!

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