You see an ad for Old Navy, Gap, or Banana Republic that tells you if you become a fan of theirs on Facebook, you'll receive 10% off of every order you ever make at any of the three stores for the rest of your life. The catch? To get the discount, you have to tell the store the email address that you use to log into Facebook every time you purchase a product, whether that's in the store and online.
In exchange for being a fan of one of the above-mentioned stores, you get a tab on your Facebook profile that only you can see. It includes clothing recommendations for you from Old Navy, Gap, and/or Banana Republic, and the recommendations are constantly updating based on the season and your previous purchases. You can even buy clothing right from the Facebook tab and receive your discount. Once in a while the special tab even includes discounts on items that you might like.
So, would you sign up for a service like this? I sure would. And I'd tell all of my friends about it, too.
You and the Gap (who owns Old Navy and Banana Republic) benefit in many ways from this arrangement:
- You receive 10% off every single order for life. You also receive customized discounts once and a while that the general public doesn't receive.
- You receive non-invasive recommendations on products based on the time of year and your past purchases. Nobody is forcing you to click on the special tab.
- The more you buy, the less you have to search for products because the Gap will start suggesting more relevant products over time.
- The Gap earns customer loyalty for life. I'm specifically using the Gap for this example because it can offer customers products for a very long time -- from teenagers who shop at Old Navy through adults that buy professional clothing at Banana Republic.
- Note that Facebook can benefit from this situation, too, by taking a small percentage of each purchase made, but that's not the focus of this post.
How much does it cost for the Gap to make a sale? Think of all of the advertising dollars that the company spends. Under this situation, the Gap would be more than willing to give up 10% of its revenues on each sale because it doesn't need to advertise as much to you, and it has developed a relationship with you. The lifetime value of you as a customer is worth much more than 10% of your purchase dollars.
This is the Future
The future of marketing is database-driven customization. It's opt-in and it's easily accessible. Sure, the Gap could create a similar program on its own website, but not many people go to the Gap's website everyday. On the flip side, a heck of a lot of people go to Facebook everyday -- many college students practically live there. The Gap is meeting its customers in a place that they want to be, and it's a win-win situation for both parties.
Add This to Your To-Do List
Admittedly, the scenario that I've described here is complex to duplicate in other industries, and it requires well-written algorithms and a big budget to set up. But, the lessons learned from my hypothetical example don't have to cost a lot of money to start:
- Focus on customer relationships and their lifetime value first and focus less on short-term sales.
- Meet customers where they hang out and in a way that isn't invasive.
- Give people a reason to talk about you. Discounts are one of the easiest ways to get people talking.
- Customize your marketing messages and make them relevant to your target audience as much as possible.
I'd love to hear your thoughts on my Facebook scenario.
There's never a lack of ideas.
PS Thanks to Northwestern University's Masters Degree in Integrated Marketing Communications Program, of which I am a current student, for inspiring this post.