How local businesses can benefit from Facebook

How local businesses can benefit from Facebook

Andreas Kraus
Andreas Kraus
published at April 1, 2019   
updated at March 30, 2022

This article describes a strategy aimed at local businesses with repeatable business potential. This means that you can sell to customers several times a year, month or week. It offers you a cost-effective way to make your already existing customers easily accessible by turning them into fans. Efficiently, without expensive campaigns or similar tricks, which usually give you poor quality leads anyway.

Which makes this strategy one of the most profitable if you want to use Facebook to increase your revenue:

Your existing customers – if used properly – can be your most profitable asset when working with Facebook

Why. Depending on which study you trust, it costs between five and 25 times more to acquire a new customer than to reactivate an existing one. The reasons are obvious: They’ve already built a relationship with you. They trust you and know what you have to offer. They probably even know the most convenient place to park their car when they visit your store.

Neglecting this in your marketing efforts can make the difference between spending 50 euros or 250 to 1,250 euros on Facebook – for exactly the same amount of traffic.

Conversely, of course, this doesn’t mean you should completely stop your new customer acquisition campaigns.

However, provided you focus more on existing customers and thus increase their propensity to buy, the resulting increase in sales will allow you to pursue the “more expensive” ones with more confidence. When you reach the point where you have figured out the right budget allocation for your business, this can become a self-sustaining growth cycle.

The strategy at a glance

  • Convert existing customers into fans of your Facebook page (highly efficient, low-cost method below).
    Increase their purchase frequency by running ad campaigns that target them.
    Reinvest some of the profit you make into attracting new customers.

Yes, you will have to spend some money to make it work …. But not a lot. Really.

If you already have a Facebook page, you’ve probably experienced firsthand that organic posts are ineffective these days. With an average organic reach of two percent, they’re barely reaching enough of your fans to bring anyone into your retail store at all (- assuming you currently have less than 2,000 people following you on Facebook).

One thing you need to spend some money on is promoting posts to reach your fans. Another is turning your existing customers into fans in the first place. But there’s a proven and cost-effective way to do that.

How to efficiently turn customers into fans

Let’s call it an “in-store like campaign”: every month, you host a small giveaway. If you’re a restaurant owner, you could give away a free dinner for two. If you run a shoe store, the winner could get the full amount of their last purchase back. Car dealers can opt for incentives like Amazon gift cards, up to and including discounts on future purchases. It needs to be something attractive so that your customers are motivated to like your Facebook page. Test different incentives!

The only catch is that your customers must leave a “like” on your Facebook page to be entered into the sweepstakes. Ideally, the winner will also be announced on Facebook.

It sounds simple, and it’s probably not that new, but: you can usually generate “likes” this way for as little as four cents per user. And these are not the kind of “likes” that you have to buy for four euros a piece via Like campaigns and come from people who will most likely never visit your business. Our method is all about proven customers.

In the 4 Cents Per Fan example, our client increased the effectiveness of this approach by:

  • Handing out a flyer after each purchase and verbally educating customers about the sweepstakes and what they needed to do to enter. (The flyer included three-step instructions and a short link to the Facebook page).
  • A bowl into which customers could drop a slip of paper with their name. Not only does this provide obvious proof that other people have already entered the draw, but it also increases the subjectively perceived chance of winning, provided the bowl is not yet completely full. Therefore, it is better to get a large bowl.

Within two weeks, our customer (a shoe retailer) collected over 150 new page fans this way. If you run this campaign for a year, you could end up with more than 3,000 “likes” from existing customers on your site – which you can then activate via ads for around 30 euros. And in the process, every user sees said ad at least twice.

Organic reach is effectively dead and regular Like campaigns are even more inefficient for local businesses than ever before. However, with the methods described above, you can still reap some handsome profits.

Make your advertising pay off

Think about it: to reach the same 3,000 people twice with a postcard mailing, you’d probably have to spend ten times what Facebook costs you. Considering that, spending money on Facebook may not look too cruel after all. After all, the chances of not making a return on such a small investment tend toward zero.

Especially if you know at least a little bit about how to create an effective ad campaign.

If you’re not quite comfortable with that yet, there’s really no better recommendation than to go back to the basics of classic direct response advertising.

David Ogilvy, who created what was at one point the largest advertising agency in the world, once called direct response advertising his secret weapon. A good read to familiarize yourself with direct response principles is “Scientific Advertising” by Claude Hopkins.

Although it was written in 1923, many of the world’s biggest marketers claim that the book was one of the central building blocks of their success. David Ogilvy even went so far as to say:

“Nobody should be allowed to have anything to do with advertising until he has read this book seven times. It changed the course of my life.”

Highly recommended! Facebook is inefficient until you can leverage your best audience, which is your existing customers. So build your fan base. And advertising is usually inefficient unless it is based on direct response principles. Familiarizing yourself with them will be a hugely profitable investment of your time.

If you want to find out how we can help your sites get more cost-effective traffic, contact us.


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