March 22, 2013

Facebook Likes, Size of Business, Age of Online Customer

I follow nineteen publicly traded retail / catalog / department store / online brands that sell apparel.  Via Quantcast, I can estimate the average age of a website visitor.  Via Facebook, I can quantify the number of likes.  Via the SEC, I can measure annual net sales.

This allows me to develop a relationship between Facebook likes, annual sales, and Quantcast estimates of customer age.

  • Facebook Likes = Constant + (X1) * (Annual Net Sales) + (X2) * (Average Quantcast Age).
This simple relationship accounted for 52% of the variability in the dataset I track.

Here are a few tidbits from the model.
  • Each incremental billion in net sales add 266,000 Facebook likes.
  • Each additional year of average age of customer reduces Facebook likes by 345,000.
  • Both annual sales and likes are statistically significant at a 0.07 level, on just 19 observations.
The age factor is important.  Let's pretend we're analyzing a five billion dollar business.
  • Average Customer Age of 30 = 8.3 million predicted likes.
  • Average Customer Age of 40 = 4.8 million predicted likes.
  • Average Customer Age of 50 = 1.4 million predicted likes.
I get a lot of requests for what I'd call "social media viability".  In other words, the business owner asks if she can grow sales by 10% per year by shifting marketing focus to social media.

I have a simple answer to that question.
  • If your customer is 35 or younger, social media isn't a marketing tactic, it must be part of the fabric of your brand experience.
  • If your customer is 55 or older, social media is meaningless.
I know, the social media elite will reject these findings, citing research articles published in trade journals.

But if you're one of my catalog clients, the findings are relevant.  If you want to grow via social media, it is going to be terribly hard to do so when your customers are acquired via co-ops that spin you 55+ age customers.  And if you do succeed, somehow, in social, your customers will be younger, and will likely reject your catalog.