Companies that use Facebook and Facebook fan pages to market their company to potential clients can increase sales, word-of-mouth marketing and client loyalty significantly among a subset of their clients, according to new research from Rice University’s Jones Graduate School of Business. The research is featured in the March 2010 issue of the Harvard Business Review.

Research for the article, “How Effective is Facebook Marketing?”, was conducted by Utpal Dholakia, associate professor of management at Rice University’s Jones Graduate School of Business, and Emily Durham, a Jones School alumna and founder of Restaurant Connections, a Houston-based restaurant consultancy.

Dholakia and Durham asked customers of Dessert Gallery (DG), a favorite Houston-based café chain. Prior to the study, Dessert Gallery did not have a Facebook presence.

The research, based on surveys of more than 1,700 respondents over a 3 month period, found that compared with typical Dessert Gallery customers, the Facebook fans:

· Spent 33 percent more at DG’s stores.
· Had 14 percent higher emotional attachment to the DG brand.
· Had 41 percent greater psychological loyalty toward DG.
· Made 36 percent more visits to DG’s stores each month.
· Spent 45 percent more of their eating-out dollars at DG.

According to Dholakia, the results of the study indicate that Facebook fan pages provide an effective and low-cost way of social media marketing.

Dholakia said Facebook marketing programs may be specially good for iconic brands, which seem to attract a higher percentage of their customer base as Facebook fans.

Paul Dholakia is a William S. Mackey, Jr. and Verne F. Simons Distinguished Associate Professor of Management at the Jesse H. Jones Graduate School of Management, Rice University in Houston, Texas. He has a master’s degree in psychology, and a Ph.D. in marketing from the University of Michigan, a master’s degree in operations research from the Ohio State University, and a bachelor’s degree in industrial engineering from the University of Bombay. His research interests lie in studying motivational psychology of consumers and online marketing issues such as virtual communities and online auctions. He also studies relational aspects of consumer behavior. He has published in a number of marketing and management journals, and consults with firms in financial services, energy, health-care and other industries.