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Facebook's recent privacy issues haven't put a dent in the social network's traffic or user levels, but if a new study from ForeSee Results and the American Customer Satisfaction Index has anything to do with it, that might be changing. The study found the social network ranked close to cable companies and airlines in terms of customer satisfaction. And according to Foresee, customer satisfaction is a pretty clear indicator of future corporate success.

Despite ongoing privacy issues, Facebook keeps steamrolling past growth figures. More people than ever log onto the site every day.  Facebook is set to announce reaching 500 million users this week alone. And the site's U.S. users climbed to 141.6 million last month, up 84% from a year earlier, according to comScore. But according to Foresee, the social network scored in the bottom 5% of a customer-satisfaction survey. 

Facebook scored 64 out of a 100-point scale, according to a report based on the American Customer Satisfaction Index, which was developed by the University of Michigan's business school. That ranks Facebook close to the IRS, airlines and cable companies in terms of customer satisfaction.

Facebook is also doing a lot worse than other digital brands, Google scored an 80 and Yahoo received a 76. Wikipedia.org ranked the highest among social-media companies, with a score of 77. YouTube got a rating of 73. Only MySpace scored worse than Facebook, with a 63.

Interestingly, privacy wasn't people's main concern with using Facebook. More at issue is Facebook's changing consumer policy, which apparently has disrupted users. Larry Freed, CEO of ForeSee Results, says that Facebook has undeniable growth and success over the last year. However, "low satisfaction means you’re starting to put that growth at risk.”

Foresee uses the ASCI to assess future growth at companies, and the results come from interviews with approximately 70,000 customers annually. According to the study: 

"Companies that did well in the ACSI saw their stocks increase by 75% on average in 2009. In contrast, stock prices for those with declining ACSI scores rose 22% over the same period, which is slightly less than the 26% gain for the S&P 500.

Based on surveys of more than 23,000 visitors to the top 100 e-retail websites, our research shows that when compared to a less satisfied visitor, a highly satisfied visitor is 73% more likely to purchase online, 47% more likely to purchase offline, 53% more likely to remain loyal, 72% more likely to recommend, and 66% more likely to be committed to the brand. This finding makes intuitive sense for many business leaders, but the ACSI is able to quantify the impact of a satisfied online shopper on a retailer’s overall business operations."

Foresee says a big issue at Facebook has been advertising. According to Freed:

”Their monetization strategy is not meeting the expectations of consumers."

That could be because users who grew accustomed to free site unencumbered by advertising are not liking the way social sites are starting to populate with different advertising products. According to the study:

"Commercialization of social media sites may be impacting satisfaction. The strategy of starting out as a free service with no advertising or revenue source is an effective way to build traffic and loyalty, as is evidenced across all of these sites. However, starting out that way also trained customers to expect an experience on these sites that is relatively unencumbered by advertising and commercialization."

And equally troubling is the rankings that digital sites received for product purchases. According to Foresee, only 12% of Facebook users who responded to the survey had purchased products or services recommended to them on the site. The numbers were worse for MySpace (8%) and Wikipedia (10%), and not great for YouTube either (14%).

YouTube and Wkipediea may not be known for product recomendations, but both MySpace and Facebook are trying to position themselves as great places for marketers to spread the word about their products.

As long as Facebook continues to add users, consumer satisfaction may not be the biggest issue. However, Facebook can't forget the number of formerly popular social networks that no longer exist.

Facebook spokesman Jonny Thaw tells The Wall Street Journal:

“Building a simple, useful service is the best way to earn and sustain the trust people put in us. That’s why we spend so much of our time and energy focused on improving the products we offer and introducing new ones. We look forward to the next survey.”

For now, there's one major benefit that Facebook can fall back on to counter these results: None of its competitors are scoring any better.

Meghan Keane

Published 20 July, 2010 by Meghan Keane

Based in New York, Meghan Keane is US Editor of Econsultancy. You can follow her on Twitter: @keanesian.

721 more posts from this author

Comments (5)

John Courtney

John Courtney, CEO and Executive Chairman at Pay on Results SEO, Content Marketing, Social Media, Digital PR, PPC & CRO from Strategy Digital

Getting customers and keeping customers are different things. When Facebook stops signing up so many new customers they will have to increase their customer service in order to keep the customers they have. It's the secret to long term profitability.

over 6 years ago

Michael Harris

Michael Harris, Freelance consultant at Private company

This article, and John's comments wrongly imply that Facebook has any form of tangible customer service - hence their terrible showing in the ASCI survey.

If you're a business or Government trying to leverage the platform to connect with customers, it's impossible to speak to a human or get any form of meaningful, non-canned and helpful response through any of their electronic channels.

They want to be the #1 platform for connecting people - and yet when business willing to invest the time to do so can't get meaningful and timely assistance, and are lumbered with a terrible platform for admin, measurement and management... well you get the idea.

over 6 years ago

Meghan Keane

Meghan Keane, US Editor at Econsultancy

Hi Michael, I didn't write about customer service in the post. I wrote about customer satisfaction. Not sure where the confusion in the post is. Best, Meghan

over 6 years ago

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Judy Rai

The whole privacy incident has really taken a hit on Facebook. People still look at Facebook with lot of caution as they still think facebook might be doing something which will leak their vital information. 

And now I think facebook needs to start thinking on user satisfaction side...

over 6 years ago

Michael Harris

Michael Harris, Freelance consultant at Private company

No confusion Meghan, it's as simple as Service = Satisfaction. These two issues are joined at the hip.

The the lack of customer service/openness/responsiveness/engagement leads to an inability to satisfy customers, ergo the poor showing in the ASCI results and consumer opinion.

over 6 years ago

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