Facebook – Fewer Users, Drop in Consumer Satisfaction and Share Price

 

Updated Sept. 13, 2012 

Get out the black balloons for Facebook.

As a new public company, its stock made a bit of a comeback after announcing plans for more mobility to keep users happy. But its stock is still down from its initial public offering.

Facebook’s first quarterly loss wasn’t the reason for its share-price decline.

Its user-rate and consumer satisfaction ratings are dropping, according to two authoritative published reports.

One reason for Facebook’s decline appears to be the popularity of Google’s social network, Google+. (There are other reasons – this business-news portal has been critical of Facebook, but more on that later.)

The two reports show:

• Facebook may be the world’s largest social network, but its number of users dropped in the first half of 2012. About the time of a report (Facebook Falls as Use on Social Site Drops), by Capstone Investments, Facebook’s share price dropped nearly nine percent in two days.
• A report (Facebook down, Google+ up with customers) indicates Facebook’s consumer satisfaction score has dropped this year by eight percent. That’s from a survey of 70,000 consumers by the American Consumer Satisfaction Index and Foresee, an analytics company.

According to a Capstone analyst, Rory Maher, the report on Facebook’s user-decline shows two developments:

• The number of U.S. users declined 1.1 percent.
• Worldwide in Q2, the social network showed little growth or a decrease in 14 countries where it had at least a 50 percent market share.

“This could be an issue for Facebook growth since we estimate that outside of Southeast Asia and some countries in Latin America, most markets are approaching 50 percent penetration,” the report quoted Mr. Maher.

ForeSee says Facebook’s consumer-satisfaction decrease was ostensibly prompted by increasing privacy concerns and dissatisfaction with its Timeline feature.

“Facebook and Google+ are competing on two critical fronts: customer experience and market penetration,” said ForeSee’s President and CEO Larry Freed. “Google+ handily wins the former, and Facebook handily wins the latter, for now.”

The American Customer Satisfaction Index ranked Facebook with a 61 – among the lowest of 230 ranked companies. On the other hand, a news release said Google+ won a 78 score because of its mobile product and sans any advertising.

The average for all social media companies was a 69. Twitter held a 64 and LinkedIn followed at 63. These mediocre scores confirms a warning published in this Biz Coach column: Despite Hoopla over Social Media, Web Searchers Stay Longer.

Not to gloat, but Facebook’s demise is not a surprise – note these Biz Coach columns:

1. Is Facebook Approaching the End of Its Product Life Cycle? Ostensibly, Yes.
2. Aside from Privacy, Security Issues — Facebook is a Threat 2 Ways

Still, some companies can make money via social media, and it teaches businesses valuable lessons in understanding customers.

From the Coach’s Corner, for additional columns about Facebook, see:

Facebook Privacy: Advice for Job Seekers and Employers

8 Tips to Optimize Sales with Social Media, But Beware of a Red Flag

11 Tips to Make Money on Facebook

“Our head of social media is the customer.”

–McDonald’s

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Author Terry Corbell has written innumerable online business-enhancement articles, and is a business-performance consultant and profit professional. Click here to see his management services. For a complimentary chat about your business situation or to schedule him as a speaker, consultant or author, please contact Terry.