Clara Shih, chief executive officer of Hearsay Labs and author of The Facebook Era (and a contributing writer for CRM magazine), delivered the morning keynote at The Conference Board’s Social Media Seminars. Her presentation, “The Facebook Era: Transforming Customers and Employees into Partners,” discussed how social media has transformed the World Wide Web of information into the World Wide Web of people — a “revolution,” not evolution, as Jonathan Spector, chief executive officer of The Conference Board, argued, in the way businesses and consumers will interact.

Shih, who worked at Salesforce.com for three years and developed FaceForce, an application that integrated Facebook contacts into Salesforce.com, said her experience with social media started in May 2007 in a noodle shop in Hong Kong. Her avid use of Facebook, she says, was so effective that some of the people she was communicating with didn’t even know she had left the United States. Facebook, she said, was like her “personal CRM,” a way to manage her personal and professional life.

The moment she really knew the power of Facebook, however, was when, sitting in the same noodle shop, she overheard two people — who, she describes were of the wrong demographic, in the wrong country – talking about the social network. For Shih, this was the moment that proved the site had far-reaching potential beyond the American-college-kids it was initially built for.

Recent tallies show that Facebook has over 300 million active members logging in over 6 billion minutes a day on the site. Moreover, Shih added, over 1 million developers from 180 countries are building businesses on the Facebook ecosystem. The site has, for many youths, replaced even traditional” communications channels like email.

Facebook, Shih noted, is not the only social network that connects people, nor is it the first. What did made Facebook successful, she said, is the fact that it wasn’t based on the idea of connecting strangers or creating a virtual community. Rather, Facebook is an extension of our “real world” relationships: it connects us with people we’ve met in real life, whether it’s a family member, or someone we met in school or at work. 

Interestingly, Facebook is perhaps most effective in its ability to connect us with those we are not as close to in the real world — those “weak-tie” relationships that, without Facebook, may have been lost altogether. And yet, having these relationships are no less valuable as people do value the bond of having gone “way back” with someone even if it was on the periphery. In addition, Shih also brought up the notion of “transitive trust,” whereby trust is extended to individuals with whom you know indirectly based on the connections you have in common (i.e., If A trusts B, and B trusts C, then A trusts C).

Connecting us to people with whom we have even a “kernel of trust” allows us to create our own World Wide Web of people, which can then help us parse through the world of too much information.  For instance, with the integration of Citysearch and Facebook, users can see reviews written by their Facebook friends, rather than having to decipher whether a random review is actually legitimate.

Does Facebook matter for B2B?

When faced with that question, Shih can’t help but point out that “corporations don’t make decisions, people do.” When you think about it like that, it makes sense that people want to interact with people and Facebook helps to humanize the business relationship. There’s a psychological bond that gets created, Shih said, when you open up your Facebook world and essentially let your guard down. At the same time, social networks like LinkedIn also provide information that may help you steer clear of individuals that may hinder your sale, like a technician who is skilled in your competitor’s software. Regardless of how you use your relationships, the belief is that individuals no longer have to be strangers forced together – social networks enable users to find a common ground. Cold calling, Shih said, may never have to happen again if you look for the people you have in common and, instead, start off strong with a warm introduction.

For consumers, Facebook and Twitter, and other social networks, are the ultimate opt-in marketing channels — if and when you’re tired of hearing from a company, just stop following them. For marketers, Facebook enables what Shih referred to as hypertargeting to find the “who” based on consumer profile data. In effect, marketers can minimize wasted ads spent on uninterested viewers and tap into the latent interest of a potential customer. According to Shih, click-through-rates on Facebook Fan Pages are actually upwards of 9 to 10 percent (considerably higher than banner ads on the site), which makes sense given the fact that most become your “fan” because they like you and are interested in your offers.

“Winning someone over matters a lot more than it used to,” Shih said. “It’s not just that person, but that person and their friends.” For that reason, Shih pointed to a new metric to measure consumer worth: social customer lifetime value. Regardless of how much or how often that customer spends, there are other factors that may increase their “worth” to a company:

• word-of-mouth referrals;
• provide customer support; and
• contribute ideas that translate into sales.

At the conclusion of her presentation, Shih highlighted 5 do-as-soon-as-you-get-back-to-the-office tips for attendees:

• Check your privacy settings and make sure each piece of information about you is available the way you want it.
• Find out about the size of your audience on Facebook.
• Develop a corporate social media policy just as you would office etiquette.
• Constantly test and iterate.
• Listen to your customers.