Customer Acquisition: The Coming Facebook Gold Rush


I recently discovered an awesome new blog – For Entrepreneurs, written by David Skok at Matrix Partners. One of the best posts I have read in some time is David’s post titled, Startup Killer: The Cost of Customer Acquisition.

The (in)ability to acquire customers is something I have personal experience with and have resolved to maniacally focus on in future endeavors.

Lately I have become fascinated with Facebook as a platform for startup development (and go-to-market strategies) precisely for the reasons outlined by David. IMO Facebook (in its current iteration) offers the cheapest and most efficient way to acquire customers, anywhere.

Much has been written recently about the increasing importance of Facebook Fan Pages. However, a recent post on Alley Insider made me consider Fan Pages in a new light: think of them as “landing pages 2.0.”

As a developer and entrepreneur, one is always thinking of new ways to increase “conversions” i.e., when someone lands on your website, how do you maximize the likelihood they will fill in your form fields and sign-up? What steps can be taken to reduce transactional friction? Getting someone to convert on the web is a difficult process; average web conversion rates are only around 1%!

Now consider Facebook Fan Pages.

You see the phrase “Become a Fan!” for a favorite brand, non-profit or cool sounding new service either as an advertisement within Facebook, or as a button somewhere on the web. You click “Become a Fan!” once. Bingo! Conversion!

Effectively what has happened is that Facebook has reduced landing page friction to almost zero. Not only that, but Facebook has even vetted user identity for you – it’s a real-person behind that conversion. Even more amazing is this new ‘single-click conversion’ gives you more access to data on that individual than even the best profile form template you could find, or create. Couple all this with the ability to reverse engineer targeting of Pages through Facebook’s own ad and feed environments and you are talking about the ULTIMATE customer acquisition tool.

This line of thinking leads me to wonder why well known, awesome VCs like Matrix are not (more) actively investing in Facebook-centric businesses and applications? Of course, a business should not be solely reliant on Facebook. In fact, many companies like are now trying to move out of the FB platform shadow, but nevertheless, a good business should be able to use a platform to initially capture customers while scaling a business model capable of standing on its own.

The way I see it, customer acquisition on Facebook is a coming gold rush in 2010 for sharp entrepreneurs.

If you don’t subscribe to David’s For Entrepreneurs, you can do so here.

Update: Great thoughts here by Nick O’Neil on Facebook Pages as next-generation landing pages.


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