Friday, September 6, 2013

Customer Experience Crisis: Will Facebook's User Experience Be Its Undoing?

This is the final installment of my series on the customer experience crisis among some of today's most popular digital services. The series began with a review of studies on the importance of customer experience and then examined how Groupon and Yelp could and should be doing more to improve customer experience. (No one objected to my criticisms of Groupon, but my Yelp critique generated a few contrary opinions on Twitter.)

Today I will make my riskiest prediction: The world's largest and most popular website, Facebook, is nearing an important inflection point due to growing frustration about its user experience. If consumers do not soon see Facebook demonstrating as much care for users as for advertisers, Facebook's growth could stagnate and reverse. If that seems unlikely, just consider Myspace, which used to rule the social media world. Its leaders could have prevented the shift away from the platform, but once consumers began their migration, Myspace was powerless to recapture the trust and stem the bleeding.

photo credit: aaron_anderer via photopin cc
I know that predicting the demise of Facebook is about as unique as criticizing Miley Cyrus's VMA performance, but if you are a long-time reader of this blog, you may appreciate a shift in my opinion of Facebook's future. I have long criticized those who too-easily predict an exodus after each change of Facebook news feed or stumble on privacy; in fact, some have labeled me a Facebook apologist. Increasingly, however, I detect the seeds of trouble for Facebook, and I wonder if there might soon be some serious new competition for social networking dominance. 

The first piece of evidence is the oft-repeated claim that kids are leaving Facebook. I have my doubts that teens are abandoning the platform to the extent many believe (this will be the subject of my next blog post), but to me the more telling aspect is not the reports themselves but how quickly many want to believe this as gospel.

The eagerness with which the reports of a teen exodus have been welcomed is a situation that should give Facebook's leaders pause. There is a worrisome trend among existing Facebook users who seem hungry for any indication of the social network's decline. Brands can succeed even when large numbers of customers root for them to fail--just look at cable, mobile and airline companies--but those firms are in highly regulated industries with significant barriers to entry while Facebook is not. 

The promised but still largely undelivered new news feed
Facebook is on top now, but there are growing signs of serious discontent, both in terms of trust and user experience. Despite almost constant tinkering with the news feed, most users still complain about seeing stuff they don't want while missing the things they do. In addition, six months after Facebook announced a huge change to its news feed to make it more useful and less cluttered, almost no one I know has this new feature. The promise of a better experience that remains undelivered is doing nothing to improve the social network's reputation among those in the know. 

While improving the news feed is vital , there is no bigger threat to Facebook's user experience than brand advertising and promotion. Everyone complains about it, but more advertising is on its way. Facebook is readying a new video ad product that will autorun (thankfully without sound) inside of users' news feeds. 

photo credit: Lynn Friedman via photopin cc
Brand presence is likely to increase not just because of new ad products but also because of important changes Facebook has made to its promotion guidelines. In a move that will degrade the usability of the news feed and the value of the "like," Facebook now allows brands to run sweepstakes and contests that collect consumers' entries by having them message a page or like or comment on a post. This is not a change demanded by users (because no one signs on to Facebook hoping to see friends desperately trying to win sweepstakes); in the face of declining brand page PTAT (People Talking About This), Facebook has altered its policy to reward brands not for furnishing quality content but for cheap tricks to farm more likes and comments. 

Meanwhile, Facebook is giving little reason for critics of its laborious privacy tools to back off. As the New York Times noted just last week, "Facebook is also doing nothing to simplify its maze of privacy settings... Privacy controls are still buried in at least six different menus. To plunge down the rabbit hole, click on the little lock icon next to your name in the top-left column of your news feed page. You will find privacy settings in the tabs for Privacy, Timeline and Tagging, Blocking, Followers, Apps and Ads."

The declining customer experience on Facebook is not lost on the social network's users as privacy and advertising concerns continue to suppress customer satisfaction with Facebook. The 2013 ForeSee and American Customer Satisfaction Index, much like in prior years, revealed that Facebook has among the lowest customer satisfaction of any company in any industry. Over one in four respondents said advertising on Facebook interferes with their experience on the site, the highest among social networks, and when it comes to users’ confidence that their personal information is protected, Facebook earned scores of four out of 10 or lower at a rate double those of other social networks. Facebook's ACSI rating places it in the company of the lowest-rated firms, including Time Warner Cable, Comcast, United and US Airways.

Could concerns about privacy and advertiser access to data lead consumers to stop tying their web surfing activities to Facebook? As a method for signing into third-party sites, Facebook may still be king but its share is shrinking. In 2011, Gigya found that 62% of users identified Facebook as their preferred identity provider and 27% preferred Yahoo or Google. A year later, 52% preferred Facebook, while the portion choosing Yahoo or Google grew to 41%. 

Do I think that Facebook will fail in the next five years? No, much like email, which at one time was hip and exciting and then became dull but essential, I think Facebook will last. That doesn't mean, however, that Facebook can continue to command a growing share of advertisers dollars' or consumers' time. Trends have been great for Facebook for several years now, but they cannot continue unabated. If data from Nielsen, Pew, Forrester or others begins to validate teen abandonment or growing Facebook fatigue among all users, the party could quickly come to a stop. 

While Facebook deserves to reap the rewards of building and maintaining the most powerful communication platform in human history, there is an alternative for Facebook other than the single-minded reliance on advertising. The Web 1.0 period was not won by companies like Excite and Prodigy that relied primarily on ad revenue; it was won by companies such as Amazon, eBay,, Netflix and others that furnished consumers with services for which they gladly pay. (Google is a notable exception, but it didn't merely trade eyeballs for ads--Google changed the face of advertising via search.)

photo credit: Telstar Logistics
via photopin cc
Even those providing high-volume, high-value online content like the are finding it hard to make a go with just advertising. The New York Times website is already making more money from subscriptions than advertising even though we are in the very early days of online subscriptions becoming a working business model.

Facebook could offer an ad-free subscription option--if every one of Facebook's 1.15 billion active users paid just $6.50 annually, Facebook could exceed the current flow of advertising dollars. Of course, not every user will pay, and Facebook is unlikely to alienate advertisers by offering an ad-free version (but Facebook, if you're listening, you can count on me for $29.95 a year for my ad-free version. You'd make in excess of 400% more revenue from my subscription than from serving ads to me!)

Even better than a subscription model, Facebook could embrace the largely untapped market for value-added services. Facebook made an attempt at this with Facebook Gifts, but while you can still send gift cards to Facebook friends, you no longer can send physical gifts. Some claim physical gifts didn't work because Facebook users don't want to send physical gifts to their virtual friends, but they are incorrect; physical gifts failed on Facebook because consumers found they could get better recommendations from throwing darts at a catalog than from Facebook. Had Facebook shown as much care and interest in helping people to discover truly interesting gifts for friends as they do helping advertisers discover prospects, the gift program could have been a value to users and a revenue driver for Facebook.

photo credit: Shockingly Tasty via photopin cc
This shift away from physical gifts is a lost opportunity for Facebook, and it does not stop there. One only needs to look at the growth of the sharing economy to see that Facebook could be increasing revenue by facilitating the peer-to-peer economy rather than supporting old-fashioned interruption advertising. Facebook led the world into the social era, but now the most interesting business models of the social era are succeeding with little to no support from Facebook. RelayRides, Airbnb, Lending Club and others are growing rapidly by giving consumers new ways to share and collectively consume goods and services, and the fact they can do this without tapping today's most popular social network is another warning sign for the future of Facebook.

Don't get me wrong, advertising has a place on Facebook, but the social network's total reliance on paid media threatens to undermine customer experience, loyalty and usage. I have long predicted that Facebook would be the Amazon of the Web 2.0 era--the company that stands the test of time--but Facebook still has a chance to snatch defeat from the jaws of victory. If it continues to place as much focus on increasing advertising revenues as on how to improve the customer experience, Facebook's future status update could be more "feeling sad " than "feeling happy ."

What do you think? Is Facebook secure? Do you and the people you know have concerns about Facebook's user experience, advertising or privacy? Your input would be much appreciated!

1 comment:

Anonymous said...

Excellent analysis. Facebook at once created and filled a void, which is amazing. We know that simply pushing your agenda (your idea of the experience) because you're huge isn't sustainable.
It's time for Facebook to start leading by listening and testing some of the other opportunities you mention. Has anyone tried managing their friend lists lately? It's now a nightmare. They might has well have just said, "we don't care about making this easy."
Nice job. Thanks.