Using Facebook Credits for Loyalty Programs and Beyond

social media viewpointsAt the Facebook f8 conference earlier this year, founder and CEO Mark Zuckerberg unveiled Open Graph as “the most transformative thing we’ve ever done for the web” and with that announcement, the disparate strands of the world wide web became more tightly woven.

At the time, and to my surprise, mention of Facebook Credits was minimal at best—but as more information becomes available, it’s my prediction that Facebook Credits will be the NEXT major step Facebook takes toward unifying the online experience from simple, social interactions to true social commerce (or when tied to Facebook commerce, labeled as fCommerce).

Before we dive into where I see that going, here’s a quick recap of what Facebook Open Graph is and how it lays the foundation for Facebook Credits to revolutionize the online experience for users and marketers alike.

An Open Graph Recap

The Open Graph protocol enables any web page to become a rich object in a social graph. A website owner can add a few lines of code to connect his or her site to Facebook, so what a user does off Facebook provides Facebook behavioral data about that user. At its simplest form is the Facebook Like button that has made its way onto websites of all types and sizes.

For example, if a Facebook user visits IMDB.com (one of the more than 1 million partner websites utilizing the Open Graph protocol) and Likes the Mad Men TV show, this interaction would immediately update the user’s Facebook profile with additional psychographic data on his likes and interests.

When the same user is logged into Facebook, that updated psychographic profile data becomes very beneficial for marketers. During the fourth season of Mad Men, Unilever created a series of six retro commercials to be aired during the show. Unilever can now leverage that Like on IMDB to create a very targeted ad campaign on Facebook. This is why Facebook Ads can be highly effective as they target both demographic and psychographic data.

Facebook has created a platform that allows sites to share information about users in order to tailor offers, features and services to each person’s interests—even if that individual has never visited the site before.

But the use of Open Graph gets even more interesting.

When that user visits another Open Graph partner site such as Amazon.com, Amazon knows the user likes Mad Men based on what he did on IMDB and can now showcase books, music and other products such as the Mad Men soundtrack. With over 1,000,000 sites currently incorporating Open Graph, Facebook becomes the hub of an amazing amount of data and provides websites the ability to truly personalize the social commerce experience to each individual visitor if the site integrates with Facebook.

Enter Facebook Credits

For those not familiar with Facebook Credits, they are a virtual currency you can use to buy virtual goods in over 100 games and applications on the Facebook platform such as Farmville with approximately 54,000,000 monthly active users and Mafia Wars with over 22,000,000 monthly active users.

But based on my prediction, Facebook Credits will no longer just be for games but also for actual real-world transactions!

As Casey Hibbard pointed out in her article entitled Cold Stone Transforms the Ice Cream Social With Facebook, companies are finding creative ways to leverage virtual gifts to engage with fans. Even though Cold Stone Creamery used a different payment processing system, the concept is the same and the results were amazing with 66,000 new fans and $10,000 in incremental sales.

It’s clear that people are comfortable with virtual goods, but to take this to the next level, Facebook Credits will need to translate into real-world products or services.

Today, the Facebook Open Graph protocol comes with 8 social plugins to simplify the integration for website owners to leverage Open Graph. One not in the suite YET is ecommerce Social Plugin—also known as Facebook Credits.

This is where the future takes hold and how I can see this exploding into a completely personalized and comprehensive social commerce experience, powered by Facebook, driving a plethora of data back to Facebook and into the hands of marketers (which of course drives more revenue to Facebook).

According to Amy Porterfield’s article entitled 3 Studies That Show Facebook’s Marketing Potential, 35% of ecommerce companies had already implemented the Facebook Like social plugin indicating the Open Graph protocol has been rapidly adopted by many businesses such as Levi’s Facebook Friends Store, and demonstrating the potential for rapid penetration of other similar Facebook programs such as Facebook Credits.

Reflecting back to the previously mentioned user’s experience on Amazon, the Buy Now button next to that Mad Men soundtrack becomes Visa, Amex, PayPal, and oh, Facebook Credits. In theory, a user could complete a transaction on these sites using Facebook Credits.

Now of course, for every transaction you make, Facebook is making 30% of that sale AND collecting an amazing amount of data on the user. Facebook and partner sites know you like certain things but if you BUY things that support those interests, Facebook now knows you REALLY like those products. This changes everything! Facebook Ads would now have another level of targeting such as behavioral ads based off prior transactions.

Move Over, Visa Rewards

The Internet is becoming more saturated and consumers are going to get even more impatient. Facebook Open Graph websites today can personalize the experience for the user based on his Facebook profile. However, businesses are going to need loyalty and incentive offers to guarantee return visits to the site.

If I’m an active user on your site, give me some recognition. I’ll take Facebook Credits as a reward for things I do on your site or even in your brick-and-mortar store. I can then use those credits to process transactions both on- and offline.

Today, I use my Visa card and collect points based on how much I spend and can use those points to order “free” products. I continue to use my Visa rewards card instead of a competing credit card to make a purchase because of this incentive to earn products or services. Grocery stores also have loyalty programs that encourage repeat purchases because the more I shop, the more rewards I’ll receive when I use my loyalty card.

What would happen if one card provided both loyalty and the ability to complete transactions and had the huge base of users like Facebook does?

For example, if I accepted Facebook Credits on my website or in my store and it “cost” the customer 100 Facebook Credits to purchase the item, I would get 70 credits paid and Facebook would take the other 30 credits as their fee. This is similar to how Apple.com takes a percentage of revenue with their paid apps and other credit card companies charge merchants transaction fees. Definitely Facebook’s 30% is quite a bit more aggressive. The fee Facebook charges is definitely one area that would need to be analyzed before this could become widely adopted.

Now, what if the 100 Facebook Credits the consumer used were earned credits from activities such as commenting on websites, Liking products and other behaviors? No money changes hands but activity takes place and the user is rewarded with Facebook Credits to make the transaction possible—activity that further enhances the website’s brand and improves advertising targeting.

Paid in Data

Ultimately Facebook becomes the new payment processor + loyalty program of the future and no other current service comes close to competing.

The behavioral data that’s collected through the implementation of Open Graph and the ultimate penetration of ecommerce is priceless from a marketing perspective and would likely help businesses significantly increase transactions and revenue as the targeting of consumers would be spot-on.

With virtual gifts and games expected to top $6 billion by 2013, the move to secure online credits for those games is a smart bet on Facebook’s part, especially because not everyone uses PayPal or credit cards online. With the real-world purchased cards, those people will now have access to virtual Facebook products.

To make this happen:

  • Facebook will launch a new social plugin (ecommerce).
  • Companies will integrate the Facebook Connect ecommerce program into their websites and start leveraging Facebook Credits as their new loyalty program, as well as provide an end-to-end commerce platform.
  • Facebook supports real-world transactions connecting well over 500 million users to the consumption of pretty much anything. Facebook credits currently cost $5.00 for 50 credits, $10.00 for 100 credits and so forth, and can now even be purchased at 7-Eleven, over 20,000 CoinStar machines, Wal-Mart, Best Buy, and as of this week, my grocery store, to name a few.
  • Credits become an alternate form of currency on both transaction-based sites and brick-and-mortar stores.

Today you can use Facebook Credits to buy a virtual rack of lamb, and if my prediction comes true, you’ll soon use your Facebook Credits card to purchase a real rack of lamb from your local supermarket.

Facebook credits can be used anywhere on Facebook where the credits are already accepted, such as within Farmville and to buy virtual gifts which can be sent to other Facebook users. Tomorrow you may be able to use Facebook Credits to purchase real-world products and services.

How Facebook integrates Facebook Credits into more than just gaming is of great interest. It was the many conversations at the f8 conference with product managers that inspired my vision for an all-encompassing web commerce experience with Facebook as the common thread.

Jay Baer, author of The Now Revolution, states that “Facebook wants to be the plumbing of the Internet—indispensable and everywhere. Credits are their gateway to being relevant in three dimensions. People often cite that Facebook would be the third-largest country in the world, based on its user base. So, for them to create their own currency shouldn’t be a surprise. If Credits get even a minor toehold as a payment mechanism, the opportunity for Facebook to weave itself even tighter into the fabric of day-to-day life will get a huge boost.”

Conclusion

This is the future of social commerce! A place to bring social interaction and consumer spending together to breach the “walls” of the Internet. Get yourself ready and start thinking about how you’re engaging with customers today. If you want to take a break, go and experiment with how Facebook Credits work. That way, when my prediction comes true, you’ll be ready.

Sorry Visa, but your slogan “It’s everywhere you want to be” just might become the new tagline for Facebook Credits.

What do you think? Do you feel Facebook Credits could become the next transformative step Facebook takes toward unifying the online experience from simple, social interactions to true social commerce? Leave your comments in the box below.

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About the Author, Jay Feitlinger

Jay Feitlinger is founder of StringCan Interactive, a strategic online marketing and social media agency, and co-founder of ShopTab on Facebook. Other posts by »




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  • http://www.colemanmg.com Antonio Coleman

    Jay..Facebook is all over the place these days..this is my first time hearing about the credits..I don’t really be on there that must to understand..but thanks for given me an front row seat on how the credits work.

    “Black Seo Guy “Signing Off”

  • http://www.stringcaninteractive.com Jay Feitlinger

    Yes, Facebook has a lot going on these days but I guess that can be expected with last I heard over 580 million users. Sure no problem on front row seats. Popcorn included.

  • Paul

    Thanks for that information Jay. Wow, I knew there was a lot going on behind the scenes at Facebook, but this new virtual credits and buying power credits is a wild new concept. I have never gotten into any of the game games and credits, but I guess I better understand how the virtual world is changing so that I can make sure my business does not get left in the dust. Thanks! Paul Cole at http://www.thepondwarehouse.com

  • http://terrycrosbyblog.com/ Terry Crosby

    Finally, a prediction post that actually contains a prediction. I completely agree! When you really think about it the 30% Facebook earns is well worth the data received. This will take customer service to the next level. This is so exciting.

  • Mark

    Right on–great insight and thinking here, Jay.

    You know that old story about boiling frogs, right? How they won’t notice the water temperature changing until it’s too late and they’re in boiling water?

    Facebook is kinda like that and we’re the frogs. In 5 years, Facebook will be that absolute center of our social and commerce experience on the internet and we’ll never quite realize how it happened.

    Insights like yours will give clues to the digital archeologists of the future that we sorta saw it coming.

  • http://cindyking.biz/ Cindy King

    Boiling frogs? I don’t know about not noticing the change in water temperature, but I do notice the other changes. :)

  • http://www.stringcaninteractive.com Jay Feitlinger

    Thanks Paul. Just thinking that way is a great start so don’t worry about the dust.

  • http://www.stringcaninteractive.com Jay Feitlinger

    Thanks Terry – now let’s see if it comes true. I feel its better to put yourself out there with bold ideas and if it comes true then great! Completely agree this will take customer service to a completely different level.

  • http://www.stringcaninteractive.com Jay Feitlinger

    Love it – boiling frogs! Glad I can help. Stay tuned as lots more to come.

  • http://www.LiveTotallyHealthy.com Reggie

    Great article Jay! It only makes sense that Facebook would take Facebook Credits as far as they can. And it also makes sense for merchants to embrace the whole concept. Thanks for the insight. Reginald at http://www.LiveTotallyHealthy.com

  • http://www.stringcaninteractive.com Jay Feitlinger

    Reggie, love the comment. Those merchants that can get past the negative press around Facebook (aka privacy, etc.) and can start at least dipping their toe into social commerce will be the ones that stay ahead of the competition and truly engage with their customers. Social commerce is not a when (because it is already here) it is now just about “how” to best embrace it!

  • http://mazakaro.com Mazakaro

    Some of communication company gives free load to their subscriber through Facebook

  • http://mazakaro.com Mazakaro

    Some of the communication company give free load to their subscriber through facebook

  • Michael D Decker

    Social Media works because it gives the power to the people… we’re in the honeymoon stage right now because that power has remained with the people. This is a seismic shift.

    Will Big Brother FB use its vast reserves of personal data and cash to make this world a better place? Or will they use it to broker favors to the highest bidder — ultimately aiding multinational conglomerates in putting small, earth friendly business out of business?

    Hate to be a downer guys — but we have pay it forward… Peace on earth!

  • noblinkmedia

    This idea is not far fetched. However, I was wondering about a comment in the article. It said, “what if the 100 Facebook Credits the consumer used were earned credits from activities such as commenting on websites, Liking products and other behaviors?”

    Right now, Facebook users Like products based on what they get from the owner of the Fan Page. For instance, a coupon, information, or entertainment but all directly related to what the company actually does. But, based on the above comment, by using Facebook Credits to “reward” a Like response, wouldn’t that diminish the value of the data. Wouldn’t that be equivalent to “buying” a response with a currency that can later be used somewhere else? In essence, I can go to a bunch of Pages, Like stuff I don’t want just to get FB Credits and then go buy what I really want.

    Does that make sense?

  • http://www.stringcaninteractive.com Jay Feitlinger

    Great point and with all loyalty programs there is always the room for abuse especially one as innovative as this. This and a few other details would need to be worked out before the idea would be accepted. One solution could be that activities such as simply commenting, sharing, etc. would ONLY generate Facebook credits for that specific site and or network. Therefore, you would only benefit by engaging with that one business so it would reduce the abuse unless you really wanted that product or service.

  • http://www.stringcaninteractive.com Jay Feitlinger

    Michael, that is fair and not a downer. Always good to hear other viewpoints and appreciate you taking the time to comment.

  • noblinkmedia

    Your idea is well taken. This could be a way to minimize abuse while still attracting true interest.

  • noblinkmedia

    Your idea is well taken. This could be a way to minimize abuse while still attracting true interest.

  • http://www.mobilecubix.com iPhone Application Developer

    Marketing and promotion are vital for any business, regardless of the industry. Without them, reaching prospects and building a successful business are block.

  • http://www.jaavedkhatree.com.au Jaaved Khatree

    The potential here is so huge, it’s scary and amazing at the same time. Thanks for the very detailed article – some very interesting ideas and explanation of social commerce and its role in the future. Will be following you on Twitter too. Cheers from Australia.

  • http://www.stringcaninteractive.com Jay Feitlinger

    Hi Jaaved, yes I agree on the “scary and amazing,” comment. While writing the article I found my head spinning with thoughts on both sides. Very excited to see what comes of 2011.

  • http://www.irisemedia.com iRISEmedia
  • Terrahk

    This is an incredibly insightful article. Thanks for sharing your future predictions with us. I’m going to go play with FB credits now and get a head start on this for my clients. This will surely knock their socks off. ~Terrah kocher
    Marketing Consultant
    TKPR & Markeitng
    http://www.terrahkocher.com
    @terrahk

  • http://www.stringcaninteractive.com Jay Feitlinger

    Where do you think Facebook will be at this in number of members point next year? Winner gets 100 Facebook Credits ;-)

  • http://www.stringcaninteractive.com Jay Feitlinger

    Thanks Terrah – very smart move on getting ready for this. We took the same attitude a few months ago and my accountant loves how my team has been “expensing” their Facebook Credits. I tell her its for client research but unfortunately she is friends with some of our team members and the Farmville Status updates are getting us into trouble. :-) Let me know what you come up with.

  • http://www.irisemedia.com iRISEmedia

    Well, it seems like Facebook can do anything, so maybe next month? Just 5 years ago it was a basic social networking website run by a 20 year old nobody. We know that because we unsuccessfully tried to sell him internet marketing services back in the day.

    If we had to take a serious guess, Zuck will probably hit this number before the end of next year.

  • Chetanchawla

    IMHO one thing to focus on in the case of any form of “currency” is its valuation/exchange rate, this in turn depends on what is backing it? This I wager will become a huge factor in the scalability of FB’s ecommerce platform. The leap from being a medium of exchange in online games to one in transactions offline is huge. Only if FB credits ends up bridging this barrier will this take place, not a given by any means. As we’ve seen over the last 15 years, being a dominant player online is not a stable position, how much value would you assign to currency backed by such a player? Super insightful post, still racking my brain on this one, hope to learn more from you in the future. Will follow you on twitter, Best @ChetanChawla

  • http://www.stringcaninteractive.com Jay Feitlinger

    Right on – and I was thinking about that issue when I was writing the post. Over 70% of Facebook users today are outside the U.S. so currency & translations would need to be part of this fCommerce Social Plugin. Because Facebook is the largest platform today that has users from all over the world it has the greatest potential to make this happen but you do bring up good points and it would be one of many items that need to be resolved before launched.

  • http://www.hanifinloyalty.com/ billhanifin

    The power of engagement is FB credits and they will surely be a valued currency in near future. I do think that a 30% cut for FB to process will be tested quickly. With merchants fighting banks over interchange and just last week winning reduction of debit swipe fees to a range of $.07-.12 per transaction, there seems little chance that the 30% transaction fee will be allowed to survive broader market adoption. If FB keeps the platform open and provides tools for interaction and engagement they will win even bigger than they have to date. Only greed, i.e. the fee mentioned, would be a potential obstacle to achieving that goal.

  • http://www.madmagz.com/ Youssef Rahoui

    Really great post, thanks!

  • http://www.stringcaninteractive.com Jay Feitlinger

    Bill good points. Agree the 30% is too high; however, I would be willing to pay a premium for this service if FB provided some additional consumer insights. The only challenge I have today is not gaining the data on “likes” on my and clients websites. I can see those people I am friends with on Facebook when they “like” an object but the other anonymous users (e.g. and XXX number of people like this) is the demographic and psychographic data I would love to get my hands on. I see great potential to truly engage with prospective customers by understanding their wants and needs. If FB was willing to provide additional customer information on what the FB members are doing “and soon purchasing” on my website then a higher share of revenue would be of greater interest.

  • http://www.stringcaninteractive.com Jay Feitlinger

    Thanks Youssef!

  • Jim Bunch

    Hi Jay,

    Thanks for giving us a peak into the future, I can see the plus and the minus of facebook currency.

    This is a really exciting concept from a business standpoint as it makes facebook ads and experiences more targeted and customized for businesses and allows us to know consumers at the level of their “buying habits” vs just their “browsing habits”. This will save businesses billions in advertising (yeah!).

    On the flip side…it could become a problem for many consumers who are unable or unaware of their own spending habits.

    In our coaching programs, we often ask clients (aka Players) to see their financials so we can help them create wealth. What we have noticed in reviewing thousands of their financials is many people who have racked up credit card debt.

    The main thing we hear is “i didn’t realize how much i was spending”. They basically had no association to what they were spending at the point of sale b/c it didn’t seem real and it didn’t have an immediate consequence to spending it. After all, if you have 30 days to pay it off….that’s 2 paychecks for most employees, right?. But that rarely happens.

    When currency moves away from the instant consequences of handing over cash (dollar bills/coins,debit cards) and toward virtual currency with delayed consequences (poker chips, gift cards, credits like facebook, etc) the consumers brains often don’t register the value the same so the spending often becomes excessive.

    This will for sure be an exciting time and hopefully for many it will become an awakening time.

    Thanks again for the article.

    Jim Bunch
    Founder, http://www.TheUltimateGameofLife.com

  • Jim Bunch

    Hi Jay,

    Thanks for giving us a peak into the future, I can see the plus and the minus of facebook currency.

    This is a really exciting concept from a business standpoint as it makes facebook ads and experiences more targeted and customized for businesses and allows us to know consumers at the level of their “buying habits” vs just their “browsing habits”. This will save businesses billions in advertising (yeah!).

    On the flip side…it could become a problem for many consumers who are unable or unaware of their own spending habits.

    In our coaching programs, we often ask clients (aka Players) to see their financials so we can help them create wealth. What we have noticed in reviewing thousands of their financials is many people who have racked up credit card debt.

    The main thing we hear is “i didn’t realize how much i was spending”. They basically had no association to what they were spending at the point of sale b/c it didn’t seem real and it didn’t have an immediate consequence to spending it. After all, if you have 30 days to pay it off….that’s 2 paychecks for most employees, right?. But that rarely happens.

    When currency moves away from the instant consequences of handing over cash (dollar bills/coins,debit cards) and toward virtual currency with delayed consequences (poker chips, gift cards, credits like facebook, etc) the consumers brains often don’t register the value the same so the spending often becomes excessive.

    This will for sure be an exciting time and hopefully for many it will become an awakening time.

    Thanks again for the article.

    Jim Bunch
    Founder, http://www.TheUltimateGameofLife.com

  • http://www.wickedinnovations.com/ Jeorge Peter

    I think so, facebook credits will probably used often this weekend for its the holidays

  • Turkishgeeky

    İt is a nice article. We might be using Facebook credits insted of cash in the future. However, it seems to be far from now since ecommerce must be adopted by vast masjority of business including giant machinery companies, transportation companies so that it should be approved as worldwide money. But, we are probably not using credit cards in the future but paypal and Facebook credits

  • http://www.ignitesocialmedia.com Jim Tobin Ignite Social Media

    Jay,

    Interesting article. Two points:
    1) 30% isn’t even remotely realistic if Facebook wants to be a payer platform. Visa gets 1.5% (roughly) and Amex gets (3.5%) roughly. Others are coming along with smaller (not larger) percentages. But even if they took 1%, it could be worth billions to them. This is true even if they continue to take 30% for things like in-game purchases of virtual goods, as the margins there are nearly 100%.
    2) There’s precedent for this. A Chinese social networks currency is now so ubiquitous that it’s accepted by many people for offline, real world transactions, like haircuts. So even the Internet isn’t the limit.

    Thanks for the post.

    ~Jim Tobin
    President
    Ignite Social Media

  • http://www.stringcaninteractive.com Jay Feitlinger

    Jim, completely agree on the transaction fees. With mobile headed into this year as the new “wallet” social commerce is going to get very interesting.

  • http://rosetwyford.com Rosaleen or Rose to my Buddies

    Well Mark certainly knows what he’s doing, He will eventually be the only guy to go to for search. products, and everything else. You have to admire him. Thanks for the great post facebook for sure is getting to be the biggest brother as seen by the stats of 2010 in search perfomance.

  • Ideamichael

    I worked at a company which had “qy points” rewarding the posting of valuable messages as well as rewarding people for rating messages. Funded by advertisers, users spent their points on airline miles, real-world products, and charities.

    Do you think Facebook might move in this direction? It seems related to your key points…

  • http://soldiersheartranch.blogspot.com/ Debra LeCompte

    Well, now isn’t this interesting, … I have noticed I have 25 credits, I never play any of those games, actually find them annoying, … Just wonder how I got mine?

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