Two Companies Take Different Tacks to Find New Revenue

In their respective markets, Facebook and Constant Contact have achieved superior financial performance. Facebook has become the largest social network on the planet and its valuation along with its user base is unmatched by current social media competitors. Very few people are unaware of Facebook as a brand and as a service. Constant Contact, by contrast, has quietly become the largest email service provider. It targets small to medium size businesses, who want to manage and monitor their relationships with their customers. In their respective markets, both companies have achieved superior financial performance. Both companies are also trying to improve their financial performance. While both companies are work toward this objective using similar approaches (by offering new services to current customers), only of the two companies will achieve its desired objective. Constant Contact should have little difficulty achieving its objective while Facebook will need a lot of luck. Facebook is adding commerce and search capabilities for its users ahead of its initial public offering. The commerce capability fell flat. Ashley Lutz reviews several retailers that shuttered their Facebook stores only six months after launch. Gamestop, J.C. Penny, and other retailers spent at least one to two years in planning and testing stages before formally launching Facebook stores. Six months after launch, the respective projects were stopped. Only one conclusion can be drawn. These stores were colossal failures, missing on all objectives with no hope of the project ever meeting any objectives developed in the business or marketing plan. Sucharita Mulpuru, an analyst at Forrester Research, provides the money obituary:

“There was a lot of anticipation that Facebook would turn into a new destination, a store, a place where people would shop. But it was like trying to sell stuff to people while they’re hanging out with their friends at the bar.

As to its search capability, this initiative smacks of the answer to the question no one is asking. While an improved search function could engender more positive affect by users toward the social network service, the revenue potential remains illusive. The cost associated with the service, however, is quite real.

To the larger point, these two strategic initiatives point to a company a drift in the market. It has 840 million users. Yet, it does not seem what to do with them. Facebook is not adding any more users. Indeed, its greatest competitor should be boredom, not another social networking service.

Its lack of focus reflects stems from the concept that Facebook does not have customers; rather, it has users. Facebook has no idea what its customers want or demand. The company appears content to tell users and clients alike what services they will get instead of involving them in the development of new services. This lack of involvement would explain the company's zeal for commerce and search capabilities.

Contast Contact, by contrast, has customers; roughly, 500,000 of them. The company has developed a customer orientation, which gives them a sense of what their customers want and demand. As a consequence, the company will add a daily deal service for its customers to use. Instead of contracting with a daily deal service such as Groupon, a company can control the process through its contract with Constant Contact, who is already helping the company manages its email distribution list.

The company can control the size and timing of the discount. Furthermore, the company can decide its email recipients could pass along the deal to their friends.

By adding this service along with another service that allows customers to communicate with its customers through Facebook, Constant Contact is moving toward becoming a relationship manager for its customers.

As to Facebook, its destination seems to be unknown.