Social Media Marketing: Is There ROI?

It is official, Social Media Marketing has been proven to deliver an ROI. So says the 2012 LoyaltyOne

This study shows:

• When properly designed and executed, social media engagement provides long-lasting returns that are both significant and measurable. (In the case of the study, this engagement was prompted by online events and contests.)

• Social media initiatives create a long-term improvement in customer engagement, markedly improving the value of customers involved in the effort.

• The impact of consumer engagement is evident at all levels of the marketing dialogue with customers – from the initial outbound contact all the way through to customer response.

• The biggest lift created through social media engagement is found in high-potential customers who are not yet fully engaged with the brand.

What is the Canadian Air Miles Reward Program?

This is a hugely popular program in Canada with 70% of all households actively participating. Air Miles allows people to earn reward miles from everyday shopping at more than 220 brand-named partners. Since 1992 over 50 Billion reward miles have being redeemed by Air Miles members. It has over 10 million members and is ranked as one of the first and largest such coalition loyalty programs in the world. So the sample size is without question.

Why is this land mark research?

In 2010 a DMA-Colloquy study, two thirds of marketers answered “don’t know’ when asked to identify the most important measure of Social Media. In 2012 a Deloitte and MIT Sloane Management Review asked 3,748 executives about Social Media metrics. The number one answer was “do not measure”. This lack of measurement is puzzling, without measurement how are you going to know if your campaigns are working or not?

If you Google ROI and Social Media you will find a large amount of studies, reports and surveys all trying to prove the link between Social Media and ROI. This is by far the most comprehensive report proving the link and they used two campaigns to prove the theory.

Campaign One

Showed an impact over the course of the ten weeks surrounding the events – benchmarking participants’ transactions over the entire period against an indexed performance baseline of 100 for non-participants’ transactions. Members, who participated in the events by responding with their thoughts about the AIR MILES brand and what it brought them in terms of benefits, became much better customers.

In the eight weeks after the events, participants increased their transactions with the AIR MILES partner companies by, on average, 15-30% over the performance of the non-participants in the control groups. These aggregated general results were consistent with the specific findings of each of the three individual events – significant lift in post event transactions for participants that persisted for the two months following the event.

One inescapable conclusion from the study is that the greatest mistake in marketing via social media is employing it only as a means of communication—to tell the customer something. Instead, initiatives must offer customers opportunities to participate in ways that reinforce the brand value for themselves. Our findings indicate that successfully prompting dialogue triggers brand engagement, and engagement drives subsequent transactions.

Campaign Two

The smallest improvement in customer participation was among the heaviest users of  AIR MILES. Those people were already spending at a high level to collect the currency, so it’s likely that they were participating as much as they could. Therefore, social media interaction can be a tool for lifting the transaction value of lower-volume consumers with high potential, who have more room to increase their spend. The spending of the low-volume consumers increased between 20% to 35% in the eight weeks proceeding the start of the campaign.

What have we learned from this brilliant report?

Some of the knowledge imparted in this report we have seen before.

• Peer to Peer marketing works
• Selling directly via social does not work
• You have to stimulate the engagement by your community in an engaging way
• Measure the engagement levels that your campaign evokes

Most importantly we have learned that a solid, well executed, social media strategy will raise the engagement within your online community. In the two cases quoted in this report, this led to increased sales. Can your company get the same ROI? Yes is the answer.

I would like to acknowledge the work of Neil Everett and Jim Sullivan in writing and researching this report. I have quoted from the report liberally in my post.

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