Consumer Social Media Engagement with Brands Leads to Increased Sales, Study Reveals
Research released today by LoyaltyOne and two leading North American academic institutions provides empirical proof that social media interaction between a customer and a brand drives immediate and long-term sales increases.
The research constitutes a social media marketing breakthrough because it establishes the accountability link long sought by brands that have showered dollars on social media outlets while attempting to prove the return on investment to C-suite skeptics.
Transaction-based proof that social media participation increases purchases is the outcome of a research effort undertaken as the 2012 LoyaltyOne Social Media Transaction Impact Study.
LoyaltyOne, a global provider of coalition loyalty, customer analytics and loyalty services conducted the first-of-its-kind analysis with the Medill IMC Spiegel Digital and Database Research Initiative at Northwestern University and The University of Western Ontario's Ivey School of Business.
The research findings are based on a two-year analysis of brand-customer social media engagement and actual transaction data with Canada's more than 10-million member AIR MILES Reward Program. Consumers who participate in LoyaltyOne's AIR MILES loyalty program earn reward miles by making purchases from its affiliated business partners (sponsors) and services across Canada. Collectors of the program redeem reward miles for a wide range of travel, entertainment and merchandise rewards.
The breakthrough results show that AIR MILES Collectors who participated in social media events and promotions increased their purchases from AIR MILES program partners by 15-30% over non-participants.
In this case, the engagement involved monitoring participation in online events and contests from February 2009 to May of 2011. Researchers were then able to use AIR MILES program collector data to obtain concrete evidence of the impact of social media engagement on purchasing behavior.
“The good news is this research delivers the evidence that investment in social media has the potential to return benefits in the form of transactions, profits and ROI if done well,” LoyaltyOne Executive Vice President and CMO Neil Everett said. “The even better news is this study demonstrates that the data obtained through loyalty programs generates a reliable method of measuring this connection.”
Other highlights from the study include the following:
- The mere act of writing a short public statement on a social media site spurs significant lifts in transaction activity;
- However, longer, more elaborate posts dealing with redemption experiences (travel, entertainment) created higher lift than shorter, product-based posts;
- The higher the level of participation in a social media event, the greater the impact on a consumer's purchasing activity;
- Brands can use social media as a tool to raise the value of lower-volume, high-potential consumers who have more room to increase their spend; and
- Events that encourage participants to recreate the core benefits of a brand have higher lift effects than more generic posts – resembling a “co-creation effect.”
Complete findings from the 2012 LoyaltyOne Social Media Transaction Impact Study can be found in a white paper titled The Social Media Payoff – Establishing the Missing Link Between Social Media and ROI. The paper is available for download free of charge at https://loyalty.com/knowledge/articles/social-media-payoff.
LoyaltyOne is a global leader in the design and implementation of coalition loyalty programs, customer analytics and loyalty services for Fortune 1000 clients around the world. LoyaltyOne's unparalleled track record delivering sustained business performance improvement for clients stems from its unique combination of hands-on practitioner experience and continuous thought leadership. LoyaltyOne has over 20 years history leveraging data-driven insights to develop and operate some of the world's most effective loyalty programs and customer-centric solutions. These include the AIR MILES Reward Program, North America's premier coalition loyalty program and a working partnership with Latin America's leading coalition program, dotz. LoyaltyOne is also the equity partner of Direxions, a loyalty pioneer headquartered in India and the owner of COLLOQUY, a group dedicated to research, publishing and education for the global loyalty industry. LoyaltyOne is an Alliance Data company. For more information, visit www.loyalty.com.
Medill was founded in 1921 and offers programs in journalism and integrated marketing communications. It teaches new techniques essential in today's digital world. Medill is leading the way in training a new generation of multimedia journalists and integrated marketing communications professionals. The Medill School of Journalism, Media, Integrated Marketing Communications at Northwestern University is named after Joseph Medill, a newspaper man and former Mayor of Chicago.
About the Ivey Business School, Western University, Canada
The Ivey Business School (www.ivey.ca) at The Western University is Canada's leading provider of relevant, innovative and comprehensive business education. Drawing on extensive research and business experience, Ivey faculty provide the best classroom experience, equipping graduates with the skills and capabilities they need to tackle the leadership challenges in today's complex business world. Ivey offers world-renowned undergraduate and graduate degree programs as well as Executive Development at campuses in London (Ontario), Toronto and Hong Kong.