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 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”
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.