New research shows that social media interaction between a customer and a brand drives immediate and long-term sales increases. The 2012 LoyaltyOne Social Media Transaction Impact Study was released this week by LoyaltyOne, in cooperation with 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 the country. Collectors of the program redeem reward miles for a wide range of travel, entertainment and merchandise rewards.
The 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 percent over non-participants.
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," said Neil Everett, LoyaltyOne executive vice president and CMO. "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, more elaborate posts dealing with redemption experiences (travel, entertainment) created a 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.
Read more about social media initiatives.