Brand-Customer Social Media Engagement Leads to Sales

Social media is here to stay, as the success of the existing social networks shows and as we see more and more of these online hangouts being launched. Companies try to get as much as possible out of these new channels of communication, but the never-ending dilemma is how. And there is another question: is social media really useful from the point of view of revenues?

There are new studies released every day, and some have rather contradictory conclusions. But any marketer – or most of them – wants to see results in order to also be able to justify further investments in this direction. The 2012 LoyaltyOne Social Media Transaction Impact Study tries to shed some light into this rather blurry area. The research from LoyaltyOne, Northwestern and Ivey Business School shows up to a 30% increase in purchase behavior which results from social media activity. The study analyzed data from the over 10 million members AIR MILES Reward Program from February 2009 to May of 2011 involving brand-customer social media engagement and actual transaction data. As some of you might already know, people involved in this program earn miles when making purchases from affiliate business partners (sponsors) and services in Canada. With these miles, consumers have access to a wide variety of travel, entertainment and merchandise rewards.

The study revealed that members this program who also took part in social media events and promotions made between 15% and 30% more purchases from the AIR MILES program partners than the non-participants. Other findings of the research prove that a social media mention leads to an increase in the transaction activity, but that more elaborate posts are recommended in order to get the best possible results. Social media can be used as a way to raise value of potential customers to spend more. Also, the more participants are involved in an event, the higher their purchasing activity.

“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.”

The study is available for free along with more conclusions here. .

Undoubtedly, the study brings an important contribution to understanding the relation between consumer-brand engagement and sales, but we have to also keep in mind that it is carried out based on a program that brings rewards to consumers when they make a purchase. There are several companies using this miles-in-return system which a consumer can use for different services, and there are many people really appreciating them. If you already travel a lot, why not gather miles for tickets to a special destination for a wonderful vacation with your family? This study should be followed by similar ones in different areas where there aren’t immediate added rewards to every purchase made, in order to see exactly what works and what doesn’t in this social media landscape – though it is a rapidly shifting one!

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