Social Media is the newest darling of marketing. But, for all the buzz it’s generating, there is very little hard data on how or why companies use it, or how successful it is. However, that is beginning to change.
The Aberdeen Group recently concluded a study that shows seven specific reasons why companies choose to use a social media strategy. They separated their respondents into three categories, based upon four key performance criteria. The categories were Best-In-Class (top 20%), Industry Average (middle 50%) and Laggards (bottom 30%). Of all companies questioned, the top reasons for implementing a social media initiative, in order of their reported importance are:
- Increase customer advocacy / word of mouth 37%
- Protect brand reputation 35%
- Improve customer research capabilities 33%
- Increase product / brand awareness 32%
- Increase customer loyalty 31%
- Increase customer acquisition 23%
- Increase customer retention 21%
What is interesting to note is that these results were taken from all respondents. However, when looking at Best-In-Class respondents, the number one reason, at 47%, was increasing customer loyalty. The argument might be made that increasing customer loyalty can be seen as an umbrella that includes most of the other categories, so it was just a matter of wording. Or, it might speak to a more refined understanding of Best-In-Class companies that in today’s economy, customer retention is a much more important strategy than in normal times. And, that customer loyalty is a deeper level of customer retention.
Regardless of the relative importance of reasons to engage in a social media strategy, it shows a growing realization among companies that a significant part of their effort to connect with their customers must now take place on this new two-way communication platform. And, it provides the beginning point for quantifying those efforts.
Best-In-Class companies showed an average of 11% increase in their ability to generate consumer insights that drive new product/service developments. Laggards decreased 10%. Best-Of-Class companies showed an average decrease in customer service costs of 7%. Laggards showed an average increase of 5%.
When companies have to struggle for every sale it’s hard to justify the time and expense for a new, unproven marketing strategy. But, evidence is beginning to grow in support of what many marketing professionals instinctively saw as an important new tool.
Not every company is a candidate for social media. But, if you are wondering what a social media campaign might do for you, a good place to start is the above list. And, if you interview a social media professional, be sure to ask questions that are wrapped around the appropriate reasons that drove you to consider it in the first place.