Why it pays to join the social club

Marketers have clamoured to jump on the social media express in the past five years. But now some are questioning the sales and profit results related to social media.

Has the investment been worth the reallocation of their marketing budget from other vehicles?

Like the word ‘digital’, ‘social media’ has become a catch-all phrase for many communication tactics in the ‘social space’. There’s social advertising, social customer relationship management and social listening, and you can drive loyalty through social, encourage customer engagement through social, service customers through social, do research through social, run promotions through social and drive word of mouth through social. But which of these, if any, can deliver a return on investment for your brand? And should marketers be looking for a short-term or long-term return?

There are certainly a limited number of examples of social media leading to an immediate sales result. Retailers in Australia, for example, have relied on television, press and mail catalogues to reach more than a million customers at a time and quickly create awareness of a new product and where and when it is available. So if you take that model in its simplest form, a retailer would need close to a million followers and ‘likes’ on social media to replicate that kind of reach.

However, as of February this year, only 12 consumer brands in Australia had more than 500,000 likes and/or followers on Facebook and Twitter. Very few brands have developed their own mass-market social advertising channels as yet.

One Australian brand that has done so is KFC, which has 700,000 Facebook likes. In the middle of 2012, it revived a product called The Double for just two days and communicated this to Facebook fans only. The next day queues that extended out the door were reported at some stores, as fans and friends lined up to buy the breadless burger.

Other local brands are using social media to boost loyalty and customer engagement, and they are finding this delivers a strong long-term return on investment. Bank of Melbourne customers who have engaged and interacted with the brand on social media do 40 per cent more business with the bank than those that have not.

Officeworks customers who are engaged with the brand through social media convert to sale at a rate more than 60 per cent higher than those that don’t. They might not all buy immediately after seeing an ad on Facebook, but they are brand advocates and longterm spenders, both online and in stores.

Return on investment should not be measured only through top-line growth. Driving cost efficiencies through social media is a perfect way to obtain a better bottom-line return. One great example is where brands have ‘socialised’ their call centres.

Companies trust their call-centre teams to answer questions and complaints via the phone, so why not trust them to do the same via social media? And once a question is answered on social media, the exchange exists for others to search. So instead of 100 customers ringing with the same question and the call centre having to answer it 100 times, it can be answered just the once. In some cases, this has allowed call centres to cut staff by a third and save millions of dollars.

Socialising call centres can also drive top-line growth through better service, engagement and advocacy. Because the call-centre teams can listen to conversations and complaints in real time via social media, they can also immediately respond to that customer. Qantas was one of the first Australian companies to do this. For example, when a disgruntled Qantas customer tweets that their plane has been delayed, the call centre quickly sends a reply to that tweet. The team empathises with the customer’s frustration and asks them to send their mobile number via Twitter, so Qantas can try to help.

In doing so, the airline turns a negative encounter with the brand into a positive one. And as mentioned earlier, brands that engage well with customers via social media are rewarded with long-term increases in spending. Winning that trust maximises lifetime customer value. So while ‘social’ has been a buzzword in business for the past few years, there are signs it can deliver a return on investment in the short and long terms.