Engagement in social media can be valuable to a brand. If it’s done right.

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Day 30 - Falling dominoes

Day 30 - Falling dominoes (Photo credit: evil_mel)

I really don’t care how many people follow your brand on Twitter, or Like your brand on Facebook. Numbers like these are essentially meaningless - building the right kind of relationships with 500 targeted people will always be more beneficial to you then meaningless, un-targeted relationships with 500,000.

The same is often said about ‘engagement’ - what value is there in engaging people on social media? This is a valid question to ask, but it is not the same as just attracting more Likes or Follows. Done well, engagement is valuable to a brand.

There are two main challenges to the value of engaging people in social media as brand:

  1. Surely sharing photos and chatting to people online has no connection to sales
  2. If it does have a connection, is it just a correlation (people feel positive about our brand so they both join us in social media and spend more money with us) and not a causation (people join us in social media and therefore feel more positive about our brand and spend more money with us)

What’s the value of ‘just chatting’?

The first challenge is a valid one - you can spend forever as a brand mindlessly chatting away to people without it having any impact on what you do. Are the people you are talking to even valuable to you, and are your engagements helping at all with them to spend more money, to recommend you to more people or to do some other action that will be beneficial.

The truth is that nothing should be done in social media with a clear understanding of why you are doing it - what you want to achieve and why this will help your business - and a clear understanding of who you want to target. These can be difficult questions to answer, but if you are not completely clear on them then you just won’t get the same benefits from engaging people in social.

Imagine a luxury fashion brand. It is probably very easy to get lots of people to ‘Like’ you page on Facebook or to follow you on Pinterest, but are these people actually the ones you want to engage? Or are they just aspirants, or people who like looking at the beautiful pictures? If you haven’t clearly identified who you want to engage (who will be valuable to you) and are managing your activities to attract these, then you may just end up chatting away to people who could have little value for the brand.

Know what you want to achieve, know your audience and make sure you are working hard to attract the right people.

Is it a causation or a correlation?

The bigger challenge to the value of social media engagement is that it does not lead to greater value for a brand, but that people engage more and spend more because they already feel positive about the brand. In short - that this is an example of correlated events and not causation.

A great piece of work by Bain & Company last year addresses this. Their Social Media Consumer Survey looked at average annual spend of customers who have a meaningful engagement with a brand in social against those who do not. Overall, those with a meaningful relationship spend 30% more annually.

If we were confusing causation and correlation we would expect that it would be those who are already positive about the brand who are spending more; those who are less positive about the brand would not. But the research doesn’t show this - those who’s spending is increased the most are the ‘fence sitters’ (those ambivalent to the brand); even the brand’s ‘detractors’ spend 20% more annually if they engage in social.

Bain Social Media Consumer Survey, 2011

So what does this mean for engagement in social?

So having good engagement in social media can be valuable to a brand - it’s not another meaningless number like Followers or Likes. Meaningful engagement, with the right people can lead to greater value for the brand from those customers.

But getting good engagement is not easy - it involves having a clear view on why you are using social, on the audience you want to engage, and on how you turn them from being passive to having an active relationship with you in social media. Most brands could get better at this and a focus on quality engagement, with the right people, will always pay greater dividends than just hunting down a few more Twitter followers or Facebook Likes.

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6 Comments

  1. Richard Millington:

    I’ve been reading through this study for the last 10 minutes and still can’t get to the same conclusion.

    How do you prove that the type of people that engage with a brand online aren’t already spending 20 - 40% more? The only way to measure that is the increase in spending attributable to the engagement (i.e. people before they start engaging and then after they have engaged for a sustained period of time - and thus any difference in spending patterns between the two).

    The measure in the study is asking people if they would recommend the brand to others on a scale of 1 to 10 (surely this is a year/no answer?) and then their level of engagement with the brand online (and evaluating whether those that are engaged would purchase more). This study is, essentially, comparing Apples to Oranges.

  2. Matt Rhodes:

    Hi Rich,

    A couple of observations here:

    The study is comparing two things:

    1) Net Promoter Score (NPS): a metric of customer loyalty developed in the early 2000′s by Fred Reichheld, Bain & Company, and Satmetrix. It’s seen by some as ‘The one number you need to grow‘ (although debated by others) - anyway it’s used by companies from Apple to GE to measure customer loyalty. It asked you how likely you would be to recommend to others on a scale of 0-10 and that makes you either: A Promoter (very likely to recommend), a Fence Sitter (the majority of people in most cases) or a Detractor (very likely to recommend against a brand).

    2) Their reported purchase - we can’t see the Bain questionnaire (we asked!) but this is likely to be reported purchase value over a year.

    The chart above then compares three groups of customers - Detractors (likely to recommend against), Fence Sitters and Promoters - and how much more those who ‘engage with the brand in social’ spend compared with those who do not.

    If it were a simple matter of correlation between engagement in social and ‘benefit’ then you would expect the Promoters (those who love the brand and recommend it) and the Fence-sitters (most people) to both engage and spend more. The engagement and spending more are both caused by their love or neutral attitude towards the brand.

    But you would not expect those who actively recommend against the brand to spend more. This suggests that it is not simply correlation but there must be an element of causation in there too.

    And this kind of makes sense if you think about the use case of resolving a customer complaint or service issue in social. Somebody with a bad experience with a product (maybe waiting out the end of their contract before moving) would be a classic Detractor and likely to not spend more with you right now. If through social you can resolve the problem or help them in some way then you might get them to spend more with you.

    So the accusation that engagement in social media is just a correlation with increased spend does not seem to totally stand up. It’s probably more complicated than that and there must be an element of causation in there too.

    Matt

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  4. Richard Millington:

    Hey Matt,

    Thanks for the response. It’s an interesting debate.

    This doesn’t show causation (nor disprove it). It shows that people that that participate more in social media purchase more. But you can’t discount that the type of people that purchase more are those most likely to engage in social media channels.

    Where we differ, I guess, is whether NPS removes the bias of initial purchase behaviours (i.e. they would purchase anyway?). I don’t think it does. Though, if we have any studies that prove the opposite, I’m open to that.

  5. Harindra Bhatt:

    I am not an expert but only I can say social media is proving its superiority and companies are quite focused to build their relationship and brand over various social networking sites. Social engagement with quality sharing will increase participation and then to a healthy business.

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