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Beyond Loyalty: The future for Social Media

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Beyond Loyalty: The future for Social Media

With Facebook’s recent 10th birthday celebrations, it has reminded us how Social Media is playing such a central part in how we connect with consumers today. But its entry into the Media-Mix Club hasn’t always been an easy one - and to gain full entry, it still needs to prove itself better in helping brands grow. So can this happen?

How brands grow: a lesson from Australia and the IPA
First, we need to take a trip down under to the Ehrenberg-Bass Institute for Marketing Science, where they have discovered from decades’ worth of data that brands grow by connecting with their heavier and lighter buyers. Going for those loyal, heavier buyers alone is likely to see less brand growth, say our Aussie counterparts. Which is also backed up by the IPA, who say that penetration strategies are more profitable than loyalty-focused ones. And gone too is the loyalty myth of “20% of customers driving 80% of sales”: the reality is, slightly more than half a brand’s sales are coming from the top 20% of heavier, loyal buyers and the rest is coming from the bottom 80%, lighter, less loyal buyers.

What does this mean for social media?
It has been shown, by The Journal of Advertising Research, that social media entices far more heavy, loyal buyers than it does lighter ones. We can look at Pepsi to see the warning signs of over-investing in social media (and therefore loyalty), when they moved their budgets from TV into social media with the ‘Pepsi Refresh’ project, and subsequently saw a 5% drop in market share, a loss of $400-$500 million and a drop from number 2 to number 3 in the category!

And the warning signs are there for Burger King in Norway too, when they decided to cut out 30,000 of their 38,000 Facebook fans who, having taken part in a quiz and chosen a free McDonald’s Big Mac voucher over a Burger King voucher, got ostracised from Burger King’s Facebook page for their disloyalty. Now Burger King in Norway has a narrower reach of 8,000 very-engaged-but-would-have-bought-from-the-brand-anyway-fans. A strong PR story, but not a very sensible move….

Engagement: let’s change our expectations
So, if we are going for more lighter buyers on social media, we should also change our expectations around engagement. If the past 10 years has taught us anything, it is that only a small amount of fans actively engage on social media and the vast majority are happy to be passive instead.

Take the sensation that is Lady Gaga. What fan wouldn’t want to engage with her on social media? Well, actually only 1.16% of her 62.7 million Facebook fans (at the last count). It is true that engagement rates get bigger for brands with smaller followings (Innocent has under half a million fans and gets about 10%-15% engagement score), but for the majority of brands 1%-2% engagement over a monthly period is the norm more than the exception.

So, should we be chasing engagement at all? Well, yes we absolutely should, but with a renewed understanding about expectations from engagement as being the be-all metric. Instead, we should focus on what counts – linking engagement to sales and brand growth and seeing likes, comments, retweets and shares as examples of active engagement, indicating a wider success of passive engagement from the majority of fans who haven’t actively engaged. It should also be expected that an increase in lighter buyers recruited to a brand’s social media account will care a bit less about the brand, so are less likely to actively engage with it, potentially encouraging a lower engagement rate.

But that is okay! As long as the creative continues to be outstanding and convinces lighter buyers to be heavier, more loyal (and ideally actively engaged) buyers.

So what’s next for social media?
Well, we think that brands should follow these 7 simple steps to achieve better brand growth with social media:

  1. Reach all category buyers, enticing far more lighter buyers to follow your brand
  2. Ensure a better weighting of social media in the media mix (don’t over-weight it)
  3. Engagement is important, but focus on specific metrics that demonstrate reach and viral-ness beyond your existing fan base
  4. Be okay with engagement not growing hugely, especially when your brand wins millions of fans and lighter buyers
  5. See engagement as a success with a small, actively engaged audience of heavier buyers and an indication of success with a wider, passively engaged audience of lighter buyers
  6. Reward loyal customers, but don’t over-reward them. Yes, they are critical to your brand’s growth, but don’t make them your only focus
  7. Above all deliver kick-ass, brave content that makes it worthwhile for any fan to belong to your brand on social media

Simon Lamey
Planner, Strategy & Investment

Southpaw Communications Ltd

Southpaw

The Warehouse, Hill Street,
Tunbridge Wells,
Kent
TN1 2BY

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