Research from consulting firm, Bain & Company revealed that organizations that have adopted social media early on (Dell, Wal-Mart, Starbucks, JetBlue and American Express) have captured real economic business value from their budget investments.
Bain found that that customers who engage with companies via social media channels spend 20% to 40% more money with those companies than other customers. They also demonstrate a deeper emotional commitment to the companies, granting them an average 33 points higher Net Promoter® score (NPS®), a common measure of customer loyalty.
Bain goes on to outline 5 steps to successfully engage in social media in order to see value from such efforts.
1. Link social media efforts to concrete business objectives
This is certainly a disconnect in many organizations today. Being able to map external social media initiatives is critical to determine its success, deterimine business value and validate financial investments. Bain was gracious enough to provide this matrix with real examples of companies that were successful in linking social media to business objectives.
2. Focus and tailor your efforts to engage your key customers
The research concluded that the average Facebook user will “like” no more than seven companies or brands at one time. Facebook users are very selective because they do not want their streams inundated with corporate messages and promotions. Additionally, Bain identified 10 segments of social customers. Members of these segments frequent different social media platforms and prefer different types of content and engagement models. See below.
3. Build a social media organization to deliver results
Smart companies mobilize cross-functional teams spanning marketing, sales, public relations, corporate strategy, customer service, product development, IT, HR and legal. They are building social capabilities, behaviors, processes and workflows into the underlying DNA of the organization rooted in change management. Bain outlines three organizational models based on their study:
- Empowered units like Dell
- Command and control like Starbucks
- Decentralized organizations like Zappos
4. Monitor and measure the results—then close the loop
Creating the right measurement philosophy to measure and track results is mission critical. There are a few challenges in measuring the return on investment (ROI) on social media efforts, and many companies will remain gun-shy about spending until they capture concrete evidence. Additionally, organizations must ensure that everyone engaged in social are measuring social media consistently. Bain goes on to outline three different business metrics:
- Engagement metrics: likes, RTs, comments, web analytics
- Customer metrics: NPS, loyalty
- Financial impact metrics: ROI, cost savings
5. Be flexible and adaptive. It’s still early days
We live in the culture of NOW! Social media is one area in which everybody is learning and adapting in real time – customers, partners and the organization. Just as companies need to continuously experiment to determine what works for them and their customers, they also need to negotiate an increasingly crowded playing field, with newcomers always joining the game. The companies that succeed will be those that are flexible, adaptable and ready to change. They’ll be able to quickly try new approaches and just as quickly adjust— or abandon them. They’ll listen to the social customer, adapt their business models and drive shared value with end result being customer advocacy and an increase in customer satisfaction.