Control their behavior, Control your ROI
“Yes, we are social . Our company has a Facebook and twitter account”. One of the biggest misunderstandings of traditional marketers. Having an account does not mean that you are social. To be social you need to connect, communicate and get engaged with your customer on a daily basis.
Research has shown that Word-of-Mouth marketing can have a larger and longer lasting effect than traditional marketing activities. Instead of spending millions of dollars on advertisements, more companies start to notice that there are much more cheaper marketing strategies as blogging and Word-of-Mouth campaigns. (Trusov, Bucklin and Pauwels, 2009) Word-of-Mouth campaigns are:
- two times more effect than radio advertisement
- Four times more than personal selling
- Seven times more than print advertisement.
Moreover, compared with traditional marketing activities, the Word-of-Mouth referrals have a larger short-term response and a longer carryover effect. ( Trusov, Bucklin and Pauwels, 2009). This is convenient for predicting stock markets, because these predications are formulated by numbers and thoughts of the public mood, which in turn can be driven by the social media. For example, Gruhl et al. showed how online chat activity predicts book sales. (Bollen, Mao and Zeng, 2011)
Different public moods leads to different opinions and predications. After aggregating of millions of tweets submitted to twitter at any given date, analyzing them with two different tools, Opinion finder and GPOMS on the six different moods: Happy, Alert, Sure, Vital, Calm and Kind, the researchers found that changes in the dimension Calm by T-3 predicts a similar rise or fall in DJIA values by T-0. Based on that information, is the dimensions calmness of the public considered as relevant data to control the DJIA. But how can companies use this in their advance? By “controlling” the customers behavior through social media. (Bollen, Mao and Zeng, 2011)
Unfortunately, a lot of marketer fail at this part. (Hoffman and Fodor, 2010) In majority cases, they place a message without considering the richness of the content, the diversity of perspectives nor the longevity of the information. In particular, the last two factors can help a marketer to identify which social media tool is required to achieve his goal. For instance, if you want to convey product knowledge, then is blogging a suitable tool to use. Would you rather create awareness? Then Weingberg and Pehlivan recommend you to use micro-blogs, because the appearance on the site is short and the depth of the information is shallow. (Weingberg and Pehlivan 2011)
The purpose of your social media and your understanding of it state, which social media tool is required to drive the behavior of the customer. (Weingberg and Pehlivan 2011) For instance, the local family companies. They have some insight of what they are doing by opening an account, but have no idea of how to measure their effort. This is called the Death End path. On other path is the Measure and Adjust, here are the “traditional” marketers located. Despite their understanding of customers behavior, they do not recognize the impact of social media on them. The principal reason for this is that most of the time they do not see direct results. However, how important are these direct results in marketing, do they influencing the customers behavior? No, they do not. You can by recognizing the value of their messages and communicate with them. (Hoffman and Fodor, 2010)
For instance, the Forrest study, which evaluated Facebook fans vs. non-fans of brands like Best Buy, Wal-Mart, Coca-Cola and Blackberry. This study showed a higher level of customer engagement for Facebook fans compared to non-fans. For the respective brands, the engagement through the social media facebook led to better results. By Blackberry 55% of fans purchased in the past 12 months, as compared with 10% of non-fans. Seventy-eight percent of fans are likely to consider purchasing by Best Buy, as compared with 47% of non-fans. Eighty-three percent of the Coca Cola facebook users likely to recommend to friends, as compared with 35% of non-fans. (See figure 1). However it does not show short term profit results, it shows the ROI on facebook. The result: Loyal customers and free publicity.
To summarize, social media ROI will not always be measured in dollars, but also in consumers behaviors and loyalty. Managers need to build long term relationships, which takes time and let the consumer do the connecting, creating, consuming and controlling. The focus should be more on the qualitative objectives like brand awareness, brand engagement and worth-of-mouth communication instead of calculating how much to spend in each media channel. By controlling their behavior through social media, you can create loyalty among your customers which leads to more sales. Not only at the end of the first quarter, but also at the second, third and fourth one.
Reference
Bollen, J., Mao, H. and Zeng, X. (2011) Twitter mood predicts the stock market, Journal of Computational Science, Page: 1-8.
Hofmann, D. and Foder, M.(2010) Can you measure the ROI of your social media marketing?, Mit Sloan Management Review, page: 41 – 49.
Sverdlove, G., Reitsma, R., Parrish, M. and Jaddouh, M., (2012) The Facebook factor, Quantifying The Impact Of A Facebook Fan On Brand Interactions, The Forrest study.
Trusov, M., Bucklin, R. and Pauwels, K. (2009), Effects of Word –of-Mouth versus traditional marketing: Findings from an internet social networking site, Journal of markting, page: 90 -102.
Weinberg, B. and Pehlivan, E. (2011), Social spending: Managing the social mix, Business Horizons, page: 275 – 282.
