Loyalty Truth

U.S. companies that use social media primarily to deepen customer loyalty spend almost twice as much on this emerging channel as competitors who use it for brand awareness, customer acquisition and other core marketing purposes, according to national survey results jointly released by the Direct Marketing Association (DMA) and COLLOQUY.

Specifically, the DMA-COLLOQUY survey results show the average social media spend for marketers whose primary objective is to obtain customer loyalty was $88,000 last year, compared to $53,000 for brand awareness and $30,000 for customer acquisition, the objectives that attracted the next highest spending levels.

Additionally, the DMA-COLLOQUY survey shows that the amount of social media budget marketers allocated to loyalty objectives increased by 293 percent over the past 12 months, easily surpassing allocation increases for all other social media-related marketing objectives.

“Social media budgets for loyalty objectives experienced the most growth last year and, in fact, the last three years,” said COLLOQUY Managing Partner Kelly Hlavinka.  “Savvy social media marketers recognize they must turn first to their best customers and apply the same principles inherent to loyalty, which are combining economic incentives with social capital.”

DMA and COLLOQUY teamed this year to create a profile of US  marketers’ social media activities, with a focus on spending trends and metrics for success in building customer loyalty.  In late June and early July they tapped via email survey the expertise of COLLOQUY subscribers, DMA’s nationwide membership and other qualified marketers, obtaining 369 valid responses from marketers to a 17 point questionnaire.

A conclusion that can be drawn from overall survey results is that the use of social media as a marketing tool is still in the early experimental stage.  “Marketers across all sectors are involved in social media,” said DMA Research Manager Yoram Wurmser.  “However, after five or six years in the space, and growing social media budgets, marketers are still testing the waters to figure out what works, with the incentive to accelerate their efforts is being driven by consumer’s rapid adoption of this trend.”  In fact, research from Nielsen released this week shows that consumers are spending 43 percent more time on social media than a year ago, making social networking and blogs the top online activity followed by online games and email.

One of the key revelations from the research is that the absolute dollar amount marketers are setting aside for social media is low:

• When asked what percentage of their company’s overall marketing budget is spent on social media, the largest group, covering 24 percent of survey takers, selected “don’t know”
• 17 percent of respondents said they allocated only 1 percent of their annual marketing budget to social media
• 16 percent said they allocate 4-5 percent
• Smaller companies with tighter budgets are significantly more likely than large companies to say they spend almost 50 percent of their marketing budget on social media.

Another key finding reveals a lack of metrics for success differentiated by objective:

• When asked to identify the most important measure of social media success, nearly two-thirds of respondents selected “don’t know”
• Of those who identified a measurement, the largest group, covering 20 percent, said engaging customers to respond and provide feedback
• 65 percent of respondents said they’re not using any listening tools to monitor what their customers are saying about their brand.

DMA and COLLOQUY hosted a free webinar, Deploying Social Media to Generate Customer Loyalty:  A Tell-All Marketers Survey yesterday afternoon.  Additionally, a report containing complete survey results is available from DMA for a price of $135 for DMA members and COLLOQUY subscribers, and $240 for non-members/subscribers.  To purchase a copy of the report, visit DMA’s Bookstore by clicking here.  Members of the press may request a complimentary copy of the survey by contacting Carmela Uzzi, DMA media relations manager, at cuzzi@the-dma.org.