It’s one of those “brilliant observations of the blatantly obvious” to state that companies should listen to their customers; successful companies have always done that. But the rise of social media and the interactive web present new opportunities, and challenges, for conducting those conversations. Effective social media monitoring requires a significant investment in both tools and time. Does it pay off? If so, how much? A new report from the Aberdeen Group, The ROI on Social Media Monitoring: Why It Pays to Listen to Online Conversation, answers the question and quantifies the benefits.
Among the findings:
- Best-in-Class organizations are 2.6 times more likely than Industry Average companies, and 93 times more likely than Laggards, to improve their ability to generate customer insights that drive new product / service development.
- 72% of Best-in-Class companies, compared to 42% of Laggards, rank their experiences with social media monitoring as successful.
- Best-in-Class organizations that engage in social media monitoring and analysis activities are 3.3 times more likely than Industry Average companies, and 82 times more likely than Laggards, to improve their ability to identify and reduce risk to the brand.
- 78% of Best-in-Class companies, compared to only 8% of Laggards, have improved year-over-year customer retention rates.
Increasing customer advocacy and word-of-mouth promotion was ranked as the top social media “pressure” by companies in the Aberdeen study. After that, reinforcing the concept that social media is a powerful PR tool, “protecting brand reputation” and “increasing brand / product awareness” were goals that followed closely. And reinforcing the notion that social media is not primarily a lead generation or direct response tool, “increasing customer acquisition” was ranked near the bottom of the list.
Given these priorities, “establishing a method for engaging consumers in online conversation” and “analyzing customer insights to improve marketing campaign effectiveness” were at the top of the list of strategic actions for best-in-class companies. On the other hand, “establishing a method for monitoring benchmarks and goals” proved to be the most challenging tactic, even for organizations that are very good at social media monitoring.
While the Aberdeen study focused on large enterprises, many of the results are equally valid for smaller companies. Actually, the top pressures—increasing brand awareness and enhancing brand image—are arguably more important for smaller firms, which lack the large marketing/PR budgets and broad name recognition of larger market players. For small companies, influencing the influencers is another key goal in their use of social media. Bloggers, journalists and industry analysts are among the heavy users of social media, often even more so than customers and prospects. Social media provides an opportunity for small companies to increase their exposure to and by these key sources of influence, which indirectly though critically affects the perceptions of prospective customers searching for solutions.
Not surprisingly, marketing and PR groups are among the heaviest users of social media within companies. It’s heartening to see that sales forces are becoming more active as well, given the potential for rich insights into prospect needs and motivations that social media can provide. As prospects spend more time on up-front web research and less actually engaged with sales, it’s critical that sales people research prospects as well, enabling them to ask better questions and get to the heart of each prospect’s issues more quickly.
It’s interesting that market research and product development are the lightest users of social media, given the importance Aberdeen reports that best-in-class firms place on using customer insights to drive new product / service development. This is likely more a reflection of the immaturity of social media as a method for generating actionable insights than any lack of priority or monitoring capabilities on the part of the enterprises studied. In the b2b world, such intelligence is still sporadic and diffused, though sites like FYIndOut.com are attempting to give buyers a platform to discuss both vendor offerings and new product / service needs. Feedback mechanisms are a bit more mature on the b2c side through sites like Yelp and Epinions, though the quality of the feedback provided on such sites varies widely.
The Aberdeen report also covers benchmarking requirements, competitive assessment and recommended actions for success, as well as providing several illustrative case studies.
This report normally retails for $399, but is available on a complimentary basis from the Aberdeen Group here until January 1, 2010.