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Companies Seeking to Obtain Customer Loyalty Via Social Media are Biggest Spenders

August 27, 2010
NEW YORK CITY—August 27, 2010—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% over the past 12 months, easily surpassing allocation increases for all other social media-related marketing objectives.

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% of survey takers, selected “don’t know;”

• 17% of respondents said they allocated only 1% of their annual marketing budget to social media; and

• 16% said they allocate 4-5%.

• Smaller companies with tighter budgets are significantly more likely than large companies to say they spend almost 50% of their marketing budget on social media.

“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 U.S. 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.”
 

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