SOCIALMEDIA.ORG/SUMMIT2013ORLANDO

Some evidence! Social engagement’s financialimpact

TOM COLLINGERNORTHWESTERN UNIVERSITY

DECEMBER 9–11, 2013

Industry Impacting, Applied Research that improves marketing communications performance

Some evidence!

Social engagement’s financial impact 2 studies

10 insights

December 9, 2013 Tom Collinger

Executive Director Spiegel Research Center

T-collinger@northwestern.edu

We believe there may be a hierarchy to customer engagement. . . And it’s not entirely obvious

• Engagement that’s

– Good and bad

– Relevant and not

• Financial Impact that’s

– Significant

– Not

STUDY #1: SPIEGEL RESEARCH STUDY 1.0

CREATING SOCIAL MEDIA ENGAGEMENT THAT DRIVES PURCHASE BEHAVIORS

Kudos to Edward C Malthouse

Sills Professor of Integrated Marketing

Northwestern University

Mark Vandenbosch University of Western Ontario

Su Jung Kim Research Associate Northwestern University

Canadian Air Miles Reward Program • Coalition Loyalty Program

• Operating in Canada since 1992

• 67% of Canadian households

• 100+ Company sponsors

• “Community” website in 2009

– 99,000 unique posts

• Mile accumulation = proxy for financial impact

The Data

• Random sample of 10,000 collectors as control group

• Accumulation and redemption history from Mar09 – May11

• All who posted

• Stratified sample of those who post

Research Questions • How do branded prompts impact

social media engagement and purchase behavior?

• Do different types of posts affect behavior differently?

• Is viewing a form of engagement that translates to financial impact?

Analyzed engagement and purchase impact from 5 prompts

• Block Party – Rate a “tip or memory” – Issue a tip – Chance to win 25,000 miles

• Epic Cruise – Answer 6 questions (one per week) – Chance to win a Cruise

• Winter contest – Tell us what you’re saving for – Incentive is 10 miles

• Mommy Moments – Share a mommy moment – Incentive is chance to win 25,000 miles

• Living Greener – Share a “living better” story – Incentive is 5 bonus miles

8

Relevant community posts linked perfectly with prompts

Less relevant prompts get little attention

Share your stories, tips and advice on how you help the planet and receive 5 BONUS AIR MILES reward miles. Make sure you post before April 25th to get your 5 miles! Post your comments in the Living Greener forum.

“Mommy moments”

Posters (engagers) spend more immediately, and over time

Contest Incentive # of Posters Week 1 Week 2 Week 3 Week 4

Party Chance to win 25,000

miles 5627

42%

increase

43%

increase

12%

increase

35%

increase

Winter 10 miles 2105 54%

increase

27%

increase

72%

increase

29%

increase

Viewers of Winter contest increased

spending > 40%

Low spenders

Medium spenders

High spenders

week 1 week 2 week 3 week 1 week 2 week 3 week 1 week 2

42% incease

43% increase

46% increase 20% increase 20% increase

11% increase

10% increase

10% increase

• Low spenders the most • A “co-creation” effect

Word

Count

(Number of

words)

Low spenders Medium spenders High spenders

Week 1 Week 2 Week 3 Week 1 Week 2 Week 3 Week 1 Week 2 Week 3

Q1=8

49%

increase

39% increase 23% increase 5% increase 5% increase 7% decrease 7% increase 5% decrease 7% decrease

Q2=13

55%

increase

45% increase 28% increase 7% increase 8% increase 5% decrease 11% increase 2% decrease 5% decrease

Q3=21

62%

increase

51% increase 34% increase 9% increase 11% increase 3% decrease 13% increase No change 2% decrease

P99=73

80%

increase

67% increase 49% increase 16% increase 17% increase 3% increase 21% increase 7% increase 4% increase

Elaboration correlates with purchase

13

Experiences (not stuff) lead to greater financial impact*

*Winter Contest Redeeming Event

Period 1 Period 2 Period 3 Period 4

Experience (vs. "stuff") 15% increase 19% increase 24% increase 23% increase

8 Insights worthy of further tests 1. Social engagement without prompts is very low 2. Relevant prompts link to (far) greater engagement 3. Posters spend more in short and longer term 4. Viewers spend (far) more when viewing relevant posts 5. Low spenders who engage impacted most (% not $)

6. The right message causing co creation can be more valuable than greater price-oriented incentives.

7. Posters who elaborate spend more 8. Elaboration on experiences implies higher future

accumulation

SPIEGEL RESEARCH STUDY 2.0

How Negative is Negative Word-of-Mouth (NWOM)?

Moving from Faith to Facts Evidence on how posting and viewing NWOM on a social media

platform affect customer purchase behaviors

Faith: A generalized belief that NWOM really matters

• 3 Hypotheses

– NWOM is harmful (“disengagement?”) • Mostly about viewing NWOM

– What about posting NWOM? • Decrease or increase purchase behavior?

– Negative sentiment is nuanced • What types of emotions expressed?

• How do they impact purchase behavior?

William R. Wilson, Rice University Robert A. Peterson, University of Texas - Austin

Context and data for this study

• Airmiles data

• Trigger event was unpopular policy change announcement

• Reviewed posts, views and purchase impact

• Study period was 15 weeks • 4 weeks prior and 11 following

• The announcement generated 110 NWOM messages

• 75 customers posted

• 713 viewed the posts

We analyzed and coded messages for types of emotions and intensity

• Analyzed Emotions – Anger

– Disappointment

– Concern (i.e., doubt, surprise, confusion, etc)

• Coded Level of intensity for emotions – Increases with the number of emotional

keywords in a post

Viewing decreased future spending (“disengagement?)

Posting increased it, if given a chance to experience the value of the brand

• Viewing NWOM

Point accumulation by 12% Purchase frequency by 5%

• Posting NWOM & redeeming points (experiencing the value of a brand)

Point accumulation by 58% Purchase frequency by 16%

Strong negative emotions decrease spending Less intense ones increased spending

• Posting NWOM that has expression of anger

Point accumulation by 5% (N.S.) Purchase frequency by 3%

• Posting NWOM that has expression of concern

Point accumulation by 183% Purchase frequency by 65%

Our future work Better understand relevant

engagement • In-market experiments

• Other categories

• Compare across platforms & channels

• Analyze Relationship Engagement vs. Event engagement

Contact me if. . . • You’d like the academic

research report in greater detail.

• Journal submission

• Access to models and methodology

• You’d like access to future research

• You’re interested in sponsoring new research (Forgive me the shameless plug)

Tom Collinger is the Executive Director of the Medill IMC Spiegel Digital and Database Research Initiative at Northwestern University. Tom joined the faculty at Northwestern University in January 1998, served as Associate Dean and Department Chair from 2005 to 2011, and now leads a research center linking consumer engagement with marketing communications platforms to purchase behavior. He also serves as senior director of distance learning. He is a widely recognized expert in the areas of integrated marketing communications, direct, database and e-commerce marketing management, customer loyalty, customer relationship management, and channel integration. He is a former Senior Vice President of The Leo Burnett Company, former Vice President and General Manager of Ogilvy & Mather Direct/OgilvyOne, and former member of the editorial advisory board for the Journal of Consumer Marketing. Blog: http://about.me/tchere - See more at: http://socialmedia.org/summit/preconference/#sthash.VvXCBOyz.dpuf

Appendix: Engagement Insight from academic studies

• Conceptual roots of CE* draw on theory addressing interactive experience and value co-creation within marketing relationships.

• 2010 Journal of Service Research Special Issue titled ‘‘Customer Engagement’’ is of particular relevance to advancing engagement research in marketing.

• Premise 10 states ‘‘Value is always uniquely and phenomenologically determined by the beneficiary.’’

• Of particular note is that the terms ‘‘engage’’ and/or ‘‘engagement’’ appear to replace more traditional relational concepts, including ‘‘involvement’’ and/or ‘‘participation.’’

• The five propositions

– CE reflects a psychological state, which occurs by virtue of interactive customer experiences with a focal agent/object within specific service relationships

– CE states occur within a dynamic, iterative process of service relationships that co-creates value

– CE plays a central role within a nomological network of service relationships

– CE is a multidimensional concept subject to a context-and/or stakeholder-specific expression of relevant cognitive, emotional, and behavioral dimensions

– CE occurs within a specific set of situational conditions generating differing CE levels

*CE = Customer Engagement

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