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New research finds [download page] that customers who participate in a brand’s social community are likely to show higher transaction volume in the weeks following the event that spurred their engagement. Using Canada’s AIR MILES rewards program as a case study, LoyaltyOne, which operates the program, combined 2-and-a-half years of social media interactions with actual transaction data for members identified by a disguised unique member ID, finding a “direct, positive, and tangible” link between social media activity and transaction volume.

To establish that link, LoyaltyOne looked at the AIR MILES social community website, where members discuss and share tips about reward miles. The researchers then examined website activity surrounding 3 AIR MILES events that invited social media participation from site members, using incentives such as bonus miles and lotteries.

By tying the site activity to the actual transactions of participants and a control group of non-participants (who were prompted to participate but did not), the study found that members who participated by sharing their thoughts about AIR MILES and the benefits the program affords them boosted their transactions with AIR MILES companies by 15-28% over the performance of the control group in the 8 weeks following the events. (Transactions were measured as reward miles collected, frequency of AIR MILES transactions, and the number of AIR MILES partners visited each week.)

The study concludes that prompting dialogue triggers engagement, which in turn begets transactions. In particular, what are important are initiatives that give customers the chance to participate in ways that reinforce the brand’s value.

Lower-Volume Customers Showed The Most Lift

Further results from LoyaltyOne’s “The Social Media Payoff” indicate that the social participants who had been low- or medium-volume users of the AIR MILES program in the 2 weeks prior to the events showed the most lift in transaction volume, up to 37% over the control group during the first 2 weeks following the events. High-volume users of the program showed relatively smaller lift in transaction volume, likely because they were already spending a lot to collect the reward miles.

The study infers that social media engagement can therefore lift the value of  customers who have low value but nonetheless have high potential.

Other Findings:

  • Examining one event in particular, the “Winer Event,” the study finds that participants who gave longer answers to the question posed on the community site tended to collect more reward miles.
  • AIR MILES members who received and opened the email inviting them to participate at the social media site but took no action actually showed higher transaction volume after than a control group who received the email but did not open it. Similarly, those who opened the email and clicked through to the page without contributing a post showed higher volume than those who simply read the email.

About the Data: The sample sizes studied were 25,326 for social participants, and 69,682 for non-participants. Due to the length of the study methodology, the key points are pasted directly below.

“The core of the research was its ability to identify individual members through the anonymous numerical key representing their program ID. This allowed researchers to view the before-and-after activity of members individually and in aggregate, and therefore also in segments within that whole. To establish the level of participants’ social media activity, the events were conducted via the AIR MILES social media platform, where sign-ins meant that all posts made could be associated with an individual member.

The learning here is the importance of linking social media across all touch points into your customer database. Measuring social media marketing efforts has been haphazard and disconnected from real business results for too long. The study shows the importance of linking the unstructured data of social conversations into the structured decision frameworks and valuation metrics of a brand’s CRM and/or loyalty program management. That means setting up your own proprietary social-interaction sites (community pages, online customer service sites, blogs, and so on) to register your customers through their loyalty- membership numbers. Even third- party social platforms, such as Twitter and your various Facebook pages, can be employed to establish that link back to your proprietary member tracking. Incent members to register via engaging events and contests to build your visibility into “who’s saying what” and the downstream impact
that may have on sales.

A clear goal was established for the research: to determine the nature of participation on the
AIR MILES community website and measure the downstream transaction impact, if any, of different forms of participation (active posting versus passive viewing, posting of positive versus negative comments, the length of posts, the incidence of event-motivated posts versus general posts, and so on). The purpose was not to measure activity ”“ it was to measure financial impact. What questions must you answer ”“ for key stakeholders and decision-makers ”“ and what information will help you answer them?

The study held out one carefully matched sample control group that did not receive the email invitation to the events. In addition, the researchers created three large post-hoc (after-the-fact) control groups for all events, composed of members who received the email invitation but who did not participate in the events.

Researchers then tracked the long-term impact of these marketing events by monitoring customer behavior in the two weeks before and the eight weeks following each event. They measured reward miles collected, frequency of AIR MILES transactions, and the number of AIR MILES partners visited each week. More than two years of data were incorporated in the research. In each of the events studied, invitations were emailed to all AIR MILES members (except the hold-out control group). The emails linked to the AIR MILES community website, where members were required to sign in, meaning that all posts could be linked to an individual member. Researchers subsequently reviewed more than 99,000 unique posts made by users before and after the marketing events. Researchers were able to track how much time each person spent viewing and posting to the site, and link that information to downstream customer behavior.

A loyalty program’s ability to identify customers is a powerful tool to create that linkage.”

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