Measuring Social Media’s Impact on Loyalty

Today I listened to a podcast interview with Jake McGee of Big in Japan on the Marketing Monger Podcast.  His firm specializes in helping companies tap the benefits of social media such as Blogs and message boards. While he praises social media as an important loyalty builder, he claims that the ROI is not very measurable.  Since customer loyalty is a key goal (particularly in my company where we sell subscription based software) – I began thinking about how social media might be measurable.

For a company with registered users/customers, it is best to start by creating a field in the database representing each social media program.  Each time a logged in customer participates in a program (such as reading the message boards) it should be recorded in the database.  After enough data has been collected it should be clear whether there is any correlation between participating in the program and higher customer lifetime value (improved customer loyalty).  If there is a correlation, more funds should be concentrated in social media programs.  If no correlation can be identified, resources should shift to other, more direct ROI generating programs.

2 thoughts on “Measuring Social Media’s Impact on Loyalty

  1. Hi there, just a bit of follow-up. If it wasn’t clear, my point was more about ROI being too much of a focus for whether or not you should actually DO social media. That’s like saying “When I meet a sales lead, should I shake his hand?” Value and ROI often get confused and mixed up, I think.And while I completely agree with your points about registered user tracking, I’m not sure that we’re talking about the same thing. Tracking registered users is certainly one method, but tracking word of mouth, brand appreciation, and seemingly personal relationships is very difficult and largely irrelevant (again, tracking, not doing).Anyway, great to read your comments!

  2. Thanks for the clarification Jake. Sorry if I put words in your mouth that weren’t quite accurate. Your Marketing Monger interview got me thinking – and any mental stimulation is a good thing for marketers. Since much of my marketing experience has been in venture funded tech companies, I’m very cognizant of where I allocate my team’s time and resources. A few bad decisions can easily cause a tight resourced company to fold (most startups eventually do fail). Luckily there is more than one path that leads to success. Generally I try to stick to a path that consists of activities with very measurable benefits. Of course many of these activities have additional benefits that can’t be measured, but if I can track a positive ROI then everything else is gravy. Things like a hand shake (or a polite customer service rep…) don’t require much additional time and resources. That personal touch is essential to success and is really a no brainer. Can we succeed without a large time investment in social media? Absolutely. Can social media be an important tool to help drive success? Probably. If I can measure a good return from the time investment in social media, then it will definitely be a part of our marketing mix. If I can’t – it will have a minor role at best. Again – thanks for the dialog and making me think.