Improving Customer Loyalty Tops Social Media Budgets

by Jack Loechner, Sep 16, 2010, 8:15 AM

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According to national survey results jointly released by COLLOQUY and the Direct Marketing Association, 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.

Specifically, the 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.

The 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.

DMA Research Manager Yoram Wurmser observes that "... marketers across all sectors are involved in social media...  after five or six years in the space, and growing social media budgets, marketers are still testing the waters... with the incentive to accelerate their efforts being driven by consumer's rapid adoption of this trend." 

In fact, says the report, research from Nielsen released this week shows that consumers are spending 43% more time on social media than a year ago, making social networking and blogs the top online activity followed by online games and email.

An important revelation 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
• 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

Other key findings reveal a lack of metrics for success differentiated by objective:

• When asked to identify the most important measure of social media success, nearly two-thirds of respondents selected "don't know"
• Of those who identified a measurement, the largest group, covering 20%, said engaging customers to respond and provide feedback
• 65% of respondents said they're not using any listening tools to monitor what their customers are saying about their brand

For additional information about the study from Colloquy, please visit here.

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