Best Buy, Coca-Cola Case Studies Prove ROI of Social Media? (Well, Not Really)



Brian Cantor
05/10/2012

A recent Forrester Research study that swept media outlets off their feet reveals that customers who "Like" a brand on Facebook are more likely than non-Facebook fans to purchase, consider purchasing and recommend products from that brand.

In other news, those who bought a brown shirt at some point in the last few years are more likely to wear a brown shirt than those who did not purchase one. Those who wear their New York Giants jerseys to work on "Casual Friday" are more likely to show public support for the team than those who do not wear such jerseys.

Marketing decisions are almost exclusively made on considerations of revenue and lead generation, and it is no surprise that marketers and customer management leaders, in an effort to demonstrate the potential ROI of social marketing, will grasp at any straw in their sight lines. But professionals most certainly cannot step outside the realm of reality and common sense to establish that ROI; the media’s analysis of Forrester’s study is yet another example of that rule being violated.

It is a shame that factors like "reducing cost per call" and "recovering brand detractors" are often not enough for executives to pull the heaviest trigger on social marketing spend. On such matters, social has already managed to show tremendous value for wide arrays of organizations, thereby proving its worth as an investment.

But it is simultaneously not unfair to expect social marketing to yield greater market share, greater revenue, greater profit and greater brand advocacy. After all, for all the dialogue customer management professionals place on "social customer service," it remains commonplace to focus on the supposed marketing benefits of social media.

We talk about how social is supplanting traditional channels for effective advertising. We celebrate the accumulation of "followers" and "fans" as a sign that business is booming. Insofar as social has at least partially been earmarked as a strategic marketing avenue, it is not unreasonable to expect users to "put up or shut up."

And that pressure to prove ROI explains why studies like this one, which really do not establish anything about the efficacy of social marketing, are improperly hailed as game-changers.

The study, which evaluated Facebook fans vs. non-fans of brands like Best Buy, Wal-Mart, Coca-Cola and Blackberry, indeed shows a higher level of customer engagement for Facebook fans. For the respective brands, and note that especially-poor engagement for non-fans of Blackberry greatly skews the data, 81% of fans purchased in the past 12 months, as compared with 49% of non-fans. Seventy-nine percent of fans are likely to consider purchasing, as compared with 45% of non-fans. Seventy-four percent are likely to recommend to friends, as compared with 35% of non-fans.

A simple comparison of the numbers implies that a "Like" contains considerable value, but an evaluation with even a hint of depth reveals the silliness of that conclusion. And we do not even need to dwell on the whole causation vs. correlation debate; there is clearly no demonstration of a causal link between a Like and a purchase. These results are, quite simply, definitional.

By publicly Liking a brand, one, in essence, is already advocating for that brand. It is therefore no secret that those who favorably engage with a brand on Facebook are more likely to recommend that brand to friends. The same logic applies to purchasing and considering future purchases—what is surprising or newsworthy about an ongoing brand customer also liking that brand on Facebook?

If anything, the real news in this study is that Facebook is not the end-all, be-all of gauging and connecting with a fanbase. Sizable chunks of non-Facebook fans are, after all, still very likely to consider purchasing and advocating.

Researchers, professionals and media really need to make sure they approach social media findings from the proper perspective. When evaluating social’s footprint on business, I want to see, for instance, the extent to which getting one to Like my brand translates to new business—I want to know that my courtship of 400,000 Facebook fans will yield revenue I never could have received without Facebook. I want to know that a Facebook fan who previously planned to spend $500 on my brand over the course of a year will spend $1000 on the basis of the Wall Posts and Tweets my social marketers share.

Those kind of findings would be establishing causation and therefore value. I have previously pointed to a laughable comment I heard during a presentation that still underscores the problem with how we evaluate social marketing: "We have significantly more Facebook fans than our top competitor, which nonetheless continues to generate significantly more revenue than us."

Really.

It is, of course, wonderful to be able to point to a list of millions of individuals who proudly wear my brand’s badge for all their friends to see. It reassures that my message is resonating and that my brand is connecting with the target audience.

But the intent of social marketing is not simply to create "badges" for our most loyal customers to wear. It is about creating customers (as in, I had no interest in your brand until I Liked it, now I buy from you) and turning existing customers into bigger spenders and more loyal customers. It is about growing market share and generating new, revenue-friendly leads; not simply getting customers to admit publicly that they are supporters.

Sure, there is some silver lining in this study. The fact that a brand’s Facebook fans tend to be more engaged as customers suggests there is meaning behind a Facebook Like—it is not solely a product of randomness or desire for a quick-fix discount or contest entry. These people really do want to associate with the brand.

But if the concern is about generating value for the business, there is little value in showing that Facebook fans really, really do like my brand. I need to show that my Facebook efforts drive new purchasing, increased purchasing and increased advocacy.

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