How Engagement Through Social Media Affects the Bottom Line

. February 10, 2010

By Ritesh Gupta, Global Correspondent & Managing Editor, EyeforTravel

A study released last year indicated that the most valuable brands in the world are experiencing a direct correlation between top financial performance and deep social media engagement.

The relationship is apparent and significant: socially engaged companies are in fact more financially successful, according to a report released by Wetpaint/Altimeter Group. The study evaluated how well some of the established companies are engaging their consumers using social media and, even more importantly, how that engagement correlates with their most important financial metrics: revenue and profit.

From a travel company's perspective , Flo Lugli, EVP - marketing, Wyndham Worldwide, says using social media in a tactical way, as part of an integrated marketing campaign, is an excellent way to test the water and to see how engagement through social media affects your bottom line.

Lugli, who is scheduled to speak at the forthcoming Social Media Strategies for Travel USA 2010 Conference, spoke to EyeforTravel's Ritesh Gupta about social media. Excerpts:

Should social media be used to raise brand perceptions or as a tactical marketing tool?

Flo Lugli : Both. Being responsive to your consumers is paramount to brand perception. JetBlue is a great example. They engage with their customers through social media, and in doing so, they are true to their service tag line “bringing humanity back to air travel”.

Remember, it's about what you are trying to accomplish and creating a rewarding experience that reflects well on you and your brand. Don't try to boil the ocean all at once. Using social media in a tactical way, as part of an integrated marketing campaign, is an excellent way to test the waters and to see how engagement through social media affects your bottom line.

Given the immediacy of social networking, it's imperative that the strategy and execution don't end once it's out the door. The ability to quickly adapt and modify the approach is important. How do you think one should approach this as an ongoing initiative?

Flo Lugli : It's all about the resources and structure and how you monitor social media. Through social media, it's possible to receive immediate feedback vs. a print ad or a TV ad. Now, the opportunity or challenge is that consumers expect immediate feedback, so being flexible and responsive, and managing expectations is key.

The traditional way of doing business in a large corporation is that before you put out a statement or response, a number of people internally need to review it before it is read by the public. We have a 21st Century medium while most companies have a 20th Century infrastructure. So taking a look at long standing methods and how well your customer service is being perceived via social media is a big shift for many. So in order to protect and build strong brands, we marketers have to do a better job of educating and socialising our operations, financial and legal teams on the importance and impact social media has on business today.

Marketers acknowledge that it is essential that brands are aware of and monitor conversations that are happening about them in real-time so they can understand how their customers feel and can also protect their reputation where necessary. What do you think is being done in this arena and which is the best way to respond to such monitoring of conversations?

Flo Lugli : It is obvious some are doing a much better job than others, JetBlue, Southwest Airlines, and many of the retail brands are embracing social media in a responsive way that makes it almost look easy. It comes back to structure and how an organisation responds to the customer. For example, most companies wouldn't think of not responding to a snail mail letter or email correspondence with a customer complaint. I look at these customers as the same ones who are reaching out and connecting through social media platforms. It's the same bucket. Now, it's our job as marketers to educate the same people internally who value customer service and its affect on branding about how social media is a big conversation that contains many voices, critical to our business, customer relations and branding.

As companies increase their social media marketing budgets, they are also looking at ways to measure their return on investment. Which is the best way to measure the ROI of advertising campaigns in a social media environment? You may have many fans, or tweets but is it driving your business?

Flo Lugli : This depends on what your goal is - Most likely it's driving room nights, airline seats, or market share. So how do fan bases translate into business? It's up to us as marketers to manage expectations when recommending and researching options with social media and its costs.

The other quotient is that Facebook, Twitter, Blogs can't distinguish between whom or what may be a vocal minority or who may be criticising your brand. We all know perception is reality and the fans and followers don't always know, and in some cases don't' care, whether someone is a lone voice or two or a vocal majority. But this much is true, if you don't monitor this medium, you are going to end up on the short end of the conversation and potentially compromise your brand's strength and equity in the long run.

Would it be right to say that a basket of measures in line with site or campaign objectives is a much better indicator of success? For example, contributions, interactions, comments, video/photo uploads, fans etc. Should the overarching objective of any social media activity be around encouraging customers to engage with your brand?

Flo Lugli : However you can translate engagement on social media into more revenue is the direction we should all be taking at the end of the day. We need to understand and study how engagement translates into a financial model that can measure ROI. That can be a simple measurement, such as customer satisfaction, and companies with high satisfaction ratings are also the most profitable.

Flo Lugli is scheduled to speak at the forthcoming Social Media Strategies for Travel USA 2010 Conference. The two-day conference will take place in San Francisco (March 24-25).

For more information, click here:
Social Media Strategies for Travel USA 2010 Conference

Or contact:

Gina Baillie
VP Global Marketing & Events
+44 (0) 207 375 7197 (UK)

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