Recent research by LoyaltyOne and two leading North American academic institutions has offered further proof that social media interactions between customers and brands drives both immediate and long-term sales increases. This article is copyright 2012 The Best Customer Guide.

The study by LoyaltyOne, Northwestern University and The University of Western Ontario's Ivey School of Business, established a link that has long been sought by brands that have invested heavily in social media efforts, all the while trying to prove the return on investment to sceptics in the C-suite. The '2012 LoyaltyOne Social Media Transaction Impact Study' report was based on a two-year analysis of brand-customer social media engagement and actual transaction data with LoyaltyOne's Air Miles loyalty programme in Canada.

Consumers who participate in the Air Miles programme earn reward miles by making purchases from its affiliated business partners (sponsors) and services throughout Canada. They can then redeem their miles for a range of travel, entertainment and merchandise rewards. The study examined members' participation in online events and contests from February 2009 to May 2011, and found that Air Miles collectors who participated in social media events and promotions increased their purchases from Air Miles programme partners by 15% - 30% compared to non-participants.

"This research provides evidence that investment in social media has the potential to return benefits in the form of transactions, profits and ROI - if done well," noted LoyaltyOne's executive vice president and CMO, Neil Everett. "But it also demonstrates that the data obtained through loyalty programmes generates a reliable method of measuring this connection."

Among other highlights from the study:

  • The mere act of writing a short public statement on a social media site spurs significant lifts in transaction activity;
  • Longer, more elaborate posts dealing with redemption experiences (travel, entertainment) created higher lift than shorter, product-based posts;
  • The higher the level of participation in a social media event, the greater the impact on a consumer's purchasing activity;
  • Brands can use social media as a tool to raise the value of lower-volume, high-potential consumers who have more room to increase their spend;
  • Events that encourage participants to recreate the core benefits of a brand have higher lift effects than more generic posts, resembling a 'co-creation effect'.

Complete findings from the 2012 LoyaltyOne Social Media Transaction Impact Study can be found in a white paper entitled 'The Social Media Payoff - Establishing the Missing Link Between Social Media and ROI', which has been made available for free download from LoyaltyOne's web site - click here (free registration required).