What if Social Media Doesn’t Matter?

April 7, 2011

Guest Post from MotiveQuest CTO Brook Miller (@brookmiller)

As I’ve worked the last 7 years in building metrics and tools to help companies understand the reasons why people do what they do, 3 facts have become evident:

1) Pretty much everyone is online

2) Online communities are reflective of or an enhancement to traditional social relationships

3) People I know are the best source of product recommendations

The digital trails consumer conversations leave online are a good approximation for the world at large.  The latest pew Internet research report show online population reaching  79% of all Americans.  Furthermore, rather than asking people questions about what they think, we can just observe what they say.  We don’t have to ask people if they do or don’t do something we can observe them.

Online communities are as real and vibrant as any other and are built around long term relationships.  Whether it’s a community like Facebook that looks like friendships I’ve developed throughout life or LinkedIn, the connections I’ve made in business, or on a forum like Rennlist, my boss’s favorite Porsche aficionado site, the community is strong and vibrant, with lots of on-going relationships that grow and fade with new people coming into ask questions from experts or lurkers that keep up with the community without contributing or the occasional visitor that just wants to see what the experts think.  These communities are strong, vibrant and have their analogs in social situations in the offline world.

The impact of person to person recommendations is stronger than advertising or other methods of company sponsored communications, when you want to know what car to buy you ask a car nut, when you want to know how to get the best deals on frequent flyer miles you ask a friend with a passion for travel.  Increasingly, though you’d find your friend saying “go look on flyertalk” there’s a thread for that (can I trademark “there’s a thread for that?”).  I was recently browsing flyertalk to figure out international fares for a 2 year old ( I’ve never booked a child fare before and didn’t want to get screwed) while I was there I saw a new miles promo on United it had been posted and had hundreds of comments before it even reached my inbox from United later that day.

Given that people online are pretty much everyone, the communities represent real social relationships and people I know give the most trusted recommendations we should clearly expect to see that a social media metrics measuring peoples’ recommendations to each other would be reflected in sales.

We measure advocacy, which is the number of people recommending a brand above any others, and have seen strong relationships between the metric and sales in a number of categories. (I’ll post more in the future specific to the nuts and bolts of it)

While the scales are different we can see the positive correlation in advocacy and luxury market share for BMW. Looking at the scatter plot and doing the regression confirms the relationship and it’s statistical significance with a p-value of 5% (we’re 95% confident that there is a positive correlation between advocacy and luxury market share).

Given the complexity of the automotive category and the economic conditions in this time frame it’s amazing that a single factor model can so nicely line up.  With an understanding of incentives to dealers/buyers, advertising spend and supply issues I’m certain the model could be improved but at the end of the day we’re validating that social media does matter.

Social media clearly has an impact on sales in this category and others.  Many times the relationship will not be this clear or the category may be so complex that a single variable model cannot tease out the results or there could be errors in the metric (source spam/problems, bad language model, etc…)  but if you believe in the 3 tenets, it’s not surprising and quite intuitive that there should be a link between a social media metric and sales.

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Monetizing Web 2.0

July 10, 2008

Continuous refrain heard in the Web 2.0 echo chamber – but how is anyone going to make money (@amandachapel) off of this? Below is a case study that incorporates Web 2.0 tools in every phase of the project. Listening to what people say online, using that to inform and execute the campaign, and then measuring results by observing changes in brand advocacy – which are a leading indicator of changes in sales.

Here you go:

  1. Listen and learn.

    “Mini USA, the American branch of BMW’s Mini Cooper line, tracks everything being said about its brand everywhere on line — in blogs, discussion groups, forums, MySpace pages and much more — then uses what it learns to guide advertising campaigns.”

    From Knowledge@Wharton article title “Not a Site but a Concept”: Tapping the Power of Social Networking

  2. Use Learning to Inform & execute

    Use what you learn by listening to inform what you do next. Devise your campaign to connect with what your target is passionate about rather than just making up a story and pushing it at them with $$$. (We learn what people are passionate about by listening.) Here is the slideshow from BSSP’s work with MotiveQuest to develop the campaign with what we learned about the community by listening:

    BSSP/MQ Mini Case Study

  3. Measure the results

    We measured changes in brand advocacy over time (using Online Promoter ScoreTM) resulting from the BSSP campaign for Mini and tied the changes in advocacy to sales. Learn è Execute è Measure.

    Measuring Brand Advocacy

So there it is a solid ROI case for Web 2.0 tools and techniques.

Discuss.

TO’B


Social Media Measurement & ROI

November 16, 2007

This is a big and popular topic, and having just read a few posts about it – Patrick Schaber over at the Lonely Marketer and Francois at Emergence Marketing motivated me to put up my own post about it.

Of course Social Media is a huge space, so I am focused on what we (MotiveQuest) do around here – which is listen. (We collect millions of topic-specific consumer conversations from blogs, forums and newsgroups and then analyze them to develop an understanding of the core human motivations & drivers and competitive dynamics within a category. Results used for branding, communication, product development and issue management)

Anyway, in conjunction with Northwestern University, MotiveQuest has been developing something called the Online Promoter Score. This is a measure of the frequency and willingness of consumers to advocate strongly for and recommend your brand or product.

Strong Predictive Relationship to Sales

MotiveQuest worked with MINI and their agency BSSP to measure the impact of online promoters to sales. The analysis covered 16 months of data from January 2006 through April of 2007. The graph to the right shows the correlation the monthly change in online promoters for the previous month versus the change in sales. For example the point in the upper right is MINI’s monthly change in sales from April to May 2006 and the change in online promoters from March to April 2006. Statistical analysis gives 99.8% confidence that the metrics are positively correlated.

promoter_correlation60.gif

So, if your marketing activities (social media and otherwise) can drive your online promoter score – then we have ROI!

Brilliant!

Tom O’Brien