Monday, March 16, 2009

Marketers Bank on Social Media to Attract and Retain Profitable Customers

How can marketers trapped in a vortex of plunging consumer demand and growing budgetary constraints that has made it necessary to curtail or completely eliminate investments in traditional marketing channels and programs hope to attract, retain and increase the value of profitable customers? At least part of the answer lies in harnessing the power of social media marketing to encourage customer advocacy, according to research by Aberdeen Group, a Harte-Hanks Company.

A new benchmark report, called “The ROI on Social Media Marketing: Why It Pays to Drive Word of Mouth,” reveals that 68% of Best-in-Class companies are revising their marketing budgets for 2009 to increase their spending in social media marketing. Based on survey responses from more than 275 diverse enterprises, the report places particular emphasis on how Best-in-Class companies launch successful viral campaigns, form and participate in niche communities, and spur customer advocacy through various other approaches to social media marketing all the while gleaning valuable customer insights from consumer-generated content to inform future marketing actions. Despite the seemingly obvious benefits, Aberdeen research reveals that the investment in social media marketing is not always easy to justify in terms of financial outcomes. In fact, over half of all companies indicated that it was either somewhat difficult (39%) or very difficult (20%) to make the business case for investing in social media marketing initiatives, partly due to a lack of defined performance metrics and the challenge of applying those metrics to track and measure marketing performance in terms of financial outcomes.

Aberdeen research suggests that when it comes to social media marketing, achieving the desired objectives means more than just deploying the right set of enabling technologies. Success in social media marketing also requires a combination of strategic actions and organizational capabilities. Aberdeen found that Best-in-Class companies are twice as likely as Laggards to have dedicated resources devoted to social media marketing, for example, and also more than twice as likely as Laggards to have defined performance metrics for measuring social media marketing effectiveness.

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