Imagine for a moment that you are a disgruntled customer. (This is easy for me.) You’ve had a bad experience — let’s say a faulty product or poor service. You complain at the store. A savvy clerk listens, apologizes, addresses your concern, and solves your problem to your satisfaction.
Now, imagine this same scenario was resolved online in a social media forum. Either way, you’re pleased with the result.
If many of your purchase experiences are less than ideal (like mine are), this resolution is a pleasant surprise. You think to yourself, “This is the way life should be!” You tell a few friends about your experience. Your feelings toward the brand are more positive. Your loyalty has been (at a minimum) maintained, and perhaps even deepened.
Here’s an example at Jason Sander’s channel on Now Public about how JetBlue solved a customer’s problem: “JetBlue Twitterer gets customer a wheelchair.”
What is this positive experience worth to the brand? In other words, what is the ROI of keeping the customer happy? What is the financial value of brand loyalty?
Social media marketing is new, but measuring the value of brand loyalty isn’t.
In his white paper, “Strategic brand value: Advancing use of brand equity to grow your brand and business,” Michael Leiser of Prophet says, “The measure of customer loyalty also has a distinct tie to financial performance, in that loyal customers make repeat purchases of their brands of choice over the lifetime of their relationship with them. The ability to maintain loyalty translates into higher future profits per customer.”
In Jason Fall’s post, “What is the ROI for social media?,” and the subsequent comments, he addresses this point in his response to Amy Nowacoski: “It’s about the life of the consumer, not the cling of the cash register. Give me 100 people who will buy my stuff for the next 15 years over 10,000 who will buy it today every single time.”
According to a consumer branding study by management consultants Kuczmarski & Associates, brand loyalty drives up to 70% of all purchase decisions. Brand Keys, a research consultancy specializing in customer loyalty and engagement metrics, showed that in increase in customer loyalty of only 5% could increase lifetime profits per customer by up to 100%.
Bottom line: Loyalty has always been the goal of branding. Brand loyalty has financial value which can be measured. And social media is clearly a promising channel for building loyalty. Just ask @metschick if she will fly JetBlue again.
