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Social Media Engagement Correlates To financial Performance

The results are in and social media is a winner.  Social media has been heartily embraced by most of the world, and a new study from Engagementdb shows that when companies use social media and use it well, they are almost certain to reap quantifiable financial rewards.

This truly groundbreaking social media study written by Charlene Li and Wetpaint, uses a robust statistical analysis to measure how Business Week’s top 100 brands are using social media to achieve financial success. The study’s goals were to measure “how deeply engaged the top 100 global brands are in a variety of social media channels and, more importantly, understand if higher engagement is correlated with financial performance”.

Each of the 100 brands was graded based on their social media engagement (how many social media channels they were engaged in and how deeply they were engaged).  The report states that “While no one yet has the data to determine direct cause and effect, what we do find is a financial correlation between those who are deeply engaged and those who outperform their peers.  Those who are most engaged have “sustained strong revenue and margin growth in spite of the current economy.”  The report ascribes this to “social media engagement promoting a customer-oriented mindset…which allows a company to identify and meet customer needs in the marketplace, generating superior profits.”

Successful social media strategies engaged by four companies profiled in the report include:  Blogging, Facebook pages, twitter, YouTube channels, discussion forums, wikis, and others.  Best social media practices included:  engaging with a company (like Backbone Media) to help formulate your strategy, allowing employees time to fulfill their blogging or tweeting obligations, getting buy-in from top management while having an internal social media champion, and cross channel engagement.

The report emphasizes that quality of social media engagement is critical to success.  For example, blog content should be regularly updated, comments should receive responses, and networking needs to be ongoing.  The authors state that “doing it all may not be for you — but you must do something” so you don’t fall behind your competitors.  Finally, it is better to identify a few channels that you can truly be engaged in rather than spreading yourself all over the place and not being as active as your audience expects you to be.

The top 10 companies for using social media strategies to their financial benefit are:

Starbucks, Dell, eBay, Google, Microsoft, Thomson Reuters, Nike, Amazon, SAP, and a tie for tenth between Yahoo! and Intel.

Filed under: Social Media

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