Can Social Media Cultivate Long-Term Loyalty?

  • Danielle Dalton, Bridget Akinc, and Gerald C. Kane
  • June 07, 2016

Social media can be used as a tool to guide brand strategy.

Instagram is home to 200,000 brands and boasts one of the highest Millennial user growth rates among social media platforms. Some estimate that 51.8% of all social network users will use Instagram by 2017. Its visual platform makes it easy for users to share and recommend — via tags, likes, and follows — but not to make purchases. These attributes make it popular among aspirational Millennials, but challenging for brands that want to measure the impact of their Instagram investment. The value of referrals on a purchase decision has spawned an entire marketing segment (referral marketing), but the value of sharing content before a consumer enters the consideration stage of the purchase funnel has not been quantified.

It can be hard to justify the cost of operating social media accounts to managers without being able to quantify the value provided in dollar-amount terms. “It’s important that we continue to shift our focus from the short-term sale to the long-term value of social media. Part of our willingness to make this shift comes from trust that our efforts will pay off, even if not immediately, and part comes from finding new ways to measure results over time,” says Emily Teele, loyalty and retention marketing manager at the home goods retailer west elm. While calculating the value of a social media follower can be difficult, the potential value of these followers is real.

Companies can engage aspirational consumers as brand advocates, even before they purchase. Aspirational customers follow brands that represent the values, causes, status, and communities that they want to be a part of as customers. Contrary to their popular portrayal as window shoppers, aspirational consumers identify with brands whose value extends beyond status and into empowerment, trust, and social responsibility. Our research suggests that these consumers may provide real value for companies.

Who are Aspirational Customers?

We conducted a survey of 401 Instagram users ages 18-33 in April of 2016 (see “About the Research”). Sixty-six percent of respondents follow at least one brand on Instagram, with a median number of six brands followed. Of those who do follow brands, 56% follow at least one brand that they have not made a purchase from — yet. Our data suggests that they do plan to purchase in the future. Today’s followers are very likely to be tomorrow’s customers. Cultivating loyalty among those who follow your brand but have not yet purchased can add near-term benefit of expanding your reach through word-of-mouth and long-term value by adding to your sales pipeline.

The near-term value of customer response and referrals has been the focus of several studies to date. A McKinsey study attributes word of mouth to be the primary influencer for 20-50% of all purchase decisions. McKinsey points to content that relates to a customer’s experience with the product being the most influential. Our data, however, suggests a more nuanced story. Followers who are not yet purchasers can share their experience with the brand, and deepen their commitment to the brand, even prior to that first purchase. Followers who tell a friend about a brand’s Instagram account report a greater likelihood that they will purchase that brand than those who do not tell others about the account. That is, those who are brand followers hold the power to influence through sharing. And it may not be just those who hear about the brand who are more likely to purchase, but those who share it as well.

Why Don’t Aspirational Customers Buy Now?

But why are these customers not purchasing your product today? Our research suggests two main reasons: budget constraints and lack of current need.

The biggest reason our respondents gave for not purchasing was that the brand’s products were beyond their current budget. Nearly half of our respondents (47%) indicated this reason for not having purchased the brand to date, but nearly 60% of these indicated they were likely or very likely to purchase from the brand when their budget could accommodate it. In short, these followers want to be your customers, they just can’t afford it right now. This was true across multiple categories of industries, including apparel/accessories, beauty, home goods/décor, and technology/electronics. Brands can use platforms like Instagram to maintain relationships with these potential customers until they are financially able to buy. Failure to engage them, however, may make them more likely to purchase elsewhere when that time comes.

The other major reason aspirational customers have not yet purchased is that they have no current need for what a brand sells. About a third of our respondents (35%) indicated this reason, yet over half of these (54%) were also likely or very likely to purchase when the need arose. For these customers, marketers can use platforms like Instagram to build brand equity and to activate the passive need within these consumers. Millennials want to understand what the brand stands for. The most recent Cone Communications study corroborates this, revealing that more than nine out of ten Millennials would switch brands to one associated with a cause, and that two-thirds use social media to engage with brands associated with a cause.

Consumers may also associate the brand’s products with career goals and taking the next step in their lives. We found a strong positive association between a brand that inspires followers to achieve their career goals and a stronger purchase likelihood. In other words, if brands can inspire customers to achieve higher aspirations, those they inspire are likely to repay that inspiration by purchasing their product.

These aspirational customers are no accident. When we asked consumers who have purchased from brands, 40% indicated that they followed the brand before making their first purchase. Many aspirational customers “check out” a brand on social media to determine if they are worthy of a purchase.

How to Engage Aspirational Consumers

Pre-purchase loyal consumers shouldn’t be dismissed as mere followers. If we extrapolate our survey data to the population of Instagram users more broadly, the numbers are striking. We estimate that roughly 32 million Millennial Instagram users follow at least one brand, and about 18 million haven’t yet made a purchase from at least one of these. Of these 18 million, about 14 million intend to make a purchase from at least one of those brands in the future. Aspirational consumers can represent an important source of future customers for brands, particularly for the beauty industry. Followers of beauty brands exhibit significantly higher purchase intent than followers of brands in other industries, such as apparel, tech, or home goods.

Today’s challenge is converting engagement into action. Thanks to the rise of marketing technology tools, brands can now quantify engagement and conversion. Social media heavily influences brand sentiment. Our data shows that followers who indicate that the primary benefit of following the brand on Instagram is learning about the brand show a greater intent to purchase. Our data also suggests that brands that can effectively communicate to these followers that they care about their customers also increased purchase likelihood.

If your brand is on Instagram or other social media platforms, your current followers are likely also your future customers. They’re listening today to whether and how you interact with your current customers. “One of the key things in terms of building a social media strategy is that you need to build a brand around a community and not a community around the brand,” says Randy Kohn, senior enterprise sales director of Olapic, a leading platform in visual user-generated content management for brands such as The North Face. Strong digital communities allow brands to transform individuals into brand advocates before they’re even a customer.