Engagement Labs Analytics About Value of Consumer Conversations Published in MIT Sloan Management Review

Analytics Shows That Both Online and Offline Consumer Conversations Drive Purchase Decisions but Require Separate Marketing Strategies

Engagement Labs Inc., an industry-leading data and analytics firm that provides social intelligence for Fortune 500 companies, announces that a new analysis by the Company is published in MIT Sloan Management Review.

The MIT Sloan article titled “Deriving Value From Conversations About Your Brand,” is based on analytics conducted and authored by three executives of Engagement Labs in conjunction with Koen Pauwels, Professor of Marketing at Northeastern University. The article demonstrates that in most cases there was little correlation between what consumers say online and offline about brands, even though both streams of conversation can have big effects on a company’s sales.

The analysis is based on Engagement Labs’ proprietary TotalSocial data and analytics, reveals that 19 percent of U.S. consumer purchases are traced to consumers talking about brands online and offline.

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In addition, the analytics determined correlations between consumer conversations and purchases for 175 brands across multiple sectors such as beauty, personal care, retail, technology and food, as well as more detailed analytics of 21 brands, including Apple, Intel, A&W, Campbell’s, Lay’s, Red Bull, and Revlon.

MIT Sloan Management Review publishes top quality content, and we are delighted to be able to contribute and join a highly esteemed community of authors and researchers in the fields of business and marketing,” said Ed Keller, CEO, Engagement Labs. “I urge Fortune 500 marketing leaders to read our report and analytics that provide guidance for driving growth through online and offline social strategies.”

How Customer Conversations Affect Sales

The Engagement Labs analytics found that offline and online conversations had similarly large impacts on sales. For the 21 brands most closely studied, 9 percent of purchase decisions could be traced back to online conversations and engagement that occurred in social media (including Facebook, Twitter, Instagram, YouTube, blogs, and customer forums). A slightly larger share — 10 percent of sales — was related to offline conversations as measured through continuous surveys.

The Metrics That Matter Most

For offline conversations, the most important metric was the volume, or quantity, of conversations. While for online conversations, sentiment mattered more. Notably, the analytics found that online and offline sentiment often move in opposite directions. Another metric worth tracking is the extent to which the brand is being talked about off-line by “influencers” — people who regularly give consumer advice.

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Implications for Marketing

Engagement Labs recommends that marketers look for ways to drive more positive conversations both online and offline. In many cases, this will mean going back to marketing fundamentals — rethinking product design, market segmentation, customer service, messaging, and channel selection — with social strategy in mind. Understanding the value that each type of conversation may provide — and how — can help businesses develop smarter marketing strategies and make targeted investments that lead to growth.

“There are a number of quite important implications of this study for marketers,” said Keller. “Underestimating or ignoring the impact of social influence will negatively impact a brand’s bottom line. Social media conversation has a measurable business impact. Our analytics also demonstrate that social influences go well beyond the screen. Consumers are making purchasing decisions at the water cooler, on dates and at home with family, as well as chatting with friends on Twitter and other social networks.”

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