The bottom line: social media should drive sales

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Is your social media strategy successful? Is it driving sales? These are the questions raised in this exclusive article by EyeforTravel’s guest columnist Tom Bacon who says to succeed with social you need to put sales at the heart of your strategy.

Judging by a debate at a recent airline industry merchandising conference– that’s the new buzzword for airline ancillary revenue – everyone, predictably agrees that there needs to be a return for expenditures in the social arena.  All executives, apparently, must deal with disciplined finance departments that insist on financial accountability. However, what nobody could agree on was what exactly it means to deliver an ROI from social media and how exactly to measure it. To measure ROI consistently, we need to agree on its value to customers and in turn its value to a company.  There are, it seems, four ways social can do this.

1.  Social media as a customer service tool                 

For many airlines, social media is more about customer service and not in fact a direct part of sales at all. In fact, social media has become a new vehicle for responding to customer complaints.  Many companies have responded with subgroups in customer relations that are dedicated to social media.  In this area, one could calculate an ROI based on complaints or customer interactions handled per company representative. And social media allows representatives to respond faster to customers.

Having said this, it is not clear that companies achieve a positive ROI in customer service-directed social media.  As it has helped customer service manage certain complaints, it has also become easier for customers to log complaints.  Many customer relations departments are larger, not smaller, than before. 

Potentially, many customers are now more satisfied by how their concerns are handled.  This can be measured but as far as measuring ROI is concerned the big question is: will they buy more airline tickets?

2.  Social media gives us ‘pizzazz’

At the conference we heard of dazzling new social media gimmicks from various executives.  These included everything from a midnight fare sale to a contest to name a new aircraft.  One airline gained social media ‘hits’ for an April Fools’ Day video spoof. 

In this sense, social media is really an extension of the brand:  ‘fun’, ‘goofy’ or ‘low cost’. It’s a possible mechanism for breaking through the noise of media and advertising today.  In this sense, however, it might be easier to reinforce certain brands (‘fun’, ‘unique’) in quirky social media outlets than other brand images (‘professional or “five star”).

And again, this doesn’t exactly lend itself to normal ROI measurement.  What’s the value of greater brand awareness?  How will travellers factor the ‘April Fools’ Day’ spoof in their purchase decisions or is this just pure entertainment value?               

3. Social media as a sales tool

The most direct ROI comes from increased sales and, certainly, social media is a sales tool for many airlines.  We know how to measure sales initiatives.  Does our social media campaign drive more sales than we would have expected without the campaign?  Are customers responding to our social media presence with more bookings?  Do our Facebook ‘likes’ translate into bookings?

Even though it is measurable, experience says that sales-oriented social media campaigns do not generate satisfactory ROI’s.  In a previous role as chief commercial officer of an airline, I launched a special social media-oriented sales initiative.  Here we teased our followers with a countdown to the sale and then offered deeply discounted fares to popular destinations. Regretfully, we picked up a few dozen bookings across thousands of followers.

Typically, companies offer discounted fares via social media for short periods – basically flash sales.  However, such campaigns do not offer customers ‘the right product at the right price at the right time’.  The audience is not necessarily planning a trip; they are not necessarily interested in those destinations. The campaigns are not sufficiently targeted to the customer’s needs or his purchase decision timeline.  So to get any sales at all, the offer must be extraordinarily discounted.  Like flash sales’ sites, these have very limited value.

4. Social media builds and maintains relationships  

In the end, social media facilitates the building and maintaining relationships. Companies need to leverage this core role of social media and drive an ROI on relationships.

Social media supports sharing with friends – pictures, stories, interesting news articles or videos, experiences with a list of ‘friends’ that often runs into the hundreds.  People love social media as a way to keep in contact - incredibly, for some people, 24/7.

The bottom line: social ROI requires putting sales first

How can companies or airlines leverage this passion for social media?  What do airline customers care about that companies can help address or facilitate? Virtually everything above (customer relations, pizzazz and sales) offers opportunities for customer engagement.  But to drive ROI, delivering sales is the bottom line.  The entire social media strategy should be built around sales. In addition to all of the above tools – and more – need to be leveraged to gain these sales.  Sales that become relationship-oriented – and measurable outcomes of social media -- are related to loyalty and referrals, not ‘flash sales’.

Loyalty is measurable – frequency of travel, selection one airline against the competition.  Certainly, your most loyal customers are more likely to engage with you in social media in the first place. However, potentially a strong social media relationship can increase purchases even from loyal passengers (who may occasionally violate their ‘loyalty’ and choose one of your competitors due to price or schedule).  Measuring sales from your most engaged social media customers should help frame your strategy and ensure you’re on the right path. Referrals too are measurable – social media recommendations can be highly successful.  Word of mouth is often the best source of leads and social media is a modern ‘word of mouth’.  Your ‘followers’ endorsement of your product (‘great leg room’) or a destination you serve (‘the trip to Cancun was amazing’) or a fare (‘you can visit me for under $100!) can be extremely powerful.  Encourage your ‘followers’ to share their travel or flight experiences – and consider offering vouchers - or better yet miles - for referrals.

This is what we mean by a social media strategy.  Companies that have been most successful in social media see it as a tool for building customer relationships – and driving more sales.  Companies that have been most successful do in fact calculate their social media ‘ROI’ and monitor campaigns to ensure they are on track.

Tom Bacon is a former executive at American Airlines and Frontier Airlines and is currently chief executive of airline consulting firm, Revenue Optimization. With 30 years experience behind him, he specialises in pricing and profitability management for airline-related companies. Questions to tom.bacon@yahoo.com

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