Loyalty Truth Blog » DMA

Social Media Spend Highest for Marketers Seeking Customer Loyalty

JillMcBride — Tue, 07 Sep 2010 12:15:46 +0000

U.S. companies that use social media primarily to deepen customer loyalty spend almost twice as much on this emerging channel as competitors who use it for brand awareness, customer acquisition and other core marketing purposes, according to national survey results jointly released by the Direct Marketing Association (DMA) and COLLOQUY.

Specifically, the DMA-COLLOQUY survey results show the average social media spend for marketers whose primary objective is to obtain customer loyalty was $88,000 last year, compared to $53,000 for brand awareness and $30,000 for customer acquisition, the objectives that attracted the next highest spending levels.

Additionally, the DMA-COLLOQUY survey shows that the amount of social media budget marketers allocated to loyalty objectives increased by 293 percent over the past 12 months, easily surpassing allocation increases for all other social media-related marketing objectives.

“Social media budgets for loyalty objectives experienced the most growth last year and, in fact, the last three years,” said COLLOQUY Managing Partner Kelly Hlavinka. “Savvy social media marketers recognize they must turn first to their best customers and apply the same principles inherent to loyalty, which are combining economic incentives with social capital.”

DMA and COLLOQUY teamed this year to create a profile of US marketers’ social media activities, with a focus on spending trends and metrics for success in building customer loyalty. In late June and early July they tapped via email survey the expertise of COLLOQUY subscribers, DMA’s nationwide membership and other qualified marketers, obtaining 369 valid responses from marketers to a 17 point questionnaire.

A conclusion that can be drawn from overall survey results is that the use of social media as a marketing tool is still in the early experimental stage. “Marketers across all sectors are involved in social media,” said DMA Research Manager Yoram Wurmser. “However, after five or six years in the space, and growing social media budgets, marketers are still testing the waters to figure out what works, with the incentive to accelerate their efforts is being driven by consumer’s rapid adoption of this trend.” In fact, research from Nielsen released this week shows that consumers are spending 43 percent more time on social media than a year ago, making social networking and blogs the top online activity followed by online games and email.

One of the key revelations from the research is that the absolute dollar amount marketers are setting aside for social media is low:

When asked what percentage of their company’s overall marketing budget is spent on social media, the largest group, covering 24 percent of survey takers, selected “don’t know”
17 percent of respondents said they allocated only 1 percent of their annual marketing budget to social media
16 percent said they allocate 4-5 percent
Smaller companies with tighter budgets are significantly more likely than large companies to say they spend almost 50 percent of their marketing budget on social media.

Another key finding reveals a lack of metrics for success differentiated by objective:

When asked to identify the most important measure of social media success, nearly two-thirds of respondents selected “don’t know”
Of those who identified a measurement, the largest group, covering 20 percent, said engaging customers to respond and provide feedback
65 percent of respondents said they’re not using any listening tools to monitor what their customers are saying about their brand.

DMA and COLLOQUY hosted a free webinar, Deploying Social Media to Generate Customer Loyalty: A Tell-All Marketers Survey yesterday afternoon. Additionally, a report containing complete survey results is available from DMA for a price of $135 for DMA members and COLLOQUY subscribers, and $240 for non-members/subscribers. To purchase a copy of the report, visit DMA’s Bookstore by clicking here. Members of the press may request a complimentary copy of the survey by contacting Carmela Uzzi, DMA media relations manager, at cuzzi@the-dma.org.

Frequent Flyer Fountain of Knowledge – Airline Information

BillHanifin — Wed, 14 Oct 2009 13:06:13 +0000

I am often asked where to go to learn more about Loyalty Marketing. Until Mark Johnson and his crew launched Loyalty 360, it was difficult to provide a useful answer. There are occasional tracks presented at the annual DMA event and Colloquy continues to deliver its Loyalty Marketing Workshop in conjunction with the DMA, but for up-to-date industry specific information, the choices narrowed.

One new entrant that should be worth attending is the Cards & Payments Loyalty Conference slated for 2 December in New York.

If you’re looking for airline specific information on Loyalty Marketing, I’d suggest that you become involved with Airline Information, the brainchild of Christopher Staab and Roger Williams. Both of these gentleman have deep roots in the airline business and, through their conferences, are not afraid to tackle the tougher issues of ancillary revenues, frequent flyer programs, and cobrand credit & debit card partnerships.

One of the bigger topics in discussion these days is how the need for development of ancillary revenues can conflict with cost savings. Considering that a mainstay of frequent flyer programs has been the cobranded credit card, it is controversial that the airlines eagerly accept $billions earned from co-branded credit cards while mounting protest to the amount they pay in merchant fees. Edgar Dunn & Company and ARC estimate that the airline industry faces annual cost of U$1.5 billion for the privilege of accepting credit card payments or approximately U$12 per ticket, so the magnitude of the issue is clear.

You can take part in the debate by attending one or both of AI’s conferences in the coming weeks. First up is the FFP-ARAC “Mega-Event” to be held 22-23 October in Los Angeles. This conference has a decidedly strong marketing bias while the Airline & Travel Payments Summit, planned for 2-3 December in Miami will address payment and revenue issues as well as related marketing topics.

If you can’t wait for either conference and want to stay on top of industry issues, you can also visit Roger Williams’ Load Factor blog.

I recently attended an AI Networking Cocktail in Miami and hosted Evan Liu of Spirit Airlines as he talked about the role of Free Spirit for the carrier and future plans for development. These events are well organized and attended and I encourage you to give AI some mind share if you are interested in the airline industry.

AI has been specifically looking into the development of cobranded airline debit cards as a compromise solution between ancillary revenue and cost savings. Delta Air Lines recently introduced a SkyMiles co-brand debit card in association with SunTrust Bank, and considering the economics of the debit card, you might ask why and how can issuers/airlines support the value proposition of giving away frequent flyer miles on debit card purchases.

AI was looking for the same answers and recently published results of 31 airlines surveyed in their latest “45 Second Survey on Cobrand Loyalty Debit Cards”. They found that only 37.9% of airlines had previously looked at the benefits of issuing a cobrand debit card while over 55% consider debit cards as a “steady or significant” source of growth for ticket purchase. Today only 5% of airlines surveyed offer a cobranded debit card, though 48% responded that they were “very interested” in pursuing co-branded debit cards.

To navigate safely through the storms of commercial aviation and take part in the rebirth of frequent flyer programs, stay in touch with AI.

Should you Pay to Speak at DMA09?

BillHanifin — Sat, 28 Mar 2009 04:03:48 +0000

The Direct Marketing Association, known as The DMA, is the leading trade association of “business and nonprofit organizations using and supporting multichannel direct marketing tools and techniques”. Even in the digital age, Direct Marketing (DM) remains a huge business. As you can read from their site, expenditures by U.S. companies totalled $173.2 Billion during 2007, equivalent to 10.2% of total U.S. GDP. To say that the DMA is a powerful organization is an understatement, but is the DMA introducing policies that could create long term damage to its brand?

Among the year-round slate of conferences, seminars, and educational events, the crown jewel of the DMA is their Annual Conference & Exhibition, known this year as DMA09. I have facilitated DMA sponsored seminars in the U.S. and Brazil and have attended the Annual Conference on many occasions, presenting on a few. It has always been competitive to be accepted as a speaker at a DMA event and the influencers of selection can be reduced to Brand (the power of your company’s brand in the market), Client (the interest the market has in a campaign run by your client), or Money (to what extent you sponsor or exhibit at the event). In 2009, it seems that Money has become a more influential filter for speaker selection as the DMA instituted speaker proposal fees ranging from $59 for council members to $199 for non-members.

The new policy sparked controversy. Robert Rosenthal kicked off heated conversations in Facebook and LinkedIn groups where he wrote:

“The Direct Marketing Association is circulating its call for DMA09 presenters. This year there’s a new twist…the DMA will charge a processing fee for proposal submissions in 2009 to cover the administrative costs associated with managing the RFP process….have they gone too far with this policy? The implications are serious as long term damage to their organization is not out of the question.”

The posts which followed were passionate and largely in opposition to the new policy. This excerpt sums up the opposing argument succinctly:

“Speaking at DMA events is a marketing and networking opportunity. It has brought me can’t-put-a-price-on-it credibility….I’d also like to think that the benefits flow both ways. Surely by traveling and speaking at our own expense, and by sharing what would otherwise remain proprietary information, we render a valuable service to the DMA and its members. Must we now pay, not only to be of service, but to think up and suggest ways to do so?”

Ultimately, the DMA’s Bill Carls, Senior Digital Marketing Associate, posted a response directly from the Office of DMA’s President.

“….We believe most people understand the inherent value of taking a leadership position in the direct marketing community by sharing thought leadership at the global event for integrated marketing. For them, the investment of a small processing fee upfront should not be a real deterrent, even in these increasingly challenging times.”

Weighing the stream of comments from both social networks, it is clear to me that the DMA elected a policy that is contrary to the interests of its members. Except for a few outliers, the majority of entrepreneurial and business-owning DMA members vigorously objected to the new fees.

Capitalism has an interesting personality – the market unceasingly evolves to fill gaps as historical models decay and no longer provide value. Through its new policy, the DMA may be unwittingly contributing to the disintermediation of the conference business.

There are alternatives to incurring big fees and travel expenses to attend a conference when the highest element of value is often distilled to networking. As we all know, networking has gone viral – just witness the conversations on this subject in Facebook and LinkedIn. The DMA is not alone as SourceMedia, IIR, and others are adopting their own “pay to speak” business models.

I was taught at an early age that as soon as you think you are invaluable, you are at your most vulnerable. Conference organizers in the traditional model should take note. There are several avenues through which disintermediation could take place and I will cover a few in the very near future.