Social media posts impact consumer spending: study

For businesses using social media, posts with high engagement have the greatest impact on customer spending, according to researchers, including one of Indian origin.

Researchers from the University at Buffalo in the US, assessed social media posts for sentiment - positive, neutral or negative, popularity (engagement) and customer's likelihood to use social media and found the popularity of a social media post had the greatest effect on purchases.

"A neutral or even negative social media post with high engagement will impact sales more than a positive post that draws no likes, comments or shares," said Ram Bezawada, associate professor at the University at Buffalo.

"This is true even among customers who say their purchase decisions are not swayed by what they read on social media," he said.

The researchers studied data from a large speciality retailer with multiple locations in the northeast US.

They combined data about customer participation on the company's social media page with in-store purchases before and after the retailer's social media engagement efforts.

They also conducted a survey to determine customer's attitudes towards technology and social media.

The study also found that business-related social posts significantly strengthen the effect of traditional television and email marketing efforts.

When social media is combined with TV marketing, customer spending increased by 1.03% and cross-buying by 0.84%.

Cross-buying refers to when a customer purchases additional products or services from the same firm.

When combined with email marketing, customer spending increased by 2.02% and cross-buying by 1.22%.

"The clear message here is that social media marketing matters, and managers should embrace it to build relationships with customers," said Bezawada.

"Developing a community with a dedicated fan base can lead to a definitive impact on revenues and profits," he said.

The study was published in the Journal of Marketing.