Does consumer engagement in social media increase revenue and customer retention?

Marketing is increasingly focused on using social media to encourage consumer engagement.

Nearly 80% of marketers believe that consumer engagement with their products on social media will increase revenue and customer retention, and 90% of US mid-to-large-sized companies are now using social media for marketing purposes.

Brands often encourage consumers to engage with them across social media platforms in several ways, such as prompting likes, shares and product posting, as conventional wisdom suggests that encouraging engagement in this way raises awareness and, hopefully, lifts sales.

But Is this really the case?

Andrew Stephen and co-authors sought to address this question in their paper When Posting About Products in Social Media Backfires: The Negative Effects of Consumer Identity-Signalling on Product Interest. Involving a collective total of 1237 participants, the authors conducted five experiments which explored consumer behaviour in relation to the posting of identity relevant products.

Findings suggested that consumers frequently express themselves by posting about products in social media. As with actual, real-world product purchase and consumption, consumers can use their product interactions in social media to express their identities. Yet, the studies revealed that there are conditions where posting products in social media can negatively influence consumer purchase intentions when posting identity-relevant products. The authors argue that posting allows consumers to virtually signal their identity; fulfilling identity-signalling needs, and thereby negating the necessity to purchase.

What does this mean for marketing professionals?

The authors suggest theoretically and managerially relevant moderators that may reduce negative effects on individual intent to purchase. They suggest that brands frame content they want consumers to post in a way that emphasises their products, or add some type of external motivation for posting behaviour, such as a discount or reward for posting. Marketers could also delay their responses to consumers who interact with them, breaking the link between an identity-signalling social media post and making a purchase.

The authors emphasise that there is no negative effect on purchase intentions if consumers post products that are not identity-relevant. They recommend further research examining how consumers can post about non-material, experiential things like ideas, activities, and goal striving more generally. They suggest that there may be situations where signalling aspirational identities, such as in the case of weight-loss or fitness, will actually encourage greater (rather than less) engagement.

Overall, these findings and suggestions have important implications for how firms can conduct social media marketing to minimise negative purchase outcomes.

When posting about products in social media backfires: the negative effects of consumer identity-signalling on product interest’ is written by Lauren Grewal, Andrew Stephen and Nicole Coleman, and is published in the Journal of Marketing Research.