A model that demonstrates the link between consumer engagement and profit margins could be the necessary fuel to propel marketers into the boardroom.

Marketers must not only engage consumers through advertising,  experiences and online dialogues, but these days they need an in-depth financial understanding. A recently unveiled study by research consultancy Hall and Partners suggests that up to two-thirds of a brand’s profits may rely on effective consumer engagement.

To help marketers understand how what they do contributes to the “profit” column of the balance sheet, Hall and Partners has developed a model that links a brand’s level of consumer engagement with its profit margins. The “Engager” model also singles out key components on engagement that can connect marketers’ performance to a brand’s sales power.

Hall and Partners global innovation director Richard Owen explains: “When we go to a client, they may question the value of implementing and measuring engagement. We can show them that the likelihood of selecting, say, Virgin Atlantic for their next flight,  increases when other measures also go up. This validates a brand’s engagement activity.”

The Engager model, released last month, has been generated using the views of 2,500 UK consumers about 50 brands.  The overall research project takes in 250 brands in the UK, US, China and Australia, and uses the responses of 10,000 consumers.

Hall and Partners has devised a specific “Engager score” for each brand,  which takes into account numerous complex attitudes to companies, such as how much faith people have in a brand delivering and how willing they are to participate in “conversations” with it.

To make sure there is a real connection between consumer engagement and sales, the model also analyses which other measures rise when a consumer expresses commitment to buying a particular brand. A high score for purchase intent is duly mirrored by a high Engager score.

These Engager scores are also matched with company profit data sourced from the Forbes 2009 Top 2000 company list. While “intent to purchase” is a good indication of whether an item will sell, the real proof is in the eventual profits.

“We can explain two-thirds of the difference between brands’ profits through our Engager model,” says Owen. “If we rank ordered the 50 UK brands by their Engager score and rank ordered them on their profit margins, we’d be right two thirds of the time.” The remaining third of the profit generation, Owen suggests, is generated within areas such as product distribution and business management.

Read Full Article - Marketing Week

Recent Content