Social Media Marketing and its influence on brand loyalty

Social Media Marketing and its influence on brand loyalty

Posted | Updated by Insights team:
Dr. Evangelo Damigos; PhD | Head of Digital Futures Research Desk
  • Competitive Differentiation

Publication | Update: Oct 2022

As social media marketing can play a crucial role in establishing a brand and fostering long-term customer interactions, it is important for marketers to recognise the potential and the difficulties that lie ahead. Social media is an excellent tool for businesses large and small to build strong customer relationships, generate leads and achieve lasting customer loyalty and satisfaction:

·       Brands that regularly engage with their customers on social media tend to have higher customer loyalty

·       Brands can build strong customer relationships that set them apart from their competitors

·       Brands can reinforce corporate values

·       Brands can turn consumers into brand advocates

A Q2-Q3 2020 GWI survey of more than 51,000 US internet users found that about a third (34%) of US consumers follow companies they like on social media, while about a fifth (18%) follow brands they are considering buying from. They also use social media to discover fun and entertaining things to do (36%) and to pass the time (36%). The research revealed that nearly a third of Millennials use social media to research things they want to buy. According to this study of internet users aged 16-64, 20 percent of Americans and 23 percent of the global web traffic have followed or liked a brand on social media. 20 percent of respondents in the United States and 22 percent of participants of a global average said they had visited a brand's social media page, while 16 percent had used a brand's share button. Another 13 percent said they clicked on a paid social post. And, fortunately for marketers, only 11 percent admitted to no longer following or liking a brand on social media.[1]

...Figure 1: Consumer’s brand interactions on social media. % of respondents who have done the following in 2021, March. Marketing Charts. (2021, April). 1 in 5 have followed a brand on social media in the past month. Retrieved from: https://www.marketingcharts.com/digital/social-media-116710

 In the search for relevant marketing activities related to social media, companies need to find out which actions are likely to have a stronger impact and lead to an improvement in brand value and customer loyalty. The use of social media networks in the marketing industry has had a positive impact on consumer attitudes towards companies. Below are some of the key initiatives social media managers can start to increase brand loyalty and offer prospects a better insight into companies' operations, products and services:


1.     Make social media engagement an integral part of the promotional campaigns

Instant win competitions, high stakes prize draws and other exciting promotional programmes should be included as vital components in a brand's marketing strategy. However, if a company runs these types of campaigns in a way that requires social media engagement, it will be amazed at how quickly this can boost online participation and maximize its social media reach and interaction. It is easy to motivate customers to share photos or videos of them enjoying a brand’s products or services, and it is a surefire way to increase brand awareness without resorting to traditional (and expensive) advertising.[2]


2.     Provide excellent service

Companies known for their ability to retain their clients for the long-term, they typically excel at delivering excellent service. Customers want a smooth experience when they have a problem or need an answer, not hurdles to overcome. Below we highlight three critical factors when it comes to building customer loyalty:


·       Be proactive: This requires anticipating a customer's next request and helping them avoid problems before they arise. A company’s brand positions itself as a strategic partner, rather than a one-off problem solver, when it provides excellent customer service.


·       Hire customer agents with soft skills: A well-trained support team can solve immediate problems, but agents who also provide a positive experience can help creating long-term relationships. Soft skills include empathy, relationship building and the ability to connect emotionally with customers even under stress.


·       Make personal connections: Magnolia, a popular home accessories brand for defines success as much more than helping customers with billing or shipping incidents. It is about making personal connections and creating community. Agents have transitioned their level of support from ‘transactional’ to ‘experiential’, and are always actively listening to the caller’s experience.[3]


3.     Cross-channel Brand Promotions

The goal of a marketing contest, sweepstakes or giveaways should be to increase a company's reach while raising brand awareness. This requires, of course, a well-prepared plan to prevent It is a risk that may occur if the campaign will be featured in the press. For example, to run successfully a fundraising campaign, its PR team should support it and help spread the word about what it hopes to achieve. Therefore, to establish a true omnichannel campaign, it needs to promote its offer across different (if not all) marketing channels. Even if a competition is exclusively on Instagram, digital marketers should encourage participation on Facebook and Twitter. This way, consumers are directed to various social media pages and engage with the brand.[4]


4.     Become a thought leader in target market

Social media gives a company a voice to not only participate in conversations, but also to steer them in the direction it thinks they should go and establish the reputation of its products. Everything it does should meet at least one of these criteria, and the ideas and new strategies it wants to test should be evaluated for their ability to achieve these goals. A company should keep this general guidance in mind as it moves to the next step: identifying its target audience.[5] Using social media allows marketers to connect with the customers quickly and effectively. If done correctly, it can build brand loyalty.



[1] Marketing Charts, (2021, April). 1 in 5 have followed a brand on social media in the past month. Retrieved from: https://www.marketingcharts.com/digital/social-media-116710

[2] Davis, B. (2022, January). How to use social media to improve customer loyalty in 2022. Stamp Loyalty Solutions. Retrieved from: https://www.stampme.com/blog/how-to-use-social-media-to-improve-customer-loyalty

[3] Painter, L. (2020, March). Customer loyalty: A guide to types and strategies. Zendesk. Retrieved from: https://www.zendesk.com/blog/customer-loyalty/

[4] Endres, K. (n.d.). Creating a successful social media contest for your brand. Blue Fountain Media. Retrieved from: https://www.bluefountainmedia.com/blog/creating-a-successful-social-media-contest-for-your-brand

[5] Research Optimus. (2019, February). Social media impact on brand identity & marketing. Retrieved from: https://www.researchoptimus.com/blog/make-it-or-break-it-impact-of-social-media-on-brands/

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Objectives and Study Scope

This study has assimilated knowledge and insight from business and subject-matter experts, and from a broad spectrum of market initiatives. Building on this research, the objectives of this market research report is to provide actionable intelligence on opportunities alongside the market size of various segments, as well as fact-based information on key factors influencing the market- growth drivers, industry-specific challenges and other critical issues in terms of detailed analysis and impact.

The report in its entirety provides a comprehensive overview of the current global condition, as well as notable opportunities and challenges. The analysis reflects market size, latest trends, growth drivers, threats, opportunities, as well as key market segments. The study addresses market dynamics in several geographic segments along with market analysis for the current market environment and future scenario over the forecast period. The report also segments the market into various categories based on the product, end user, application, type, and region.
The report also studies various growth drivers and restraints impacting the  market, plus a comprehensive market and vendor landscape in addition to a SWOT analysis of the key players.  This analysis also examines the competitive landscape within each market. Market factors are assessed by examining barriers to entry and market opportunities. Strategies adopted by key players including recent developments, new product launches, merger and acquisitions, and other insightful updates are provided.

Research Process & Methodology


We leverage extensive primary research, our contact database, knowledge of companies and industry relationships, patent and academic journal searches, and Institutes and University associate links to frame a strong visibility in the markets and technologies we cover.

We draw on available data sources and methods to profile developments. We use computerised data mining methods and analytical techniques, including cluster and regression modelling, to identify patterns from publicly available online information on enterprise web sites.
Historical, qualitative and quantitative information is obtained principally from confidential and proprietary sources, professional network, annual reports, investor relationship presentations, and expert interviews, about key factors, such as recent trends in industry performance and identify factors underlying those trends - drivers, restraints, opportunities, and challenges influencing the growth of the market, for both, the supply and demand sides.
In addition to our own desk research, various secondary sources, such as Hoovers, Dun & Bradstreet, Bloomberg BusinessWeek, Statista, are referred to identify key players in the industry, supply chain and market size, percentage shares, splits, and breakdowns into segments and subsegments with respect to individual growth trends, prospects, and contribution to the total market.

Research Portfolio Sources:

  • BBC Monitoring

  • BMI Research: Company Reports, Industry Reports, Special Reports, Industry Forecast Scenario

  • CIMB: Company Reports, Daily Market News, Economic Reports, Industry Reports, Strategy Reports, and Yearbooks

  • Dun & Bradstreet: Country Reports, Country Riskline Reports, Economic Indicators 5yr Forecast, and Industry Reports

  • EMIS: EMIS Insight and EMIS Dealwatch

  • Enerdata: Energy Data Set, Energy Market Report, Energy Prices, LNG Trade Data and World Refineries Data

  • Euromoney: China Law and Practice, Emerging Markets, International Tax Review, Latin Finance, Managing Intellectual Property, Petroleum Economist, Project Finance, and Euromoney Magazine

  • Euromonitor International: Industry Capsules, Local Company Profiles, Sector Capsules

  • Fitch Ratings: Criteria Reports, Outlook Report, Presale Report, Press Releases, Special Reports, Transition Default Study Report

  • FocusEconomics: Consensus Forecast Country Reports

  • Ken Research: Industry Reports, Regional Industry Reports and Global Industry Reports

  • MarketLine: Company Profiles and Industry Profiles

  • OECD: Economic Outlook, Economic Surveys, Energy Prices and Taxes, Main Economic Indicators, Main Science and Technology Indicators, National Accounts, Quarterly International Trade Statistics

  • Oxford Economics: Global Industry Forecasts, Country Economic Forecasts, Industry Forecast Data, and Monthly Industry Briefings

  • Progressive Digital Media: Industry Snapshots, News, Company Profiles, Energy Business Review

  • Project Syndicate: News Commentary

  • Technavio: Global Market Assessment Reports, Regional Market Assessment Reports, and Market Assessment Country Reports

  • The Economist Intelligence Unit: Country Summaries, Industry Briefings, Industry Reports and Industry Statistics

Global Business Reviews, Research Papers, Commentary & Strategy Reports

  • World Bank

  • World Trade Organization

  • The Financial Times

  • The Wall Street Journal

  • The Wall Street Transcript

  • Bloomberg

  • Standard & Poor’s Industry Surveys

  • Thomson Research

  • Thomson Street Events

  • Reuter 3000 Xtra

  • OneSource Business

  • Hoover’s

  • MGI

  • LSE

  • MIT

  • ERA

  • BBVA

  • IDC

  • IdExec

  • Moody’s

  • Factiva

  • Forrester Research

  • Computer Economics

  • Voice and Data

  • SIA / SSIR

  • Kiplinger Forecasts

  • Dialog PRO

  • LexisNexis

  • ISI Emerging Markets

  • McKinsey

  • Deloitte

  • Oliver Wyman

  • Faulkner Information Services

  • Accenture

  • Ipsos

  • Mintel

  • Statista

  • Bureau van Dijk’s Amadeus

  • EY

  • PwC

  • Berg Insight

  • ABI research

  • Pyramid Research

  • Gartner Group

  • Juniper Research

  • MarketsandMarkets

  • GSA

  • Frost and Sullivan Analysis

  • McKinsey Global Institute

  • European Mobile and Mobility Alliance

  • Open Europe

M&A and Risk Management | Regulation

  • Thomson Mergers & Acquisitions

  • MergerStat

  • Profound

  • DDAR

  • ISS Corporate Governance

  • BoardEx

  • Board Analyst

  • Securities Mosaic

  • Varonis

  • International Tax and Business Guides

  • CoreCompensation

  • CCH Research Network

Forecast methodology

The future outlook “forecast” is based on a set of statistical methods such as regression analysis, industry specific drivers as well as analyst evaluations, as well as analysis of the trends that influence economic outcomes and business decision making.
The Global Economic Model is covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure. We aim update our market forecast to include the latest market developments and trends.

Forecasts, Data modelling and indicator normalisation

Review of independent forecasts for the main macroeconomic variables by the following organizations provide a holistic overview of the range of alternative opinions:

  • Cambridge Econometrics (CE)

  • The Centre for Economic and Business Research (CEBR)

  • Experian Economics (EE)

  • Oxford Economics (OE)

As a result, the reported forecasts derive from different forecasters and may not represent the view of any one forecaster over the whole of the forecast period. These projections provide an indication of what is, in our view most likely to happen, not what it will definitely happen.

Short- and medium-term forecasts are based on a “demand-side” forecasting framework, under the assumption that supply adjusts to meet demand either directly through changes in output or through the depletion of inventories.
Long-term projections rely on a supply-side framework, in which output is determined by the availability of labour and capital equipment and the growth in productivity.
Long-term growth prospects, are impacted by factors including the workforce capabilities, the openness of the economy to trade, the legal framework, fiscal policy, the degree of government regulation.

Direct contribution to GDP
The method for calculating the direct contribution of an industry to GDP, is to measure its ‘gross value added’ (GVA); that is, to calculate the difference between the industry’s total pre­tax revenue and its total bought­in costs (costs excluding wages and salaries).

Forecasts of GDP growth: GDP = CN+IN+GS+NEX

GDP growth estimates take into account:

  • Consumption, expressed as a function of income, wealth, prices and interest rates;

  • Investment as a function of the return on capital and changes in capacity utilization; Government spending as a function of intervention initiatives and state of the economy;

  • Net exports as a function of global economic conditions.


Market Quantification
All relevant markets are quantified utilizing revenue figures for the forecast period. The Compound Annual Growth Rate (CAGR) within each segment is used to measure growth and to extrapolate data when figures are not publicly available.


Our market segments reflect major categories and subcategories of the global market, followed by an analysis of statistical data covering national spending and international trade relations and patterns. Market values reflect revenues paid by the final customer / end user to vendors and service providers either directly or through distribution channels, excluding VAT. Local currencies are converted to USD using the yearly average exchange rates of local currencies to the USD for the respective year as provided by the IMF World Economic Outlook Database.

Industry Life Cycle Market Phase

Market phase is determined using factors in the Industry Life Cycle model. The adapted market phase definitions are as follows:

  • Nascent: New market need not yet determined; growth begins increasing toward end of cycle

  • Growth: Growth trajectory picks up; high growth rates

  • Mature: Typically fewer firms than growth phase, as dominant solutions continue to capture the majority of market share and market consolidation occurs, displaying lower growth rates that are typically on par with the general economy

  • Decline: Further market consolidation, rapidly declining growth rates


The Global Economic Model
The Global Economic Model brings together macroeconomic and sectoral forecasts for quantifying the key relationships.

The model is a hybrid statistical model that uses macroeconomic variables and inter-industry linkages to forecast sectoral output. The model is used to forecast not just output, but prices, wages, employment and investment. The principal variables driving the industry model are the components of final demand, which directly or indirectly determine the demand facing each industry. However, other macroeconomic assumptions — in particular exchange rates, as well as world commodity prices — also enter into the equation, as well as other industry specific factors that have been or are expected to impact.

  • Vector Auto Regression (VAR) statistical models capturing the linear interdependencies among multiple time series, are best used for short-term forecasting, whereby shocks to demand will generate economic cycles that can be influenced by fiscal and monetary policy.

  • Dynamic-Stochastic Equilibrium (DSE) models replicate the behaviour of the economy by analyzing the interaction of economic variables, whereby output is determined by supply side factors, such as investment, demographics, labour participation and productivity.

  • Dynamic Econometric Error Correction (DEEC) modelling combines VAR and DSE models by estimating the speed at which a dependent variable returns to its equilibrium after a shock, as well as assessing the impact of a company, industry, new technology, regulation, or market change. DEEC modelling is best suited for forecasting.

Forecasts of GDP growth per capita based on these factors can then be combined with demographic projections to give forecasts for overall GDP growth.
Wherever possible, publicly available data from official sources are used for the latest available year. Qualitative indicators are normalised (on the basis of: Normalised x = (x - Min(x)) / (Max(x) - Min(x)) where Min(x) and Max(x) are, the lowest and highest values for any given indicator respectively) and then aggregated across categories to enable an overall comparison. The normalised value is then transformed into a positive number on a scale of 0 to 100. The weighting assigned to each indicator can be changed to reflect different assumptions about their relative importance.


The principal explanatory variable in each industry’s output equation is the Total Demand variable, encompassing exogenous macroeconomic assumptions, consumer spending and investment, and intermediate demand for goods and services by sectors of the economy for use as inputs in the production of their own goods and services.

Elasticity measures the response of one economic variable to a change in another economic variable, whether the good or service is demanded as an input into a final product or whether it is the final product, and provides insight into the proportional impact of different economic actions and policy decisions.
Demand elasticities measure the change in the quantity demanded of a particular good or service as a result of changes to other economic variables, such as its own price, the price of competing or complementary goods and services, income levels, taxes.
Demand elasticities can be influenced by several factors. Each of these factors, along with the specific characteristics of the product, will interact to determine its overall responsiveness of demand to changes in prices and incomes.
The individual characteristics of a good or service will have an impact, but there are also a number of general factors that will typically affect the sensitivity of demand, such as the availability of substitutes, whereby the elasticity is typically higher the greater the number of available substitutes, as consumers can easily switch between different products.
The degree of necessity. Luxury products and habit forming ones, typically have a higher elasticity.
Proportion of the budget consumed by the item. Products that consume a large portion of the consumer’s budget tend to have greater elasticity.
Elasticities tend to be greater over the long run because consumers have more time to adjust their behaviour.
Finally, if the product or service is an input into a final product then the price elasticity will depend on the price elasticity of the final product, its cost share in the production costs, and the availability of substitutes for that good or service.

Prices are also forecast using an input-output framework. Input costs have two components; labour costs are driven by wages, while intermediate costs are computed as an input-output weighted aggregate of input sectors’ prices. Employment is a function of output and real sectoral wages, that are forecast as a function of whole economy growth in wages. Investment is forecast as a function of output and aggregate level business investment.