The #1 Social Media Metric for SaaS Companies

by contributor on January 25, 2011 in Social Media

In a recent Washington Post article about how customer success is driving Eloqua’s growth, our CEO Joe Payne discussed the disproportionate importance of customer retention to SaaS businesses.  Payne indicated that 90 percent of Eloqua’s revenue comes from existing customers needing more services, and, as a result, he spends more time “growing and satisfying (our) current customer base instead of worrying about the new guy.”

Here’s another way to look at it: Eloqua did $51M in GAAP revenue in 2010, but we already have $60M pre-committed from existing clients in 2011.  Certainly, customer retention matters to all businesses, but when your revenue performance relies on a subscription model, retention becomes paramount.  Churn customers; close shop.

It was this realization – in concert with an enlightening conversation with Jonathan Block of SiriusDecisions – that led us to study the relationship between social engagement and customer advocacy.  I guest blogged about this study in a post titled, “Your Social Followers Are Your Best Customers” on David Armano’s Logic+Emotion blog, so I won’t rehash all details here.   Basically, the study went something like this: We analyzed the past 500 LinkedIn User Group comments, posts on our Facebook Fan page, and tweets related to Eloqua; isolated content created by our customers; pulled the Net Promoter Scores (NPS) for each socially engaged customer; and compared that group against our baseline customer.

The results affirmed what many marketers have suspected: Socially engaged customers are highly likely to be brand advocates.  How much more likely?  Look at this graphic:

Despite our very respectable baseline customer NPS score:

  • Customers who post about Eloqua in our LinkedIn User Group are more than 3 times more likely to be promoters than our baseline customer.
  • Customers who comment in our Facebook Fan page are 7 times more likely to be promoters than our baseline customer.
  • Customers who tweet about Eloqua are a whopping 9 times more likely to be promoters than our baseline customer.
  • Overall the NPS for customers who engage with us on social channels is 450% higher than our average NPS.

As I noted in my Logic+Emotion post, this study only begins to address the correlation between social media and brand advocacy.  It doesn’t prove causation.  It’s unclear if our best customers engage with us on social channels because they like us, or if the act of engaging with us induced them to favor us.  Nevertheless, it argues that our instinct is correct when it comes to social media: The more a brand engages, the more advocates it creates.  And when customer satisfaction is the lifeblood of your business, as it is for SaaS companies, NPS is the one metric you need to track when it comes to your social marketing efforts.

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