Can Social Media Influence Complex Luxury Purchases?
Insight into how affluent consumers use social media has been thin on the ground, particularly when it relates to complex luxury purchases. But a recent study on the social media behaviour of 'mass affluents' (defined as those with assets of $100,000 to $1 million, excluding the value of their homes) produced by Cogent Research sheds some light on this little researched area.Before we delve into the research and its findings, it's worth sharing a few caveats upfront. Firstly, Cogent's research was carried out in assocation with Linkedin, so it's not entirely independent. Secondly, it's based on US affluents rather than those in the UK - although in our experience UK affluents have more in common with their US counterparts than with their European ones, so the insights are still useful. Finally, most of the research is centred on the financial services industry - although if we use financial services as a proxy for considered luxury purchases, then the findings can still be revealing.When it comes to usage, the study confirms that US 'mass affluents' are highly engaged in social media - 90% had used some form of social media in the past 12 months, with 72% using Facebook, 50% using Linkedin and 27% using Twitter. This backs up research in the UK from Ofcom which finds higher sociodemographic groups more likely to be active social media users.As you'd expect, the study's audience was found to be highly likely to use social media for professional purposes. However, the research found that they weren't just using social media for making business connections, but were highly engaged with companies as well - 44% had engaged with financial companies on social media, 31% had read content from those companies on social media, 30% had followed or liked those companies and 23% had reviewed those companies' multimedia content.Nearly 40% of the study's respondents had turned to social media for ﬁnancial education or research, whether that be learning about ﬁnancial trends, companies or products (i.e. discovery), or seeking advice or further information to evaluate what they’d learnt (i.e. consideration). Nearly 2 in 3 of those who had used social media for both purposes had taken action – whether that be opening or closing an account, or purchasing a new product.In terms of their expectations of financial institutions on social media, 3 key requirements emerged - social media as an enabler for enhanced customer service, as a means of providing timely updates such as market commentary and product performance, and as means of providing relevant content such as new information on products and services. In terms of the most appropriate social media channel to deliver this information, Linkedin was found to be the most trusted social source for financial information.For us, there a 2 take outs from this research. Firstly, social media has primarily been seen as being most influential in lower involvement, less complex purchases. This research suggests that, if approached in the right way, it can be play a role in more complex and considered purchases if used in the right way. Here the emphasis is not on discounts or on entertainment, but on creating high quality and relevant content to take consumers through the purchase funnel from discovery to consideration, delivering excellent customer service and providing relevant information post purchase.Secondly, where the purchase is linked to the professional life of the purchasers - and we're thinking not just financial products here but tech products such as mobile phones, laptops and tablets, business travel and even business fashion and accessories - then Linkedin clearly has potential due to its professional credibility. And it's a network that's often neglected too.Some luxury brands - particularly those which are more complex and involved purchases - have concluded that social media is not for them. More research is needed but this study, if not conclusive, at least suggests that a re-think is in order.The full whitepaper 'Influencing the Mass Affluent: Building Relationships on Social Media' can be read here.