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Strategy

Should UGC Be Part of Your Retention Strategy?

Your customers' opinions matter - let them be heard by offering them a user generated content platform, and see the engagement skyrocket

Matt Duczeminski
June 13 2018

Companies not already on the UGC (User Generated Content) bandwagon are missing out on some major growth opportunities. For one thing, brands that implement UGC within their overall marketing strategy see their engagement metrics increase by an average of 28%. Similarly, user-created videos on YouTube that focus on a brand’s products or services have ten times the amount of views than content created by the brand. UGC is also much more cost-effective than traditional content and ad creation. UGC ads see about four times the clicks as ads featuring internally-created content – and costs about half as much per click. Finally, UGC essentially tugs at the heartstrings of the modern consumer. According to an infographic by Ipsos:

  • Millennials spend 30% of their time as consumers engaging with UGC
  • UGC is 20% more influential when making a purchasing decision than other forms of media
  • Consumers view UGC as 50% more trustable than traditional forms of advertising

Statistics aside, there’s still room to discuss how UGC affects the modern consumer’s likelihood of sticking with a specific brand over an elongated period of time, but if you’re looking for a “yes or no” answer as to whether user-generated content can positively affect your customer retention rate, the answer is a resounding yes. Throughout the following sections, we’ll discuss how the presence (and prevalence) of UGC within a brand’s overall marketing content not only keeps current customers onboard with a company, but also how it can increase the chances of new customers reaching the point of retention as quickly and efficiently as possible.

Let’s dive in.

User-Generated Content and Engagement

As we mentioned above, user-generated content is huge in terms of generating engagement – both among current and prospective customers. Let’s look at each separately.

Current Customers

We’ve talked before about how the buyer’s journey doesn’t – or shouldn’t – end after an individual becomes a paying customer. In fact, we might even say that the point of conversion is merely the springboard to a deeper relationship between both parties. Facilitating the creation of user-generated content can be an incredibly effective way to deepen your relationship with your current customers.

Think about it:

If a customer takes it upon themselves to take a picture, create a video, or write a summary of your products or services, they almost certainly have a strong opinion of your brand. It’s worth mentioning that there’s a bit of a “chicken and egg” scenario, here. Do customers become more engaged after they’ve created UGC, or are the customers who are already highly engaged the ones who typically create UGC? It’s a little of both. It stands to reason that your rabid fans are probably more likely to create UGC than your average, not-exactly-all-that-fanatical customers. And it’s not as if an “average” customer will magically become a raving fan simply because they snapped an Instagram picture with your product in it; there’s certainly more to the equation.

The creation of UGC, however, does add to an individual’s overall experience with your brand – if only just a little bit at a time. That said, the more UGC an individual creates featuring a specific brand, the more habitual it may become to do so.

(Source / You don’t think this is the only time this person Snapchatted their Starbucks drink, do you?)

If your company is able to facilitate habitual creation of user-generated content by its best and its average customers, you’ll inherently increase the role your brand plays in their life as a whole. A lot of UGC tends to live on in perpetuity on customers’ social media pages (of course, with the exception of Snapchats and Instagram stories). So, even if an “average” customer merely posts a single picture of one of your products on their page, they (and anyone in their network) will potentially come across their photo many times in the future – meaning your brand will continue to stay with them as time goes on.

Potential Customers

While the creation of UGC can enhance the engagement levels of your current customers, the consumption of it improves the engagement and conversion rates of your potential customers. Case in point: 82% of consumers see UGC – especially product reviews – as influential to their  purchasing decision. Additionally, nearly half of consumers say UGC enhances their ability to discover a brand for the first time. To back up these statistics, let’s take a look at a couple case studies.

Using data collected from 200,000 stores and 163 million orders, Yotpo found that individuals who viewed UGC converted at a rate of 5.65%, while those who did not engage with UGC converted at a rate of 2.16%. In other words, those who viewed UGC converted over 1.6 times as often as those who didn’t. Also worth noting is that the overall conversion rate for all customers within the study was 3.28% – nowhere near the conversion rate of pro-UGC customers.

The Mission offers another case study revolving around the effectiveness of online ads featuring UGC. In comparing ads featuring content created by customers with ads created internally by a company, The Mission found that UGC-related ads typically perform better in terms of click-through rate and cost-per-click – which, logically speaking, means UGC-focused ads are more cost-efficient for companies than their internally-created counterpart.

(Source / Caption: One example of UGC outperforming plain product photo ads.)

So, it’s pretty clear:

Brands that facilitate and distribute user-generated content face a huge advantage in terms of gaining visibility and engagement – and generating conversions.

User-Generated Content and Trust

The modern consumer trusts their fellow consumer to steer them in the right direction when it comes to making a purchasing decision. Again, let’s look at both the creators’ and the consumers’ side of the equation.

Current Customers

We talked earlier about the fact that individuals who take it upon themselves to create UGC are almost certainly above-average customers in terms of the value they provide the company in question. These individuals clearly place a high level of trust in the company, otherwise, they wouldn’t do so much business with them, right? But, as with engagement, there is no limit to the level of mutual trust a company and customer can have in one another. The creation and use of UGC can act as another “landmark,” to build even more trust between both parties.

For example, let’s say a representative of a company comes across a piece of UGC (say, a photograph on Instagram) featuring their brand’s product, and decides to reach out to the individual who created it. While a simple comment of encouragement might be enough to brighten the creator’s day (and, in turn, enhance their relationship with the brand), the company rep could take things a step further and ask if the creator would like to be featured on the company’s main Instagram account. The representative could also offer a small prize of some sort for creating the content.

As we’ve discussed in a previous article, companies might also consider doing the above in a more structured manner, such as creating an ambassador program for its most engaged customers. Again, such an agreement is built on trust: the company explains exactly what the UGC will be used for, and the creator (ambassador) knows what they’ll get in return.

Potential Customers

As Jorden Roper points out in her article discussing UGC’s effect on ecommerce conversion rates, user-generated content serves many purposes for consumers, including:

  • Providing social proof as to the quality of the product or service
  • Providing answers and information that potential customers may have about the product/service and its brand
  • Provide examples of the product/service in action

While all of this could be made available upon request by the company, the existence of UGC provides all of it to potential customers without their needing to “take the first step.” Not to mention that the company featured within the UGC also didn’t need to invest in creating it in the first place. The way in which the company engages with customers who have created UGC can also influence potential customers’ level of trust in the brand, as well.

Going back to our example where a company representative commented on a piece of UGC, others who see that the brand has taken the time to show appreciation for the content will likely (and correctly) assume that the brand offers more than just a product or service – it offers a full-blown, multi-channel experience for all of its customers. By showing appreciation for UGC, a company can assure prospective customers of their willingness to go above and beyond for their fans. Because of this, potential customers will inherently be more likely to come on board.

A Few Notes on Negative UGC

Not all user-generated content is positive. While negative UGC isn’t exactly good for business, it’s the way a company responds that can make or break its relationship with current and prospective customers.

Current Customers

You probably know that the vast majority of unhappy customers don’t complain – they walk away from your company without a second thought. Those who do complain are gifting you with an opportunity to make things right – and potentially keep them as customers. When you do respond to negative UGC, be honest, empathetic, and authentic. Above all else, ensure those who create negative UGC know just how grateful you are for the opportunity to amend the situation.

Potential Customers

Nearly three-fourths of consumers trust companies that publish negative reviews on their website. Doing so proves your brand is honest, transparent, and confident. The modern consumer is smart enough to see right through companies that showcase nothing but five-star reviews. Nobody wants to do business with a brand that pretends to be perfect. So not only should you make your negative reviews public, but you should also make your responses to these reviews visible, as well. This allows potential customers to see that you’re willing to do whatever it takes to fix your mistakes – and that you truly care about your customers’ satisfaction.

If you can begin building a sense of trust in your customers before they even make a purchase – and you follow through with your promises, you’ll almost certainly have gained a loyal, long-time customer.

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