UGC as the CFO's favored channel
Sam Decker
The CFO usually has a louder voice during tough times, so when marketers talk in terms of OPEX scaling, the finance department perks up. With scaling, costs either decrease over time as revenue stays flat or increases, or costs don't increase as quickly as revenue. CFOs like revenues, but they're even more interested in profit and margin dollars; your goal is to show them how you can impact those numbers.
Traditional campaigns aren't as efficient during a recession because consumers must have strong reasons to buy. The natural reaction of marketers is to discount, but this has negative implications for the brand. It's also tough to implement new technology because resources are limited. When you and the CFO are looking for investments that scale OPEX, don't damage the brand and margins, and don't require a lot of resources to get up and running, it's a great time to implement user-generated content (UGC).
Discounts aren't as important to consumers when they find a product, service or experience that is a “must-have” based on the reviews they read. Customers feel confident making a purchase when they read reviews, answers and experiences from others.
We have published several case studies proving that more UGC — in reviews and questions answered by the community — leads to higher conversion, average order value, traffic from SEO, lower returns and new opportunities for merchandising and marketing. We've seen conversion rates increase anywhere from 10% to 100%. Return rates can drop as much as 67%. Traditional marketing programs and campaigns only scale moderately, requiring you to increase costs to bring in more customers.
With a hosted UGC solution, companies can predict their monthly costs and yet the potential revenue impact actually grows over time — the more UGC you accumulate, the better your revenue results get. You can then multiply the scaling by using UGC in more marketing tactics such as e-mail campaigns.
When you're intelligently aggressive, you choose effective marketing investments that drive a long-term, sustainable P&L impact. Investing in a scaling word of mouth program is the best investment you'll make — before, during and after a recession.
