Canada Goose’s stock plunged 10% after a pessimistic analyst downgraded it due in large part to social engagement. “We see a recent slowdown in both Google trend search and Instagram engagement over the holiday quarter — most notably in December — as somewhat concerning for a stock that currently relies heavily on momentum and robust growth to keep their premium valuation justified” Wells Fargo analyst Ike Bochrow concluded in his downgrade.
The social signals of consumer brands have been of interest to analysts for some time, but it seems as if their importance is reaching a new level, and premium brands are the most susceptible.
Analysts and stockholders are often customers themselves, and evaluate heavily on the face of the brand they’re able to see for themselves everyday, the advocacy, engagement, and sentiment of other customers across the social web. Premium and luxury brands, more than any others trade on cachet, on coolness, on the advocacy of passionate customers championing that brand out into the world to create that justification and sense of value for a $1,000 winter jacket.
With everything that goes into creating a successful luxury brand, a 10% stock hit on lower Instagram engagement might seem extreme, but it does highlight how important a signal social proof and advocacy has become not just to analysts and investors, but to luxury customers when deciding what they’ll buy.
Here’s some actionable takeaways that luxury brands can implement to keep their advocates engaged and their stock rising.
Beware fake engagement.
Influencer fraud has become a huge issue for brand marketers over the past year. Now it’s not just critical to make sure marketers are getting the best return on marketing spend, but revelations of significant influencer fraud around a brand or campaign can have repercussions from analysts and traders.
Pre-launch involvement translates to engagement at launch.
People are most passionate about their own ideas and values. Finding the right inner circle of historically engaged customers to give visibility and provide insight leading up to a launch, whether it’s at product ideation or even campaign creative is a proven way to validate resonance with your target buyer, while also building buy-in and excitement from an influential base to seed a launch.
Open the echo chamber doors:
Engagement on your own social posts is nice, and can increase consideration for those you’re already reaching, but it doesn’t create new awareness. Getting that engagement from advocates to happen in their feeds and their networks is exponentially more valuable, it’s a story to their friends about why they love your brand, generating new awareness and new sales.
Trajectory is set at launch
Your first 30 reviews on a product are more valuable than your last 500. These will set the tone, and shape the positives and negatives when your early adopters and mavens begin to evaluate a product. Having the right user content, champions, and reviews very soon after launch is critically important in determining success.
Build an ozone layer:
A base of earned advocates will validate other brand lovers, deflect trolls and detractors, and foster an ecosystem that nudges happy passive customers into active engagers. You don’t make friends at moving day, invest in building these authentic relationships before you need them, and they’ll be there when you do.