If Not $3.60 Per Fan, Then What? Some Tips on Creating Your Own Social Media Valuations

Compliments of MarketingVOX|News

Social media firms such as Syncapse, Vitru and now Fanscape have come up with formulas to capture the dollar value of a fan or follower’s worth.

Syncapse, for example, has identified what it deems to be the value of a Facebook fan – $71.84. According to the study, that is the additional amount people who declare themselves to be a fan of a specific brand will spend compared to non-fans. Vitru came up with its own metrics using Starbucks’ 6.5 million fans as a base: they are worth $23.4 million in media annually, or broken down to a per capita number, $3.60. Vitrue came to this conclusion by determining that the ratio of impressions to wall posts was approximately 1:1 (0.96:1 to be exact).

Fanscape, for its part, offers a step-by-step formula that can be tailored to any company’s circumstances. It weighs takes such variables as a company’s conversion costs, frequency increase, tenure into account when projecting future value. These are interesting studies – and far more highly-detailed than explained here. In truth, though, they are likely way beyond the capabilities of most firms that are just starting to get their arms around social media. Many of these companies have been proceeding on blind faith that a social media presence will pay off on the bottom line. While they are not inclined to want a specific number such as $3.60 – some sort of valuation path would be welcome. MarketingVox spoke with a few social media experts to find out what are the best ways to fill the gap between the complicated formulas of Syncapse et al and the fuzzy math used by the masses.

Referrals and Renewals

Eloqua’s, director of Content, Joe Chernov, for one, takes a less formulaic approach to valuing fans. “I have seen that $3.60 figure presented, and I’ve seen it contradicted. While there might be some validity to it in the b-to-c market, the b-to-b world is very different. In the b-to-b market, fans tend to be existing customers bound by contract. So the goods themselves are much, much more “durable” than in the b-to-c environment.”

Chernov sees the value of its fans as being twofold. First, they are essential as referrals for prospects. Buyers have grown increasingly distrustful of vendors over the past decade, and our “fans” provide an antidote to that skepticism by serving as a trustworthy complement to our sales team, he says. Second, in a subscription business such as with SaaS renewals are vital. “And our fans renew at a very high rate. We know the more fans we convert, the better our renewals will be, and therefore the more we are able to grow revenues year over year.”

Retweets from High Quality Tweeters

Michael Volpatt with Larkin/Volpatt Communications takes an even broader view. The company has Twitter accounts for its clients, but in the past has struggled with determining which Twitter accounts it should follow and engage. The company jerryrigged a list of followers by using the social media list on We Follow, he explains. “We are now following all of the influential people that Tweet about games for our clients. We don’t put a number on them but we determine how influential they are by the number of followers, their retweets, and so on.”

One time the company retweeted something Michael Arrington from TechCrunch wrote on behalf of a client Arkadium Games, he said. “He sent a direct email to the CEO. That one Tweet was a huge value to use because of the direct communication.”

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Social Media Metrics 101

by: Randy F. Price

Our clients, potential customers and the brands they represent continue to challenge the notion of social media marketing. I believe this is a good thing, keeps us on our toes. There is an ongoing discussion (similar to the internet and web marketing circa 1999) relative to Social Media Marketing’s (SMM) significance in the marketing mix, ROI and about which department, agency or functional team is best qualified to manage this new hybrid of  market research, CRM, PR/Outreach,word of mouth and advocacy marketing vehicle, channel or platform. . Take your pick of definitions du jour. Oh, and if you didn’t partake of this month’s survey, please do, love to get your take. But I digress. http://social-arc.com/blog/

Here is the logic flow of a presentation recently made to a billion dollar company that asked about the engagement value of social media marketing.

Customer Behavior

The research shows that consumers who research options online are social media participants and by the way that channel yielded the highest number of applicants (lead generation). Customers (current or potential) trust “someone like themselves” to the tune of 68% (vs. 30%, radical change in 2 short years) as reported by Edelman.

Economic Impact Black SLide

Research from London School of Economics and Bain Consulting documented that the brands with the most recommendations online in its category grow 2.5 times the category average. This key research is the fundamental underpinning of the Net Promoter Score systems.Clearly the goal (at least one of the most significant ones) of social media marketing is to inspire and lead positive conversations, engagements and ultimately recommendations.

These “discussions” also impact search results especially if accompanied by a relevant link, and not mention the straight forward approach of providing  compelling call to action, measurement and optimization analysis.

When you look at the share of voice  (actual social media mentions or conversations) split out by competitors, correlated against  social media spending,, it strongly indicates (and validates)  impact.

Spending is not the only criteria, compelling content is also critical. And of course, determining if those conversations achieved the desired result is important and should be defined upfront.

It should go without saying that benchmarking and optimizing should always be a key performance goal and a fundamental objective of any SMM initiative. If you believe, as we do, that this is just the beginning of a new interactive and truly 1-to-1 dialogue with your customers, then establishing real empirical metric targets for success measurement is critical.

To be clear, ultimately sales is the goal. However, building a model that allows for evolutionary precision as well as a variety of key performance indicators  which take into account how the social media tactics you are using are impacting your business objective is always part of the roadmap to success with any innovative approach.

Being a fan of K.D. Paine, I found this podcast interview with her to be spot on and does an excellent job of articulating the symbiotic relationship between objective and key performance metrics.