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Is it practical to try to put a dollar value on your social media fans and followers? Why/why not?
Now that so many companies are investing in social media, everyone is trying to find the best ways to measure their investment. Is it practical or even possible to put a dollar value on how many 'likes' or tweets you get? Is this a good metric to follow?
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6 Answers
Lauren: I would say it depends on your social media objective. Having said that, however there is no defined formula for putting a dollar value on this because the ROI can be qualitative or quantitative. I have written an article on this. You might find it interesting. http://radhagiri.blogspot.com/2011/04/social-media-roi-measuring-quantitative...
I'm a believer in determining the ROI of social initiatives.
However, I agree that putting a value on followers or fans is not the best approach. Not all fans are created equal. A company many be better served, in some cases, by having fewer fans who are more engaged than a large number of fans who aren't.
For sales-related activities, determining smROI results from considering three factors: 1. Reach, 2. Impact, and 3. Yield. Reach and Impact are reflective of what I mentioned in my first paragraph.
When it comes to costs, the biggest factors I consider are: 1. People (employees and agencies), 2. Technology, 3. Marketing spend (to promote social activities).
People are likely to be the highest costs. However, technology is commonly the second if you elect to use premium solutions that will allow you to have scalability in your engagement and monitoring. You can start off with free tools but free is limiting, especially in the enterprise environment.
And as a closing thought, keep in mind ROI is a financial term so it's always a quantitative results. Metrics are the feedstock to how you arrive at the ROI.
Dr. Natalie Petouhoff and I are starting a weekly Focus roundtable series on Sep 14 at 11 am PDT called Simplifying Social Business. Over the weeks, discussions on social marketing ROI will be among our topics.
P.S. Here's a link to my website where I discuss smROI on an ongoing basis. Dr. Natalie and I are also coming out with an eBook series, also called Simplifying Social Business that will be sold via Kindle and PubIt. One of our eBooks will center on social marketing ROI. We'll open our kimonos and discuss specific methodologies and formulations.
http://www.kathyherrmann.com/ebooks/
Stay tuned!
I think it's not as hard to put a $ value on this although I don't think the number of followers is the best gauge. I like to find relevant followers in some social media like Twitter and the competitive intelligence Ning I belong to. While I find it's great to connect with the world on LinkedIn since it's a valuable research connection.
I ask people how they found me when I get new business, and increasingly it's through social media. I can track that revenue easily. I also ask which social media and find that the more industry or topic specific media (like Focus and Quora) as well as the CI Ning or the Linked Groups that focus on the industry I work in are all good sources.
Brands can and should associate a value on their social media outcomes but it is not strictly tied to something as myopic as a fan or follower unless looking at it from a specific activation element and that specific channel as the conversion point.
It is also important to recognize that your prospects and customers can be influencers and influenced by your social media without being explicitly tied to a single platform or activity such as becoming a fan.
In the larger picture, brands need to take into account the lifecycle of a customer, lead nurturing in its entirety, and how social media channels and specific campaigns influence their customers when assigning values.
Excellent stream...and I totally agree with Shannon that it is "important to recognize that your prospects and customers can be influencers and influenced by your social media without being explicitly tied to a single platform or activity such as becoming a fan." Therefore, it can be difficult to place a dollar value of someone who checks out your social media pages/accounts on a consistent basis but doesn't comment, doesn't become a fan, and/or doesn't recommend/share your page/site with others. However, the more you engage the followers/prospective followers, the more likely they will think of your brand/company when your product/service is needed. This is why engagement almost needs to be a line item in the overall marketing budget - and can include all forms of social media outreach.
A study from Hitwise (Website magazine, September 2011) found that one Facebook fan was equal to 20 additional website visits per year, for the 100 leading e-commerce websites.
A July 2009 study from Altimeter Group of the 100 most valuable brands found:
- Companies with most social media activity saw an average 18% increase in sales
- Companies with the least social media activity saw a 6% drop in revenue
We're trying to keep track of all of these various studies on our Facebook page at facebook.com/ResponseCoach. For the references above, see our Social Media tab, we've grouped all the "ROI" references together.
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